Who holds African states' debt (4 of 4)
Spotlight on Burkina Faso, Mali and Niger
Our last spotlight of our mini-series is on three major landlocked countries in Western Africa; Burkina Faso, Mali and Niger.
The three countries share the same principal creditor; the World bank. But unlike the other countries we've highlighted in this series, Burkina Faso and Mali have the African development Bank (AfDB) among their top 3 creditor institutions. The three countries have not entered the eurobond markets as of 2021 but, as pictured in the two graphs below, have relied on multilateral institutions to fuel their economic development efforts.
Source: World Bank debtor reporting system
Other multilaterals* - Multilateral institutions other than the World Bank, IMF and African Development Bank. In the case of Western Africa, debt from the West African development and other regional institutions make up the total debt from other multilaterals.
Source: World Bank debtor reporting system
Although the three countries have ties with similar creditors; namely China, France and Saudi Arabia; their relationships with these nations often differ. The main outlier country in the graph above is Burkina Faso.
Burkina Faso has borrowed significantly less through official bilateral credits than Niger and Mali; however Burkina Faso has borrowed from external creditors just as much as Niger in total. According to 2019 World Bank data, Burkina Faso and Niger both have about $3.5 billion in total debt outstanding and disbursed.
Burkina Faso recognized Taiwan instead of the Popular Republic of China
Burkina Faso also owes much less to China than most countries in Western Africa. This low debt amount is mainly due to the country's relationship with China. Until 2018, when Burkina-Faso resumed cooperation with China, the country recognized Taiwan as a nation; choice that inherently blocks diplomatic relationships with the Popular Republic of China. It was one of the latest countries on the continent to recognize Taiwan until 2018. The relationship between Taiwan and Burkina Faso dates from 1994, when Burkina Faso was facing financial difficulties due to the West African Franc devaluation and a structural debt crisis that motivated its government to look for non-western partners.
Unlike Burkina Faso, Mali and Niger have very similar debt portfolios. They both collaborate mainly with China, France, India and Saudi Arabia. While the latest civil unrest in Mali will impact the country's ability to borrow but also reimburse its outstanding debt.
In Western Africa, only Benin, Ghana and Nigeria are not participating in the DSSI initiative (as of June 2021)
Burkina Faso, Mali and Niger; along with most countries in Western Africa; all requested debt assistance as part of the DSSI program. This program will allow them to suspend debt repayments to all G20 creditors for the later half of 2021. In Western Africa, only Benin, Ghana and Nigeria are not participating in this initiative (as of June 2021).
By Levi Kedowide, President @ TUKA Institute