CAPE TOWN – The perception that capital markets are a cheap way to finance infrastructure in sub-Saharan Africa is wrong – these countries pay much more for debt than developed countries, Vivienne Yeda Apopo, the director-general of the East African Development Bank, said yesterday.
Sub-Saharan African countries have some of the fastest growing economies in the world, but many also fall within the poorest and rely on donor funding for much of their fiscal requirements. Of 47 least developed countries in the world, 33 are sub-Saharan.
Most also have to rely on borrowings from capital markets to fund their infrastructure projects.
Speaking on the fringes of the World Economic Forum (WEF) yesterday, she said African countries usually pay 5 to 6 percent interest to borrow on the capital markets, but developed countries often secure funding at close to zero percent.
Some countries are forced to borrow at 10 percent a year, “which is an extremely expensive and 'not a prudent way' to finance infrastructure projects,” she said.