Report: 11 West African countries in debt distress

A recent report by the Nigerian Economic Summit Group and the Open Society Initiative for West Africa has highlighted a concerning trend in the region: 11 West African countries are currently facing debt distress. This revelation has raised alarm bells, particularly in Nigeria, as the largest economy in the Economic Community of West African States (ECOWAS). The chairman of the Debt Management Roundtable, Taiwo Oyedele, sat down with CNBC Africa to discuss the report and its implications. According to the report, the total debt of ECOWAS countries has surged by over 300% in the past decade, reaching approximately $300 billion. This rapid increase in debt levels has outpaced GDP growth and revenue generation, posing a significant risk to the economic stability of the region. Oyedele emphasized that while borrowing is a common practice for governments, the key issue lies in determining the sustainability of the debt. The report aims to assist policymakers in making informed decisions to address the growing debt burden in West Africa. Oyedele highlighted several key challenges contributing to the debt distress in the region, including insufficient fiscal management, revenue challenges, and a lack of coordination between debt management and other government policies. To combat these challenges, the report proposes a set of policy recommendations focusing on debt restructuring, efficiency in spending, and revenue optimization. Oyedele stressed the importance of governments reassessing their debt profiles and exploring options such as equity financing to reduce reliance on borrowing. He also underscored the need for policymakers to prioritize inclusive economic growth to boost revenue mobilization and curb escalating debt levels. Moving forward, the Debt Management Roundtable plans to continue engaging with policymakers to facilitate discussions on debt management, spending efficiency, and revenue enhancement. Oyedele emphasized that sustainable debt management is an ongoing process that requires collaboration and continuous dialogue between stakeholders. As West African countries grapple with mounting debt challenges, proactive measures and prudent financial strategies are crucial to safeguarding the region's economic stability. The report serves as a wake-up call for policymakers to address the root causes of debt distress and implement effective solutions to prevent a full-blown financial crisis in the region.