Many African countries are concerned about international loans.
One of the most sensible economic advice we have heard in a while comes, believe it or not, from Matthew Parks, the spokesperson for the Congress of South African Trade Unions.
While there were those gushing about that the Global Gateway Investment Package announced by the European Union in Brussels last week – at a conference attended by President Cyril Ramaphosa – Parks pointed out that this is no magic medicine for South Africa.
He said the €12 billion (about R244 billion) package would contain a significant portion of soft loans or “blended finance” which, no matter how you spin it, means more debt for a country already wobbling under massive loan repayments.
So far, the Europeans have been vague about how much of that package will be in the form of non- repayable grants, but it will be less than 10% going on previous “strategic development” packages for countries in Africa.
Soft loans
There is no doubt, however, that even soft loans might act as a stimulus in the sectors of new energy, communications and pharmaceuticals, which are targeted by the package.
That should mean more jobs, which is something we badly need at the moment.
However, the point Parks made remains: beware of any gifts with strings attached.
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