It is high time African governments became tougher when negotiating the terms of Eurobonds and commercial loans with foreign lenders and governments, as doing so will ensure that they get the most out of such arrangements.

According to analysis by the Africa Development Bank (AfDB), some external debts mature before the infrastructure projects they fund start generating returns – thus raising the refinancing risks for African states.

The short-term maturity of some of these debts, according to AfDB’s Akinwumi Adesina, do not also match the long-term revenue streams of governments. “You are going to have to pay back when you are not earning the money. These bonds or loans are oversubscribed because people see opportunities to make a killing.”

Mr. Adesina’s comments come at a time when African states have developed a strong taste for dollar and Eurobonds issuance in recent years. In most cases, some of the bonds or loans are oversubscribed.

While this signals that investors in developed nations have high hopes for the continent, it could lead to an increased debt burden on the African states, especially when the terms are not properly and diligently negotiated to yield maximum benefits for the borrower.

For instance, the continent’s sovereign issuance in the two currencies totalledUS$53billion in 2018 and 2019, according to data compiled by Bloomberg. Egypt, Angola, South Africa and Nigeria were the most prolific borrowers in that period. This has the tendency to cripple economies.

This year alone, Angola, Gabon and Ghana have tapped the Eurobond market. Ghana got around US$15billion of orders for US$3billion last month.

Additionally, some African borrowers have lengthened the maturity of their bonds. Ghana’s ideal included a 40-year tranche, the longest yet from sub-Saharan Africa.

Although Africa is in need of funds for its development, the rate and terms of borrowing and the sort of projects being pursued by some countries pose a real fiscal threat to their long-term development.