Africa needs more aid and concessionary loans if it’s to have any chance of meeting the 2015 Millennium Development Goals, ministers say – despite increasing attention from private capital and expectations of strong growth. “[We] can only be assisted on a global scale. Everything less is for the talk shows,” Kenya’s finance minister, Amos Kimunya, told Emerging Markets. Ezra Suruma, Uganda’s finance minister, said in an interview that the country was likely to miss most of the Goals “unless considerable international assistance” was made available.
Despite the tough conditions on multilateral grants and loans, African countries are wary of taking on commercial debt. Private sector interest in the sector has soared but governments are keen to avoid future debt crises at all costs. “We don’t want to go back,” said Suruma.
Shirish Apte, investment banking head at Citigroup, told a seminar in Singapore that $18 billion has been raised in Africa for commercial banks. Private capital is available for short tenures initially, but on steadily improving terms as borrowers build dup a good track record.
He cited Ghana’s copper board as an example, and said private lenders’ top consideration is the certainty of cash flows, which has improved as oil and commodity revenues have risen in several countries.
The IMF’s latest projection is that sub-Saharan Africa will grow at 4.8% this year and 5% next year, with oil producers like Angola hitting 10%. However the UN has estimated that low income countries will have to find between 10 and 20% of their GDP, after any debt relief and promised aid increases, to meet the 2015 deadline.
The extra funds needed would be determined on a country-by-country basis, Ghana’s finance minister Baah Wiredu told a press briefing yesterday, adding that his country faced a gap of $3 billion over the next ten years. African leaders continue to face protracted negotiations, taking “half the term of a government” to secure additional funds from the World Bank and IMF, said Baah Wiredu. But individual countries have shown more commitment to funding the MDG’s. “One country that has shown it can deliver on time is the UK,” he said. While most African countries have achieved universal primary education, the health targets have proved much more difficult and expensive.
Eliminating extreme poverty, the first Goal and the one that underpins the other seven according to ministers, continues to plague Africa. A relatively prosperous country like Kenya, which did not receive debt relief and has never defaulted on its debts, has a poverty rate of over 50%.
Kimunya questioned the commitment of the Bretton Woods institutions to reducing poverty.“The Millennium Development Goals are not on the official agenda at this meeting, where the countries that have to fulfill them are present” he said. “They talked about them at the Gleneagles summit, where it was a one-sided discussion within the G8.”