Trevor Manuel highlights debt crisis as a barrier to African development at G20 meetings

FORMER finance minister Trevor Manuel has issued a stark warning regarding the pervasive debt challenges facing the African continent.

- YOGASHEN PILLAY

Speaking at the G20 Finance Track meetings on Wednesday, Manuel underscored how burgeoning debt service costs were stifling essential development expenditures, particularly in health and education.

Manuel said this usually happened in circumstances where countries have not borrowed more, but the interest rate burden has increased very rapidly.

“Debt squeezes out development. It impoverishes countries, actually. It’s the only thing that is really shared by people,” he said.

“The expert panel has made 11 recommendations to deal with debt going forward. We need to develop a handle on debt. Part of dealing with debt is also understanding the cost of capital. And there are elements of the cost of capital that need particular attention.”

A particularly alarming aspect mentioned by Manuel is the detrimental impact of currency depreciation on debt management. Many African countries have borrowed in foreign currencies such as US dollars or euros, subjecting them to significant risks when their own currencies fluctuate.