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(Ecofin Agency) – The African Legal Support Facility (ALSF), established in 2008, provides legal and technical assistance to African countries to strengthen their capacities in complex contract negotiations, debt management, and economic governance.
During the recent African Development Bank (AfDB) Annual Meetings in Nairobi, Kenya, the ALSF unveiled the latest edition of its guide on sovereign debt in Africa. Titled ‘Understanding Sovereign Debt – Options and Opportunities for Africa’ the document aims to explain complex concepts related to sovereign debt and provide practical tools for effective debt management in Africa. The book was launched in the presence of Cape Verde’s Deputy Prime Minister and Minister of Finance, Olavo Correia, and Zimbabwe’s Minister of Finance and Promotion of Investment, Mthuli Ncube.
It is the result of a collaborative effort known as the “book sprint” method, and was written in a week by a group of experts. The book was first published in 2023 and updated in March 2024 to reflect recent developments in the sovereign debt landscape. This update was supported by the AfDB, the International Monetary Fund (IMF), the West African Institute for Financial and Economic Management (WAIFEM), and the Commonwealth Secretariat.
According to Maude Vallée, ALSF’s Head of Operations, the second edition of this guide is structured into six detailed chapters. It begins with an introduction to the sovereign debt landscape in Africa. The first chapter explores the different types of creditors, while the second examines available financing instruments, including multilateral, bilateral, and commercial sources, as well as bonds and secured bank transactions. The third chapter covers debt management strategies, planning, and data transparency. The management of contingent liabilities, a critical area for African states, is addressed in the fourth chapter. The fifth chapter examines the types of assistance available to African borrowers, including legal and financial advice. Finally, the sixth chapter focuses on debt distress management, explaining how to identify and manage liquidity and solvency risks and how to exit crises sustainably.
“Public finance or sovereign debt is a highly specialized field with few experts. We have identified a crucial need for knowledge in this area, which strongly impacts African economies. Our beneficiaries, African governments, needed to understand the issues surrounding public finance, particularly external credit instruments,” said Gadi Taj Ndahumba, one of the guide’s authors, in an interview with Ecofin Agency.
“It aims to provide a solid knowledge base for government representatives, allowing them to better understand the dynamics and different aspects of sovereign debt. It also covers recent developments in financial instruments, such as Eurobonds, and new types of creditors with different terms and approaches,” he said.
According to the ALSF, led by Olivier Pognon, who plays a crucial role in strengthening the capacities of African governments, “the manual does not intend to make its readers experts but to provide them with the minimum understanding necessary to recognize risks and optimize opportunities by collaborating with experts.” Practical guides and online courses offering in-depth knowledge on specific sovereign finance issues complement this work.
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