​Sovereign bonds present African countries with relatively inexpensive new sources of external finance for economic growth. A once rare phenomenon, sovereign bond inflows to SSA were equivalent to 20% of aid and 12% of foreign direct investment in 2013. While such bonds can support economic growth and transformation, they carry currency risks, roll-over risks and greater macroeconomic volatility. It is time for both national and international governments and the international community to create an enabling environment for more and better bond flows for SSA, by tapering quantitative easing and enhancing liquidity in the bond market.

Dirk Willem te Velde