Why must sub-Saharan African governments pay so much to borrow money on capital markets? And are these costs justified?
A group of International Monetary Fund economists decided to get to the bottom of these questions so that governments will have the tools to more effectively raise the money they need to fund infrastructure, health systems, and job creation.
They found tangible concerns around risks in the region that explain why investors demand higher rates of return, and argue that reforms would go a long way toward lowering costs. Some African governments have at times claimed they are treated unfairly and that their actual risk is lower than the level perceived by credit rating agencies.