The African Development Bank (AfDB) has outlined key strategies for Nigeria and other African nations to address growing debt burdens and foreign exchange challenges.
These recommendations were shared by AfDB’s vice president, Kelvin Urama.
Prof. Urama emphasised that debt, when used effectively, can fuel economic growth. However, the structure and purpose of the debt determine its long-term sustainability.
‘Debt for growth is a recognised strategy for economic development, but short-term, high-cost loans increase refinancing risks and undermine economic stability,’ he said.
He advised African nations to prioritise long-term, low-interest loans tied to clear investment strategies capable of generating returns to service the debt.
For Nigeria, he recommended shifting focus from the volume of borrowing to ensuring funds are effectively deployed in infrastructure projects that spur short- and long-term growth.
On foreign exchange, Urama highlighted Africa’s dependence on imports, particularly food, as a major weakness. He noted that geopolitical events like the Ukraine war have exposed the risks of this dependency.
“Africa should not be importing wheat from Ukraine when it holds 65 per cent of the world’s arable land and a vibrant, youthful population capable of driving agricultural productivity,” he said.
Urama cited Ethiopia as a model for transformation, having moved from wheat importer to exporter within four years through focused agricultural investments.
He pointed to AfDB initiatives, including the AgriPreneur and Special Agro-Industrial Processing Zones (SAPZ) programs, as tools to unlock Africa’s agricultural potential.
Prof. Urama stressed the role of political stability and sound macroeconomic policies in fostering economic resilience. Botswana, he noted, has leveraged stable governance to attract foreign investment and spur growth.
“When political stability and good governance are in place, the cost of capital decreases, investments flow freely, and economic growth accelerates,” he explained.
He urged African governments to adopt long-term strategies focusing on political stability, sound economic management, and local production to reduce reliance on external financing and stabilise currencies.
These measures, he argued, are essential for building sustainable, self-reliant economies across Africa.
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