In 2011, the Zambian state owed $2-billion to external creditors. By the end of 2017, that figure had more than quadrupled, to $8.7-billion — and that’s just the official, acknowledged debt. Foreign investors believe there may be another $8-billion in “hidden debt” that the government has failed to account for.
Opaque accounting practices and unreliable statistics mean that we don’t know where all this money went, or how Zambia can possibly pay it back. Certainly, there have been few obvious improvements to infrastructure or the average person’s quality of life that could justify borrowing such enormous sums — or even a coherent plan to deliver these improvements.
We do know, however, that hundreds of millions of dollars are being spent every year to service this debt, money that would be much better spent on health, education or housing. Zambia’s government has mortgaged the country’s future, with little to show for it.
Zambia is not alone. According to frightening new statistics from the International Monetary Fund, Zambia is among nine African countries that are at high risk of debt distress. Another six are even worse off, and are already in debt distress. This raises the very real prospect of widespread defaults, and an economic crisis that could derail the very moderate improvement in economic growth registered in sub-Saharan Africa last year.
Like a compulsive shopper using one credit card to pay off another, too many African governments are taking on too much debt far too casually. But questions must also be raised about the private lenders extending this credit. Not enough due diligence is going into ensuring that vulnerable countries can afford the loans, or whether the money is being used for its intended purposes.
As always, it will be ordinary people who will foot the bill — future generations in hock for loans that delivered little to no genuine development — loans that, in some cases, their governments haven’t even declared.
Maybe it’s time to put away the credit cards.