AfDB advises Africa states to borrow closer home

African governments in the grip of Eurobond fever have been asked to look closer home to secure financing vital to their economic development as borrowing costs on international debt markets rise.

According to the president of the African Development Bank (AfDB), Akinwumi Adesina, Africa has seen a boom in dollar-debt issuance over the past decade as countries have sought to borrow, often for costly infrastructure projects, at a time when investors in the United States and Europe sought out higher yields in emerging markets.

Over 20 African nations have now sold at least one Eurobond, Adesina told Reuters in an interview late on Friday, roughly double the number back in 2004.

“It’s all well and good when the interest rate environment is quite accommodating,” he said. “But as the Federal Reserve rates go up and you begin to see movement of money out of emerging markets, you’ll have a tightening of that capital market.”