Since the start of the COVID-19 pandemic, which has caused a health, economic and social crisis in the world, various opinions have been expressed on the subject of the sovereign debt of African countries. While some advocate a moratorium, others suggest hic et nunc an outright cancellation. Promoting the latter would, in my humble opinion, be a way of perpetuating this eternal spirit of assistance with regard to our States, while the moratorium would send signals of a desire to respect our commitments vis-à-vis our donors. funds and would thus give respite to our economies while ensuring our reputation, in this context of global crisis. But beyond this passionate debate around the debt, this crisis offers us a great opportunity to revisit the financing model of our States and improve its functioning in order to accelerate economic, social, cultural and environmental development. of our states.

It is with great pleasure and particular interest that I read the latest contribution by Mr. Cédric Achille M'Beng MEZUI, published on May 26, 2020 in the magazine Financial Afrik, and entitled "Dare to pool sovereign debt: The case of Central and West Africa”. Indeed, it proposes the creation of a regional financial vehicle (SPV) whose mission will be to carry and refinance part of the internal and external debt of the States of the WAEMU zone and the CEMAC zone respectively. According to Mr. MEZUI, three specific results can be expected from such an approach:

• “A reprofiling of domestic debts by the repurchase of part of the short-maturity public securities against the issue of long-maturity securities, thus reducing debt service and leaving greater budgetary room for maneuver to our States.

• Exclusiveness in the raising of external funds on behalf of States for regional investment and industrialization projects.

• The rise of an asset class through the issuance of Project bonds or green bonds. »

This initiative is only conceivable, as Mr. MEZUI said so well, if certain prerequisites are respected, in particular the harmonization by our States of certain very specific convergence criteria. While welcoming this idea, I would like to point out that firstly, the pooling of our debts will not only go through the implementation of this convergence at the regional level, but also through respect for strict budgetary discipline at the domestic scale in each of the States involved which will undoubtedly have to be accompanied by a mechanism of coercion ensuring its implementation.

Let's dare the pooling of sovereign debts: the case of Central and West Africa

Secondly, the assembly of such a financial vehicle would leave me perplexed if the establishment of a federal and sovereign entity, which would bear the legal responsibility and the guarantees, is not materialized beforehand. Undoubtedly, this supranational entity will want to be independent and provide real budgetary prerogatives in order to encourage member states to undertake all the necessary reforms to broaden their tax bases, increase their customs revenues and fight effectively against corruption. .

Moreover, this debt pooling mechanism which, as suggested by Mr. MEZUI, would respond to regional problems clearly identified upstream (construction of infrastructure, industrialization, etc.) should in no case replace the financing strategy specific to each State, but rather to be superimposed on it so as not to eliminate the efforts already made by certain nations to improve their financial rating and raise funds on the international financial markets.

Finally and above all, the pooling of the sovereign debts of our States should at no time obstruct the need to initiate an in-depth process of sustainable reform of the public debt market within our unions. A reform which would be mainly centered on the systematization of borrowings by auction which would allow an optimization of the pricing and would facilitate the establishment of a real yield curve for sovereign and/or corporate bonds.

This reform would contribute to the depth and animation of the market but also to its attractiveness to major international investors, full players in the solutions to deal with this chronic problem of liquidity in our market.

It is clear that these different avenues of reflection on the financing of our economies have absolutely all their meaning in the current context. Although they are difficult to put into practice, it is not impossible to do so. Already, it remains essential to tackle the subject of debt by having a holistic approach and by incorporating the whole dimension of the sub-regional financial market as a whole. All these proposals open up real prospects for discussion, reflection and cooperation between state decision-makers, our development partners and market players who, it is hoped, will follow in the footsteps of the continent's intellectual class.

* About Stéphane Hie

Of Ivorian nationality, Stéphane Hie has fifteen years of experience in the financial sector acquired in asset and wealth management firms in the United States and Canada. Since 2016, he has been Head of Asset Management at SGI Hudson & Cie and has a particular interest in issues of financing economies in Sub-Saharan Africa.