Okonjo-Iweala Calls on African Countries to Boost Economies by Lowering Trade Costs, Worries Over Rising Debts
The Director General of the World Trade Organisation, Dr Ngozi Okonjo-Iweala, Wednesday expressed concerns over rising African debts.
Okonjo Iweala also called on African countries to lower trade costs as a way of boosting their economies.
The WTO DG who spoke at the African Development Bank High Level Knowledge Event with theme ‘From Debt Resolution to Growth: The Road Ahead for Africa’ said that in the case of Nigeria the debt to GDP ratio had gone up 35 per cent from 29 percent.
She added, “Middle-income African countries have also seen their debt burdens increase sharply. Amid falling prices and demand for oil worldwide, Nigeria’s debt to GDP ratio rose from 29 to 35 per cent; Algeria from 46 to 53 per cent, and Egypt from 84 to 90 per cent, Angola from 107 to 127 per cent.
“Debt to GDP ratios also increased for non-oil exporters including South Africa from 62 to 77 per cent. Morocco from 65 to 76 per cent.”
The WTO DG also disclosed that African countries were also using scarce forex to service debt repayment obligtions instead of capital investment.
She said, “Even where debt to GDP or where debt to export ratios were not very high, tighter access to dollar financing because of the COVID-19 crisis means we are already seeing places where scarce foreign exchange is going to fund debt repayment instead of capital investment.”
Okonjo Iweala also called on African countries to boost their economies by lowering trade costs.
According to her, higher trade costs have contributed in hindering trade.
Thisday Newspaper also reports The Cable online quoting Okonjo Iweala also seeking debt relief for African countries, noting that many countreis were at the risk of entering debt distress.
According to her, “When thinking about how to use debt productively, it is paramount to think about how it is managed and what it is used for.
“Debt means to go into high yielding activities with high rates of returns. One potential area for high returns on investment is acting to lower what economists call trade cost, the cost associated with moving goods from the factory gates to the final consumer.
“This would raise the productive capacity of African economies, ultimately reducing debt burdens and helping build regional value chains and competitiveness of firms on the continent.
“Currently, moving manufactured goods across international borders costs roughly 2.7 times more than moving the same goods across the same distance domestically. Costs are even higher for agricultural goods and services.
“Shipping and logistic expenses often accounts for a significant share of these costs and are key factors of why trade cost between high-income countries and much lower than those among low-income countries.”
Okonjo Iweala also called on African countries to lower trade costs as a way of boosting their economies.
The WTO DG who spoke at the African Development Bank High Level Knowledge Event with theme ‘From Debt Resolution to Growth: The Road Ahead for Africa’ said that in the case of Nigeria the debt to GDP ratio had gone up 35 per cent from 29 percent.
She added, “Middle-income African countries have also seen their debt burdens increase sharply. Amid falling prices and demand for oil worldwide, Nigeria’s debt to GDP ratio rose from 29 to 35 per cent; Algeria from 46 to 53 per cent, and Egypt from 84 to 90 per cent, Angola from 107 to 127 per cent.
“Debt to GDP ratios also increased for non-oil exporters including South Africa from 62 to 77 per cent. Morocco from 65 to 76 per cent.”
The WTO DG also disclosed that African countries were also using scarce forex to service debt repayment obligtions instead of capital investment.
She said, “Even where debt to GDP or where debt to export ratios were not very high, tighter access to dollar financing because of the COVID-19 crisis means we are already seeing places where scarce foreign exchange is going to fund debt repayment instead of capital investment.”
Okonjo Iweala also called on African countries to boost their economies by lowering trade costs.
According to her, higher trade costs have contributed in hindering trade.
Thisday Newspaper also reports The Cable online quoting Okonjo Iweala also seeking debt relief for African countries, noting that many countreis were at the risk of entering debt distress.
According to her, “When thinking about how to use debt productively, it is paramount to think about how it is managed and what it is used for.
“Debt means to go into high yielding activities with high rates of returns. One potential area for high returns on investment is acting to lower what economists call trade cost, the cost associated with moving goods from the factory gates to the final consumer.
“This would raise the productive capacity of African economies, ultimately reducing debt burdens and helping build regional value chains and competitiveness of firms on the continent.
“Currently, moving manufactured goods across international borders costs roughly 2.7 times more than moving the same goods across the same distance domestically. Costs are even higher for agricultural goods and services.
“Shipping and logistic expenses often accounts for a significant share of these costs and are key factors of why trade cost between high-income countries and much lower than those among low-income countries.”
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