Saharan Africa has arguably provided the most encouraging economic growth story of recent years with countries such as Ethiopia and Kenya developing strongly but also finding new ways to do technology. One of the more remarkable initiatives has been the growth of online banking using mobile phones. The fixed line networks in Africa have never been strong outside of urban centers. By using mobile technology, sub-Saharan countries have leapfrogged one stage in infrastructure development. While Nigeria struggles to recover from the long-term disfigurement of corruption and political ineptitude and as South Africa heads ever closer toward the same risk, many African countries are beginning to prosper thanks very often to government policies that encourage entrepreneurs to get on with new projects. In contrast to the early post-colonial days, there is now hardly any doctrinaire state intervention, no attempt at a communist-style command economics. But all is not quite as rosy as at first appears. Debt rating agencies have noted an alarming rise in the borrowings in sub-Saharan states. This year for the first time in a decade, the ratio of debt to a country's income, its Gross Domestic Product, passed 50 percent and according to the ratings agency Fitch is 53.3 percent and rising rapidly. The worry is that the scene is being set for another debt bubble which saw black Africa's debt pass 80 percent of GDP. The cost of servicing these borrowings became unmanageable and countries were defaulting on their loan repayments. The crisis was only fixed by the intervention of the IMF and World Bank which forced through a series of financial reforms in return for the extensive writing off of country debts. Thus the level of debt fell to a more comfortable and manageable 30 percent. The IMF in its role of financial policy policeman was not as prescriptive as it had been in the past, when it came to insisting on structural reforms. It had been widely criticized for making struggling countries jump through economic hoops, such as the imposition of tough austerity measures. Now it would seem certain to be in line for a new bout of criticism for not keeping a close enough watch on country borrowings. But of course the blame lies elsewhere. Governments that decide to borrow for grandiose projects are often more interested in the kudos they attract than the economic benefits. Local regulators and accountancy practices are often lax when it comes to checking corporate accounts to see if businesses can afford new loans. And then, of course, international suppliers are busy trying to win themselves business, and big contracts can attract big backhanders. Therefore, the temptation to over-specify and expand the scope of projects means that the level of borrowing required is inevitably boosted. And since very few big projects ever cost what they were first projected to cost, at certain points down the line, fresh borrowing will be needed to meet the increased project bill. But the culpability does not end there. If local and international bankers are doing their jobs properly, they would be able to assess the wisdom of a loan, not simply in relation to the project for which it is intended, but in the wider economic context of the country. Unfortunately, the urgent need to book new lending business often overrides sound credit decision, but perversely it is not the bankers who are blamed when their unwise loans go sour.
