Apart from paying the normal interest rates other countries pay when they borrow from the international capital market, Ghana and other nations on the continent cough out an additional US$2.5billion to wealthy lenders yearly as ‘African risk premium’, Professor of Finance at the University of Ghana, Godfred Bokpin, has said.
“The fact is that every country goes to borrow. Countries like the USA, Japan and the rest are borrowing at a very low rate; but when Africa countries go to the market, in addition to what is normal – the equilibrium price, we have to pay something extra simply because of what is called the African risk premium,” he said.
Predatory lending as one of many reasons for Ghana’s ballooning debt, reflecting the excessive opportunism exhibited by wealthy lenders toward the continent.
Africa pays US$2.5bn yearly as risk premium from borrowing - The Business & Financial Times (thebftonline.com)
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