While the explosion of debt is throwing a shadow over global economic growth, experts warn that Sub-Saharan Africa, where several countries are already in default, is experiencing its worst-ever crisis.
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The rise in interest rates and over-indebtedness is already crimping the ability of countries to finance their development, as a number of African leaders emphasised at appearances at the World Economic Forum in Davos.
Origins of the crisis
Following the 2007-2009 global economic crisis, central banks in industrialised countries have generally kept interest rates low and countries from the Global South, which had mostly been borrowing bilaterally or from international financial institutions, gained unprecedented access to financial markets.
“Many developing countries in a desperate need for cash injection in their economies rushed to these low-cost loans, in markets with no rules or regulation,” said Kenyan economist Attiya Waris, who also serves as an independent expert for the United Nations.