To attain a high rate of investment of at least 40 per cent GDP per year in Africa, Professor Jeffrey Sachs, has urged African leaders to strategise towards borrowing a lot more on international capital markets.
In his keynote address during the 2025 Obafemi Awolowo Memorial Webinar, Jeffrey Sachs, a professor of political economy at Columbia University, New York, United States, speaking on the financing strategy to achieve this rapid rate of growth based on high investment rates, noted that Africa needs to borrow more, however, on a longer tenure of up to 40 years
“Africa’s debt is not too high, it’s too low. Africa should be borrowing a lot more on international capital markets, but not the kind of borrowing it’s been doing when it borrows. Africa has been borrowing at five years or seven years, but the development that I’m talking about is 25 or 30-year horizons. And what happens is countries borrow seven-year euro bonds, and then when those come due, they can’t repay, and then they enter into a financial spiral, an IMF program, and it’s the end, it’s the end of growth. It’s the end of the investment agenda.
“The IMF says, ‘Don’t you dare try to have those high investment rates again, and that’s too destabilizing, and things come crashing down’. But my view is the mistake is the short-term maturity of these debts, because development is a high-return activity, but over a 30-year period, not over a seven-year period.
“And so, in my view, the biggest problem that Africa has faced is finance. The biggest challenge is long-term, low-cost financing. My view is that if the markets behave properly, this would come automatically, because Africa has the highest growth potential of any region of the whole world, starting poor, accumulating capital, Africa can grow at these astoundingly high rates. And so it’s not risky to lend Africa, but it is risky to lend for seven years. The lending should be 25, 30 or 40 years, and this requires a financial strategy for Africa,” Sachs said.
Thye Don noted that a basic part of the strategy should be to increase the scale of the African Development Bank. “The African Development Bank borrows on the international markets and then lends to the member states of the African Union on good terms. But the scale of the African Development Bank is tiny. It’s only about $5 billion of lending per year. It should be 50 to $100 billion of lending per year.
“There’ll be the opportunity for a major scale up of the capital of the African Development Bank in the coming year. Don’t wait for the United States and Europe. Do it yourself.
The US and Europe are not going to scale up the African Development Bank. United States isn’t going to put $1 into African development. It may try to steal some minerals, but it’s not going to put $1 into
African development. You’re going to have to do this in Africa and with countries that are really committed to long-term development.
You have partners in the Gulf region. You have partners in the Government of India. You have partners in the government of China. That’s where Africa’s long-term financing is going to come, not from the United States, alas, and not from Europe,” he said.
He observed that the African Development Bank should not be the only multilateral bank of Africa. “There are many multilateral development banks. They should all be scaled up significantly, and maybe some new ones. Invent a West African Development Bank, an East African Development Bank, a Southern African Development Bank, because the lesson is that these multilateral banks borrow on better terms than their owners. I like the example in Latin America of what we call the Andean Development Fund or the COF. Its owners are all below investment grade, but they got together, pooled their capital develop the AMB Development Fund, and that fund, on behalf of their members, borrows at credit-worthy rates and lends to the owners who are not credit-worthy according to the traditional credit ratings.
“So actually, there’s leverage by unity. There’s leverage by multilateralism, and don’t let the US or France or the EU or the IMF or anybody else talk you out of getting the funding you need for the long-term, large-scale investments,” he said.
To achieve a more effective African Union, Pofessor however noted that Nigeria has a leadership role to play.
“As the largest economy, the most populous nation in Africa, with so many leaders in finance and business, so I really want you to take the lead, but not only for Nigeria’s development, but for Africa wide. Because if Africa succeeds as a continental scale economy, Nigeria will boom, and it will boom as part of this overall continental scale success,” he said.
Prof Sachs, who is an SDG advocate for the United Nations and a multiple-award-winning scholar, suggested that the political leaders would need to invest reasonably in these areas as well as on infrastructure.
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