Abebe Aemro Selassie on Africa’s brutal funding squeeze

IN RECENT weeks, as I have been travelling around Africa meeting ministers and central-bank governors, I was reminded of the teacher who taught his students about inequality by laying a $100 bill at the end of a running track. He told them to take two steps forward if they had access to education, another two steps if their mobile phone would not run out of credit, you get the picture. Some students found themselves with just a few feet to sprint to the bill. Others remained near the start line through no fault of their own.

A slowing global economy and tighter financing conditions have exacerbated the already challenging situation facing most developing countries—the running track is now longer and access to financing much more difficult. Better-off economies can rely on their hefty foreign-exchange reserves and deeper capital markets. But most African countries are being left on the starting blocks, shut off from finance in what the IMF is calling “the big funding squeeze”—by far the most acute such situation in decades.