The Historical Origin of African Debt Crisis

Abstract

The literature about the origin of the African debt crisis lists a number of factors as its causes. The oil price shocks of 1973-74 and 1978-79, the expansion of the Eurodollar, a rise in public expenditure by African governments following rising commodity prices in the early 1970s, the recession in industrial countries and the subsequent commodity price fall, and a rise in real world interest rate are usually mentioned as major factors. Surprisingly, almost all the literature starts its analysis either in the early 1970s or, at best, after independence in the 1960s. The main argument in this paper is that one has to go beyond this period not only to adequately explain the current debt crisis, but also to propose its possible solution. The conclusion that emerges from such analysis is that the African debt problem is essentially a trade problem.


(Eastern Africa Social Science Research Review: 2003 19(1): 59-89)