The African Development Bank (AfDB) has provided key insights into how Nigeria and other African nations can address their growing debt burdens and foreign exchange challenges.

The bank’s vice president for economic governance and knowledge management, Kevin Urama, told journalists that strategic borrowing and political stability were critical for growth.

Speaking on Nigeria’s debt profile, Mr Urama, the AfDB’s chief economist, said public debt itself was not inherently problematic.

“Debt for growth is a known way of growing economies. However, the quality and structure of the debt are crucial factors in determining its long-term impact,’’ he said.

The professor raised concerns about the growing trend of short-term, high-cost commercial loans in African countries, which came with higher refinancing risks.

“The problem arises when countries borrow short-term loans and are unable to repay them before investments mature. This cycle forces countries to continuously refinance, often at unfavourable terms,” he said.

Mr Urama stressed that African governments should focus on long-term loans with lower interest rates.

“For Nigeria, the key question should not be whether the country is borrowing more, but rather how borrowed resources are being used,” said Mr Urama. “If borrowed funds are invested in infrastructure that drives growth both in the short and long term, it is a smart move.”

On foreign exchange and trade, Mr Urama pointed to Africa’s dependence on imports, specifically food, as a critical area for reform. He urged the leaders to address the trend.

He acknowledged the ongoing disruption of global supply chains due to geopolitical tensions, including the war in Ukraine, which had affected wheat imports to Africa.

“Africa has no business importing wheat from Ukraine because we have 65 per cent of the remaining arable land in the world.

“We also have a vibrant, youthful population eager to engage in productive activities. Africa has the capacity to feed itself and the world.

“And this can be achieved through initiatives such as the AfDB’s AgriPreneur and Special Agro-Industrial Processing Zones (SAPZ) programmes, which are crucial tools for unlocking the continent’s agricultural potential,’’ he said.

Mr Urama cited Ethiopia’s success in becoming a wheat exporter within four years of focused agricultural investment. He said this demonstrated that Africa could transition from food dependence to self-sufficiency.

On the broader economic challenges facing Nigeria and other African countries, Mr Urama reiterated the importance of political stability and sound macroeconomic policy management.

“When political stability and good governance are in place, the cost of capital decreases, and investments flow more freely,” he said.

According to the AfDB vice president, Africa’s economic challenges are solvable through long-term strategies focused on stability, sound economic management, and a shift towards local production and value addition.

“By doing so, African countries can reduce their dependence on external financing, stabilise their currencies, and ultimately foster sustainable economic growth,’’ he added.

(NAN)