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Professor Jeffrey Sachs, the Renowned economist, has emphasized the necessity for Africa to secure long-term loans to fuel its growth trajectory.

Speaking at the Africa Union summit in Addis Ababa, Ethiopia, Sachs criticized the prevalent practice of short-term loans with high-interest rates, which he believes hinder Africa’s potential for sustainable development.

In an interview with CNBC Africa, Sachs highlighted the shortsightedness of international lenders and credit rating agencies, urging them to adopt a broader perspective on Africa’s economic landscape.

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He stressed the importance of aligning borrowing strategies with long-term growth objectives, advocating for loan tenures spanning 25, 30, or even 40 years.

Sachs emphasized, “Africa’s development prospects are enormously bright, but they require long-term commitments. Short-term loans exacerbate liquidity crises during rollovers, underscoring the need for robust institutional frameworks at the international level.”

The economist’s remarks come amidst concerns over African countries defaulting on foreign debts, exacerbated by challenges stemming from the COVID-19 pandemic and global economic uncertainties.

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Factors such as currency fluctuations and elevated interest rates, influenced by hawkish monetary policies in Europe and the United States, further compound the continent’s borrowing woes.

With Africa’s burgeoning young population driving the demand for substantial investments in infrastructure, Sachs underscored the imperative of strategic financing.

He emphasized the necessity for governments and lenders to prioritize long-term growth over immediate returns, particularly in critical sectors such as transportation, communication, education, and housing.

Governments across the continent have struggled to raise sufficient capital domestically, prompting reliance on foreign lenders.

However, Sachs cautioned against prioritizing profit margins over the continent’s developmental needs, urging stakeholders to embrace a collaborative approach towards sustainable economic growth in Africa.

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