RESOURCE-BACKED LOANS AND PUBLIC SECTOR COLLATERALISATION OF NATURAL RESOURCES IN AFRICAN COUNTRIES

The document examines resource-backed loans (RBLs) as a tool for financing infrastructure in resource-rich developing nations, particularly in Sub-Saharan Africa. While RBLs can unlock funding and reduce corruption by bypassing government control of funds through special purpose vehicles, they often lead to unsustainable debt, lack of transparency, and unfair terms that favour lenders. The brief recommends integrating RBLs into public procurement systems, increasing transparency, and utilizing expert negotiators to protect national interests.

• Resource-backed loans (RBLs) are complex financial arrangements where natural resources serve as a direct repayment source, a guarantee, or collateral. They often link two previously separate supply chains: infrastructure construction and resource extraction.
• Properly structured RBLs can mitigate corruption and the diversion of funds common in traditional sovereign loans by allocating funding directly to construction companies and using independent escrow accounts for debt servicing.
• RBLs can exacerbate debt sustainability issues by creating 'senior debt' that takes priority over other obligations, potentially marginalizing traditional lenders and increasing the risk of default on other debts.
• There is a strong correlation between the use of RBLs and poor governance; approximately two-thirds of these loans were granted to countries with failing or poor Resource Governance Index scores.
• A database of 52 RBLs reveals that Sub-Saharan Africa had a higher number of loans (30) than Latin America (22), but Latin America's loans had a higher total value (US$97.8 billion compared to Africa's US$65.8 billion).
• The document recommends that governments subject RBLs to standard public procurement systems, increase transparency by making contract terms public, and employ experts in legal, economic, and engineering analysis during negotiations.

APA

African Forum and Network on Debt and Development (n.d.). RESOURCE-BACKED LOANS AND PUBLIC SECTOR COLLATERALISATION OF NATURAL RESOURCES IN AFRICAN COUNTRIES. https://afrodad.org/sites/default/files/publications/Resource-Backed-Loans-and-Public-Sector-Collateralisation-of-Natural-Resources-in-African-Countries.pdf

Chicago

African Forum and Network on Debt and Development. RESOURCE-BACKED LOANS AND PUBLIC SECTOR COLLATERALISATION OF NATURAL RESOURCES IN AFRICAN COUNTRIES. n.d. https://afrodad.org/sites/default/files/publications/Resource-Backed-Loans-and-Public-Sector-Collateralisation-of-Natural-Resources-in-African-Countries.pdf.

Wikipedia

{{cite report |author=African Forum and Network on Debt and Development |title=RESOURCE-BACKED LOANS AND PUBLIC SECTOR COLLATERALISATION OF NATURAL RESOURCES IN AFRICAN COUNTRIES |url=https://afrodad.org/sites/default/files/publications/Resource-Backed-Loans-and-Public-Sector-Collateralisation-of-Natural-Resources-in-African-Countries.pdf |access-date=17 August 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{africanforumandnetworkondebtanddevelopmentndresourcebacked, author = {{African Forum and Network on Debt and Development}}, title = {{RESOURCE-BACKED LOANS AND PUBLIC SECTOR COLLATERALISATION OF NATURAL RESOURCES IN AFRICAN COUNTRIES}}, institution = {African Forum and Network on Debt and Development}, url = {https://afrodad.org/sites/default/files/publications/Resource-Backed-Loans-and-Public-Sector-Collateralisation-of-Natural-Resources-in-African-Countries.pdf}, urldate = {2026-08-17}, note = {Indexed by Climate Insights Directory} }