Akinwumi Adesina called the deals bad and pointed to a bank initiative that helps countries renegotiate them. “The risk that one has with natural resource-backed loans, as far as I’m concerned, is that they are just bad, bad, and bad. First and foremost, because you can’t price the asset properly. If you have minerals, oil, metals, and gas under the ground, it’s not actually being marketed, so how you actually come up with a price of that for a long-term contract? It’s a challenge.” Linking future revenue from natural resource exports to loan paydowns is often touted as a way for recipients to get financing for infrastructure projects and for lenders to reduce the risk of not getting their money back.
SOURCE: AFRICA NEWS
