By Colleen Goko and Nqobile Dludla
JOHANNESBURG (Reuters) -African development banks should retain the same legal protections as global lenders like the International Monetary Fund when governments restructure debt, the head of Africa Finance Corporation said, as debate grows over their preferred creditor status.
With countries including Ghana and Zambia recently working through debt restructurings, some private creditors have argued that African lenders like Afreximbank and Trade and Development Bank should share in losses rather than keep the exemptions long enjoyed by multilateral institutions.
“Preferred creditor status is awarded by countries. And typically, countries make it a law of their country,” AFC CEO Samaila Zubairu said on the sidelines of G20 business meetings in South Africa.
“The African countries have insisted – the African Union actually has a position on this – they’ve insisted that the preferred status of African institutions must be maintained, and that it’s in the interest of African economies to ensure they strengthen, not weaken, the financial institutions which they set up for themselves,” he said.
Preferred creditors are typically repaid ahead of other lenders and enjoy legal immunities, enabling multilateral development banks to lend to high-risk markets at lower costs.
AFC is a multilateral lender whose shareholders include African governments and central banks, along with private financial institutions.
(Reporting by Colleen Goko and Nqobile Dludla; Editing by Kevin Buckland)
