Credit Suisse chief executive Tidjane Thiam says it is “madness” for
African nations to rely on loans in foreign currencies to fund vital
infrastructure including roads, power and clean water.
Lenders in African nations must instead find domestic savings to
invest in local projects,
said the Ivory Coast-born banker who took
charge of Zurich-based Credit Suisse in June.
Mr. Thiam’s warning comes after countries on the continent where he
was born sold $11 billion of foreign-currency bonds in 2013 and a
further $8 billion last year, raising concerns among some analysts that a
new debt crisis may be developing.
The International Monetary Fund and the U.K.’s Overseas Development
Institute, an independent research group, have written about the risks
of African governments taking on too much debt. Borrowing costs “could
increase unexpectedly during periods of uncertainty,” the IMF said
earlier this year. “In particular, sub-Saharan African borrowing costs
are expected to increase as yields in U.S. bond markets start to climb.”
“I did a lot of infrastructure development in my life,” Mr. Thiam
said in a speech in London. “To fund them with foreign currency is
madness.”
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