Lesetja Kganyago: Growing with debt in African economies - options, challenges and pitfalls

Address by Mr Lesetja Kganyago, Governor of the South African Reserve Bank, at the African Economic Research Consortium, Cape Town, 2 June 2019.

The views expressed in this speech are those of the speaker and not the view of the BIS.

Good morning ladies and gentlemen. I would like to thank the African Economic Research Consortium for inviting me to introduce this important topic. I hope you will indulge me while I reflect the opportunities, challenges and pitfalls presented by debt to developing economies in sub-Saharan Africa.

Economic growth in sub-Saharan Africa (SSA) has been improving from the low base in the early 1990s and is set to continue. Real GDP is projected to pick up to 3.5% in 2019 and 3.7% in 2020. However, this remains well below the averages of the 2000s. There are also growing questions about macroeconomic stability given the weakening of fiscal positions in a number of low income developing countries (LIDCs) in recent years. According to the IMF, debt burdens and vulnerabilities of LIDCs have risen significantly since 2013, reflecting a mix of factors, including exogenous shocks and loose fiscal policies.