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In October 2020, Zambia failed to make a $42.5 million interest payment on $1 billion in Eurobonds maturing in 2024, becoming the first African country to default on its debt obligations in the aftermath of COVID-19. Zambia's default highlights the fragmented nature of governance in sovereign debt markets. The Zambian default also underscores the continuing impact of colonial hangover in former colonies in Africa. Fragmented governance and colonial overhang create incentives for both debtors and creditors that contribute to cycles of sovereign debt. These cycles of debt pose a particular hazard to residents within countries that issue such debt. In African contexts, this has led to flows of funds for debt repayment that may significantly jeopardize the well-being of people who are already poor. Zambia's default also reflects the increasing need of African countries to navigate among different external actors, particularly China, which has given loans throughout Africa for varied projects, including infrastructure lending as part of its Belt and Road Initiative. The Zambian default draws attention to the significant amount of Eurobond debt African countries have incurred in recent years and the burdens that such debt may impose. The circumstances of Zambia's default, as well as recent disputes about external debt in Mozambique, reflect continuing issues about transparency and public scrutiny of sovereign debt transactions and the broader societal impact of debt internally within African countries and in relations between African countries and varied external powers.

This study contributes to the debate about the sustainability of Chinese loans in Africa. The literature suggests that economic growth is among other crucial debt dynamic indicators for assessing debt sustainability in the economy. However, this hypothesis has hardly been tested in the current case due to data ambiguities on Chinese loans to Africa. Following China Africa Research Initiative (CARI)'s initiative to ameliorate these data challenge, this study utilises CARI's dataset in a GMM panel VAR framework for the period (2000–2018) to explore the dynamic relations between Africa's growth and Chinese loans. The methodology is theoretically underpinned by the exogenous growth models that consider physical capital accumulation in the form of savings as a prime growth stimulus in the economy's production function. Thus, Chinese loans are typically viewed as physical capital input that directly adds to Africa's physical capital accumulation. It was found that Africa's growth responds positively to Chinese loans but only in the short run. In the long run, the effects of shocks to Chinese loans on Africa's growth phase out despite the inclusion of merchandise trade as a productivity factor in the model. The findings suggest that Chinese loans can boost Africa's growth through physical capital accumulation. Nonetheless, for growth to continue in the long run, these loans ought to be effectively invested in productive economic sectors that can generate productivity-enhancing economic incentives and enough savings for repayment. This initiative should be complemented by reforming institutions involved in acquiring, investing and servicing Chinese loans.

South African public debt has recently increased significantly and has reached worrying levels. This study aims to examine the debt threshold effects on economic growth in South Africa, with an objective of suggesting a debt threshold as South African policymakers will seek to reduce debt to a sustainable level in the coming years.

The study applies a recent novel methodology advanced by Hansen (2017) that allows modelling a regression kink with an unknown threshold.

The findings of this study indicate a robust debt threshold of 37% of gross domestic product (GDP). Below this threshold, debt is growth-enhancing, but above 37% of GDP, debt is harmful to growth in South Africa.

Among other things, to reduce the debt-to-GDP ratio, South Africa will need a fiscal consolidation policy by undertaking reforms to state-owned companies to reduce their reliance on public funds, as well as putting in place economic measures to boost long-term growth. The country should also improve tax collection in order to realize additional tax revenue through enhancing compliance and other revenue collection measures.

Most of the existing studies on debt threshold effects in Africa are panel data studies, which assume parameter homogeneity, by determining a single debt threshold value applicable to all countries. This can be misleading as the debt-growth nexus is country-specific, being conditional on several factors, such as institutional quality. The present study applies a recent novel methodology, which allows to model a regression kink with an unknown threshold, for the case of South Africa. The methodology endogenously determines the debt threshold while also allowing a country-specific analysis.

The World Bank report Changing Wealth of Nations 2018 is only the most recent reminder of how much poorer Africa is becoming, losing more than US$100 billion annually from minerals, oil, and gas extraction, according to (quite conservatively framed) environmentally sensitive adjustments of wealth. With popular opposition to socioeconomic, political, and ecological abuses rising rapidly in Africa, a robust debate may be useful: between those practicing anti-extractivist resistance, and those technocrats in states and international agencies who promote “ecological modernization” strategies. The latter typically aim to generate full-cost environmental accounting, and to do so they typically utilize market-related techniques to value, measure, and price nature. Between the grassroots and technocratic standpoints, a layer of Non-Governmental Organizations (NGOs) do not yet appear capable of grappling with anti-extractivist politics with either sufficient intellectual tools or political courage. They instead revert to easier terrains within ecological modernization: revenue transparency, project damage mitigation, Free Prior and Informed Consent (community consultation and permission), and other assimilationist reforms. More attention to political-economic and political-ecological trends – including the end of the commodity super-cycle, worsening climate change, financial turbulence and the potential end of a 40-year long globalization process – might assist anti-extractivist activists and NGO reformers alike. Both could then gravitate to broader, more effective ways of conceptualizing extraction and unequal ecological exchange, especially in Africa’s hardest hit and most extreme sites of devastation.

The purpose of this paper is to examine the effects of firm- and country-specific factors on the dynamics of capital structure for a new data set of firms in Sub-Saharan Africa.

Panel data estimation techniques are carried out on a set of 412 firms from 12 countries within Sub-Saharan Africa.

The results show that firm- and country-specific factors play an important role in the choice of debt for firms in Sub-Saharan Africa. First, firm profitability is the most common significant predictor of capital structure for firms in Sub-Saharan Africa. The significance and magnitude of profitability coefficients is more pronounced in countries with the least developed banking and stock markets and the weakest legal systems. Second, the rule of law in Nigeria and Zimbabwe provides avenues for firms in these countries to increase their debt maturity structures. The choice of debt for firms in Ghana is significantly influenced by the strength of the legal rights, the time to enforce a contract and the cost of contract enforcement. Third, capital structure adjustment speeds in all the sampled countries are relatively slow, possibly due to the market imperfections associated with the underdeveloped financial markets of Sub-Saharan Africa. Lastly, firms in the most developed stock markets of Sub-Saharan Africa tend to have lower mean debt ratios and faster capital structure adjustment speeds. Similarly, firms in countries with strong legal mechanisms tend to have higher mean long-term debt ratios and faster capital structure adjustment speeds.

This paper explores the influence of firm-level and country-specific factors on the dynamics of capital structure for a new data set that was previously ignored in the literature.

African countries inevitably take loans due to lack of fiscal space more so, due to the devastating effects of the coronavirus pandemic in Africa, several loans and bailouts are expected from the West. These loans come with conditions which have policy implications. This study aims at examining the impact of loans received by selected African countries from the International Monetary Fund (IMF) and World Bank during the period 1994 to 2020. The study makes use of a cross sectional panel data analysis and quantile regression models. Results indicate that IMF loans had a positively but insignificant impact on GDP whilst World Bank loans and debt service to export ratio negatively affect GDP. These finding suggest that loans are not a necessary evil in Africa but what matters is targeting debt towards growth priorities. This study recommends that policies should be put to direct the use of loans towards economic growth and sustainability in Africa.

The main goal of the study is to explore the long run relationship between public debt and domestic investment in West Africa. Essentially, a study of this nature is to proffer major inroads into addressing low investment levels plaguing the region and securing critical fiscal policy measures.

The study examines the long-run relationship between public debt and domestic investment in 13 West African countries between 1986 and 2018 with the use of Panel Dynamic Least Squares (DOLS) and Panel Fully Modified Least Squares (FMOLS), and causality test based on Toda and Yamamoto.

Public debt (% of GDP) and external debt stocks have an insignificant effect on domestic investment in the long run, suggesting the negligible effect of public debt on the level of investments in the region. Further evidence shows that domestic investment Granger causes public debt indicators, implying that there is unidirectional causality. This suggests that any investment-generation policy could engender a rise in public borrowing, although such public loans might not be effective when there is pervasive mismanagement of public funds, as public debts need to be well managed for ensuring improved investment.

The study suggests that maintaining a strong and effective debt-investment nexus requires fiscal consolidation efforts across countries, as such could lead to enhanced institutional capacity and sustainable investment-generation policy.

Since panel regression techniques used by the previous studies (Fixed and Random effects) could be susceptible to possible statistical errors due to endogeneity issue and might not be well suited for explaining long-run effect or capturing the part of investment sustainability, their conclusions could be misleading and remain untenable in West Africa' s context. Hence, the study adopts techniques (DOLS and FMOLS) which could account for endogeneity issue and provide better elucidations for long-term effects.

The management of external debt among highly indebted poor countries (HIPCs) in Africa still remains a challenge despite numerous packages and attempts to ameliorate the consequences of such odious debt. The purpose of this paper is to establish the factors that contribute to the growth rate of external debt and how these factors respond to shocks to external debt growth rate in Africa.

Data were obtained from 24 African countries and analyzed using a panel vector autoregression estimation methodology.

The study found that external debt growth rates respond positively to unit shock or changes in government investment spending, consumption spending, and domestic borrowings over a long period of time. In the medium term, external debt growth rates respond negatively to shocks in tax revenue, inflation, and output growth rates. The paper also provides empirical support that external debt may be consumed rather than invested among HIPCs in Africa.

The findings of this paper are limited to only HIPCs in Africa.

This study has some few debilitating implications for external debt management among HIPCs in Africa. First, the paper suggests that debt repayment may be a problem. This is largely because external debt is consumed rather than invested. External debt sustainability needs a holistic approach in less developed countries. The findings place much emphasis on improvements in gross domestic product and tax revenues as the principal routes out of the debt doldrums. However, this option must be exploited with great caution as there is ample evidence that these poor countries increase their external borrowing capacities with improvements in economic outlook.

This paper fills a research gap that identifies specific components of government deficit budgets that may be contributing to the growth rate of external debts among HIPCs.

The purpose of this study is to seek to re-examine the threshold effects of public debt on economic growth in Africa.

This study applies panel smooth transition regression approach advanced by González et al. (2017). The method allows for both heterogeneity as well as a smooth change of regression coefficients from one regime to another.

A debt threshold in the range of 62–66% is estimated for the whole sample. Low debt is found to be growth neutral but higher public debt is growth detrimental. For middle-income and resource-intensive countries, a debt threshold in the range of 58–63% is estimated. As part of robustness checks, a dynamic panel threshold model was also applied to deal with the endogeneity of debt, and a much higher debt threshold was estimated, at 74.3%. While low public debt is found to be either growth neutral or growth enhancing, high public debt is consistently detrimental to growth.

The findings of this study show that there is no single debt threshold applicable to all African countries, and confirm that the debt threshold level is sensitive to modeling choices. While further analysis is still needed to suggest a policy, the findings of this study show that high debt is detrimental to growth.

The novelty of this study is twofold. Contrary to previous studies on Africa, this study applies a different estimation technique which allows for heterogeneity and a smooth change of regression coefficients from one regime to another. Another novelty distinct from the previous studies is that, for robustness checks, this study divides the sample into low- and middle-income countries, and into resource- and nonresource intensive countries, as debt experience can differ among country groups. Further, as part of robustness checks, another estimation method is also applied in which the threshold variable (debt) is allowed to be endogenous.

Virtually, all countries in sub-Saharan Africa (perhaps with the exception of South Africa) have still not achieved the economic, social and political self-sufficiency that the pioneers of decolonization had envisaged by the closing years of the millennium. Despite the active presence of the World Bank (WB) and non-governmental organizations (NGOs) on the sub-region development scene, initial gains immediately after colonial rule have disappeared, resulting in economic and social stagnation and, in extreme cases, disintegration (Sierra Leone, Democratic Republic of Congo and Liberia). According to the United Nations Development Program (UNDP) (1996, 2000) in many post-colonial countries, real per capita Gross Domestic Product (GDP) has fallen and welfare gains achieved since independence in areas like food consumption, health and education have declined. As a whole, in sub-Saharan Africa, per capita incomes dropped by 21% in real terms between 1981 and 1989.¹ Madagascar and Mali now have per capita incomes of $799 and $753, down from $1,258 and $898 twenty-five years ago. In 16 other sub-Saharan countries per capita incomes were also lower in 1999 than in 1975.² Nearly one-quarter of the world's population, but nearly 42% of the population of sub-Saharan Africa, live on less than $1 a day. Levels of inequality have also increased dramatically worldwide. This phenomenon is vividly reflected in the well-known graphic presentation of the UNDP (1992) in Fig. 1.