World Bank
Global Development Finance 1997: Extracts
Sub-Saharan Africa
Debt and indicators
Aggregate
resource flows
Increased export revenues coupled with moderate growth in
outstanding debt resulted in a slight decline in the aggregate
ratio of debt to exports in Sub-Saharan Africa. Still, many
countries continued to face an unsustainable debt burden.
Aggregate net transfers rose to an estimated $17.6 billion in
1996, or 5.6 percent of the region's GNP, the highest net
transfer as a share of GNP of any region. Almost all official
flows came in the form of bilateral grants or highly concessional
loans from multilateral creditors; a net $1.1 billion was repaid
on nonconcessional loans. Private flows are estimated to have
increased strongly in 1996 to $11.7 billion, or 45 percent of
total net flows, although the bulk of these flows are provided to
only a few of the region's forty-eight countries (notably,
Angola, Ghana, Nigeria, and South Africa).
The total debt of Sub-Saharan African countries rose
about 4 percent in 1996, a slower rate of increase than in 1995,
when total debt rose 7 percent. Moreover, $7.1 billion of the
$8.8 billion increase was incurred by South Africa, and another
$0.7 billion was incurred by Ghana; elsewhere in the region
countries registered marginal increases in debt or absolute
declines. Private debt accounted for almost all of the increase
in debt in 1996; public and publicly guaranteed debt increased by
only about 0.2 percent.
Debt is largely owed by and to governments. Despite the
strong rise in private nonguaranteed debt in 1996, 93 percent of
Sub-Saharan Africa's long-term debt is owed to or guaranteed by
debtor governments. Of the region's $182 billion in long-term
debt, 74 percent is owed to official creditors (about 42 percent
to multilateral agencies and the rest to bilateral creditors).
Private debt is highly concentrated. The bulk of the
region's $48.6 billion in private-source, long-term debt is owed
by Angola, Cameroon, Côte d'Ivoire, Nigeria, and South Africa.
Most private-source debt is in the form of commercial bank loans
and export credits (a portion of which is guaranteed by official
export credit agencies). At the end of 1996 countries in the
region owed less than $4.5 billion in bonds and an estimated
$44.8 billion in short-term loans, of which almost half
represented interest arrears on long-term debt.
Reducing Africa's debt burden has become a major goal of
bilateral and multilateral agencies. Sub-Saharan Africa has
become a major focus of efforts by official agencies to ease debt
burdens, through Paris Club concessional reschedulings,
commercial bank buybacks funded through IDA's Debt Reduction
Facility, debt forgiveness by selected bilateral creditors,
payments by bilateral creditors of debt service on multilateral
debt, and most recently the initiative to solve the debt problem
of heavily indebted poor countries. These efforts have eased
short-term liquidity constraints facing many debtors and in some
cases have resulted in significant declines in the net present
value of the debt outstanding.
Still, Africa's debt burden remains high. The region's
aggregate ratio of debt to exports was estimated at 236.9 percent
in 1996, down from 241.7 percent in 1995. If South Africa is
excluded, the debt to exports ratio was 327.5 percent in 1996, a
much higher share than the 146.2 percent average for low- and
middle-income countries. This comparison is somewhat misleading,
however, because a much higher portion of the region's debt (35
percent) is concessional than the average for developing
countries (20 percent). Debt service paid fell from 14.5 percent
of exports in 1995 to an estimated 12.4 percent in 1996, the
lowest ratio this decade (and well below the almost 20 percent in
the late 1980s), in part reflecting the estimated $4 billion
increase in arrears. Of the forty-eight countries in Sub-Saharan
Africa, thirty-one are classified as severely indebted low-income
countries.
Aggregate net flows to Sub-Saharan Africa rose 12
percent in 1996 to an estimated $26.1 billion. More than half of
this amount came from official creditors. The $2.9 billion
increase in net flows in 1996 reflects the rise in South Africa's
borrowing from private creditors. Net flows from official sources
rose by less than $200 million in 1996.
Official development assistance increases slightly but
remains below historical levels. Official development
assistance to Sub-Saharan Africa rose to an estimated $15.3
billion in 1996, slightly above 1995 levels but below the $16.1
billion a year provided in 1990-92. The region was the leading
recipient of grants, which in 1996 totaled $11.8 billion
(representing 38 percent of total grants received by developing
countries in 1996). Grants have changed little in nominal terms
since the early 1990s, but concessional lending from bilateral
agencies has dropped sharply, from an average of $1.5 billion in
1990-92 to just $0.2 billion in 1996. Multilateral agencies
provided $3.5 billion in concessional loans, of which IDA
contributed $2.6 billion.
Net private flows rise sharply. Private flows have
risen from less than $1 billion in the early 1990s to $11.8
billion in 1996 and now account for about 45 percent of net flows
to Sub-Saharan Africa. Such flows are concentrated in only a few
countries, however. Commercial bank lending to the region
increased by an estimated $4 billion in 1996. However, South
Africa accounted for $5.6 billion of the $5.8 billion borrowed
from commercial banks in 1996, as several countries in the region
reduced their exposure to commercial banks. More than half of the
$0.8 billion in net bond issues were from South Africa, which
tapped the market in three transactions by the government and in
one by a public utility. Portfolio equity flows (of which 89
percent go to South Africa) declined by $1.3 billion, reflecting
uncertainty about South Africa's prospects following depreciation
of the rand. Foreign direct investment rose from $2.2 billion in
1995 to $2.6 billion in 1996, most of which was invested in the
oil-exporting countries (Angola, Cameroon, Gabon, and Nigeria).
Africa continues to benefit from Paris Club reschedulings.
Ten African countries reached rescheduling agreements with Paris
Club creditors, most at a present value reduction of 67 percent
on eligible debt (Naples terms). Benin, Burkina Faso, and Mali
rescheduled their stock of debt outstanding; Chad, Congo,
Mozambique, Niger, Sierra Leone, and Zambia rescheduled debt
service due over one to two years; and Ghana rescheduled arrears
due as of July 1995. In addition, Ethiopia, Mauritania, and
Senegal reduced $0.5 billion in commercial bank debt (including
interest arrears) through operations funded by IDA's Debt
Reduction Facility, which includes funds from bilateral donors.
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