LAGOS (Nigeria), March 16 (NNN-GNA) — Dr. Akinwumi Adesina, the Managing Director of the African Development Bank (AfDB) is calling on African leaders to put an end to the exchange of Africa’s resources used to further industrialization in the countries of the country’s creditors.
Speaking in an exclusive interview with The Associated Press in Lagos he said, “They are just bad, first and foremost, because you can’t price the assets properly. If you have minerals or oil under the ground, how do you come up with a price for a long-term contract? It’s a challenge.”
Dr Adesina believes that loans of such nature are of disadvantage to the borrower as the lenders in most cases have upper hand when it comes to the negotiation of terms. He added that, the power imbalance in such negotiations coupled with the lack of transparency creates fertile ground for exploitation and corruption.
“These are the reasons I say Africa should put an end to natural resource-backed loans,” Dr. Adesina said.
Since the 2000s, more than 11 African countries have taken external loans worth billions of dollars secured with their natural resources. On the top of these external creditors is China.
Linking future revenue from natural resource exports to loan pay downs is often touted as a way for recipients to get financing for infrastructure projects and for lenders to reduce the risk of not getting their money back. — NNN-GNA
