The UN Conference on Trade and Development (UNCTAD) has raised important issues about the high cost of debt that African countries are made to carry because of a skewed international financial market system that favours Western nations to the detriment of Africa.

Its secretary-general, Rebeca Grynspan, pointed out that Africa is charged up to eight times more interest on loans compared to the US and up to four times more compared to European countries. This is largely attributed to negative ratings that rating agencies routinely assign African countries.

These factors, when combined, mean that African nations spend more on debt servicing than on important social services like health and education. In turn, this makes it even harder for Africa to compete favourably in global trade because it lacks the money to invest in building supply chains.

It is, therefore, important for multilateral lenders to review their debt policies towards African countries, and as UNCTAD has counseled, they should either write off the debts altogether or reduce the interest rates so that they are more sustainable.

Unless the international financial markets imbalances are addressed, there is no clear path for Africa to escape from the poverty trap and its poor citizens will continue taking risky boat rides trying to cross over to Europe. This trend is not sustainable. Something must give, and it should start with revising debt policies to reduce the burden for Africa and make it more equitable compared to other regions of the world.

Similarly, it is important for international businesses — and African governments — to create capacity for local value- and supply chains to grow and mature so that they can create more local jobs. As it is, Africa is a net exporter of raw material used in more developed markets to manufacture mobile phones and computers, produce energy, make tools and machines and generally drive those economies.

But because it sells these vital materials in their raw forms, Africa earns very little from this global trade that benefits manufacturers and distributors at the tail end of the supply chain. This is another trend that must stop. And it can only stop if African countries invest in value addition and supply chains that increase export of processed or semi-processed goods.