In this decade of the 2020s, a new borrowing playbook is emerging in sub-Saharan Africa, and it should concern all of us. Yes, the use of hydrocarbons and minerals for loans is a poison pill. Simply, African leaders cannot even wait for the oil and minerals to be extracted before they can spend the funds. This is Unborn tomorrow but Dead yesterday, meaning that the future is being sold.
South Sudan, you are following a really wrong path: “A Dubai-based firm has agreed to lend $13 billion to South Sudan in exchange for 20 years of discounted oil, sparking a lively discussion among stakeholders. The deal, nearly double South Sudan’s GDP, is seen by some as a potential lifeline for the country’s development, while others fear it may hinder long-term financial stability by tying up most of its oil revenues.” Nigeria pioneered that, and others are copying at scale.
Nothing new… yes, they cannot wait to sell the oil before using the funds! Nothing new or innovative. You have oil, and you use it to take out loans. But you can also sell that oil for the same funds. What this means is clear: the rate Nigeria needs money is faster than the rate it can ship it to buyers. If you do this as a businessperson in Aba, Kano, Lagos, etc, in 6 months, you will return to the village with nylon bags! Nigeria could lose close to 30% of the value of the oil via interest payment and panic pricing.
I call on the African Union to look into this matter as the trajectory is very dangerous. Most international players cannot lend to most of our countries because of the current debt burdens, and to get over the challenge, our leaders now sell un-extracted minerals and oil. If this is not stopped, all African development models will fade!
Tekedia Mini-MBA edition 16 (Feb 10 – May 3, 2025) opens registrations; register today for early bird discounts.
Tekedia AI in Business Masterclass opens registrations here.
Join Tekedia Capital Syndicate and invest in Africa’s finest startups here.
In this decade of the 2020s, a new borrowing playbook is emerging in sub-Saharan Africa, and it should concern all of us. Yes, the use of hydrocarbons and minerals for loans is a poison bill. Simply, African leaders cannot even wait for the oil and minerals to be extracted before… pic.twitter.com/vZNSb4l2gp
— Ndubuisi Ekekwe (@ndekekwe) April 26, 2024
---
Register for Tekedia Mini-MBA (Feb 10 - May 3, 2025), and join Prof Ndubuisi Ekekwe and our global faculty; click here.