Africa'S Sovereign Bond Debts: Alternative To Dead Aid And Catalyst For Development

Purpose: The study sought to examine viability of sovereign bond debts, the alternative to foreign aid, which Dambisa Moyo calls "˜Dead Aid', for financing economic development in Africa.Methodology: The research is a desk research via the qualitative methodology where information was derived from published scholarly works of various authors on the issue of aid, debt and development of African countries.Findings: The study shows that several African countries, such as Angola, Kenya, Zambia, Côte d'Ivoire, Senegal and Gabon have ventured into international capital markets and accessed the sovereign bond debts. Second, these countries' debts have grown exponentially while most of their economies are still commodity based and have not grown in tandem with the debt. Volatile commodity prices have made it difficult for some of these countries to raise enough resources to service these debts. Some of the debt is now maturing and these countries are now potentially facing debt crises akin to what they went through in the 1990s.Unique contribution to theory, practice and policy: Since 2006, many African countries have issued debt in the international bond markets but are now faced with prospects of default and accumulation of excessive debts. This has the potential of wiping out the gains achieved under the Highly Indebted Poor Countries (HIPC) and Multilateral Debt Relief Initiative (MDRI), which sought to reduce debt levels for the beneficiaries of these initiatives. Accessing international bond markets is not a panacea for Africa's development problems. Indeed it seems to compound the African Sovereigns' problems by creating conditions for future debt distress. Deliberate policy decisions and efforts are required in managing the risks that come with these kinds of debt.