The ruinous price for Africa of pernicious ‘perception premiums’

Financial charts over a map of Africa


The COVID-19 pandemic has aggravated one of the most important development challenges confronting Africa—the high cost of perception premiums. This paper argues for fairer financing rules to address the growth-crushing, default-driven rates that undermine the diversification of sources of growth and debt sustainability across the region. Fairer rules that equalize access to development financing at the global level will mitigate the risk of a divergent, two-speed recovery in the post-containment phase of the pandemic. They will also sustainably boost the supply of long-term financing to accelerate the process of structural transformation and reduce the unhealthy correlation in Africa between growth and commodity price cycles.

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