Speaking quietly but enunciating clearly, Ahunna Eziakonwa, under-secretary general and special adviser on Africa to the United Nations secretary-general, distils a truth that has long haunted the continent's development story: Africa pays more because the world perceives it as high risk.
"Africa loses an estimated $74.5bn in additional debt service costs due to exaggerated risk perceptions and biased credit ratings," she says. "It's what has been called the Africa risk premium."
This figure, she explains, is not just a line item in a budget spreadsheet. It is the difference between progress and paralysis. "If the borrowing cost is lowered by just 2% over a three‑year period across a $18.6bn portfolio, Africa could save about $1.12bn, which will be enough to provide electricity to 50 million people or hire 900,000 teachers. What Africa loses through biased credit rating is not just revenue; it loses future prospects and potential for the continent's youthful and vibrant people."
Eziakonwa's argument is as moral as it is economic. African countries are not serial defaulters.
Originally published by African Business.