Navigating Uncertainty: Patrick Njoroge on Debt, Growth, and the Future of Africa’s Economies

Thank you for having me at the show.

I just loved it. This is a space that I think I benefited from greatly. Yeah. And I think that one of my favorite things about the conference in general, like the whole Milken conference, other than that, is some of the people that you get to meet. Like some of the people that you get to meet that you wouldn't like you meet them from all around the world. You meet different things, different niches and the context and I know this is your first time going so you probably already noticed when you're there. I know you've been to many of the other conferences IMF and all the other like big big conferences but this one has kind of like to me a little bit of a collegial feel like year after year you'll see some of the same people second year, third year after a while I like say first year you go it's you know eyes wide open and by third or fourth year you're family. I don't know that's just my culture. I look forward to that. You know, I look forward to the next edition of it and uh you know maybe by then I'll have had also maybe matured my thinking about some of the topics that were not really front and center of my conversations this year.

Okay, Adam, that's a big one. That's a big question to open with. I know that's a big one but that's okay. I think first to appreciate this I think there are several types of shocks and I think the way to look at it is we have just recovered or we had been recovering from the COVID type shocks and then along with other countries in the world. Africa has had multiple external and internal shocks that have in some sense imperiled the recovery but also may cost may create a sort of a reversal the gains that we had seen over the last two decades. So what are these shocks and I begin with the external first of course the rising trade tensions um that has been around of course we have seen a lot of development of that discussions but I think that is front and center all the concerns that anybody has at the even at the m conference this was the big item now of course around that you have a lot of other uncertainties and somebody said you know the level of uncertainty has is completely unprecedented. So not only on trade but also for in the US the issue of the fiscal stance. Now of course we have the new big bill that is going through the various approval processes and then of course deregulation and the big one that we have seen more recently is immigration. Now those items obviously relate to the US particularly but not only the US because the US is a key player is really the most important economy or driver of the global economy. So that's so that's one set of shocks. Then of course you have the geopolitics and this has worsened over the last month as you can imagine the conflicts that we had seen. We've seen Ukraine, we've seen Gaza, but now we have Iran and the potential of worse, you know, a world war, whatever else it is. So that is a big one. There's also the at this moment or at this time the African nations are facing what I'll call exorbitant terms from the capital markets. So they unable to borrow at you know appropriate terms and that we can discuss what that causes that. The point is that these are pressures that obviously apply to most countries around the world but they fall disproportionately hard on the developing countries and in particular Africa. So that is one set of issues. Secondly we have the issues of domestic shocks right in the African countries and one of this of course is the limited fiscal space that we have seen. and they have limited room for maneuver. But at the same time, there's the other issue of the debt crisis that has emerged. 2024 was the costliest year in in more than three decades. Actually, you need to go back way back before even hippic of sessions etc. to get the same level of debt service that the debt service burden in our countries. Now it is a crisis. Why? because it has pushed out the expenses on let's say or the government the possibilities of spending on health and education. So more than half the countries in Africa are spending more on debt external debt payments than they do on health and education. That is a major issue.