Egeh: Africa is in a global debt distress era

Somalia's Finance Minister, Bihi Iman Egeh, delivered a keynote address at the AfDB meeting in Nairobi, Kenya, where he highlighted the importance of building resilient African economies. A key takeaway from his speech was Somalia's significant progress in reducing its external debt from 64 per cent to 6 per cent by the end of 2023. CNBC Africa's Aby Agina sat down with Minister Egeh to delve deeper into Somalia's achievements and challenges. Minister Egeh emphasized that responding to the climate crisis and reforming the international financial architecture were central themes at the meeting. He pointed out that the climate crisis, both in Africa and globally, is a pressing issue that dominated discussions during the event. Minister Egeh also discussed Somalia's success in achieving the Heavily Indebted Poor Countries (HIPC) completion point, marking a historic milestone for the country. This achievement was the result of a decade-long reform implementation process focused on improving public financial management, strengthening domestic resource mobilization, and building robust government institutions. Additionally, Somalia has made significant strides in defeating militant groups like Al-Shabaab and has successfully joined the East African Community. Despite these accomplishments, Somalia faces challenges such as recurring climate crises, security threats from Al-Shabaab, and geopolitical shocks affecting its economy. Minister Egeh highlighted key opportunities for investors in Somalia, including the blue economy due to its extensive coastline, the agricultural sector with high livestock potential, and uncultivated arable land. He also emphasized the country's young population as a valuable asset for economic growth. Addressing the pressing issue of debt sustainability, Minister Egeh acknowledged that Africa is in a global debt distress era. He stressed the importance of building domestic revenues and debt capacity to prevent falling back into debt distress. While Somalia has made progress in clearing arrears with international creditors and maintaining moderate debt sustainability, many African countries continue to struggle with managing their debt levels and financing debt services. Minister Egeh's insights shed light on Somalia's journey towards economic resilience and the challenges faced by African nations in the current debt landscape.