High interest rates have made it impossible for Africa to pay back

[Caz4]

A lot of Africa's poverty is to do with the crippling debt it faces preventing it from economical developement.

Following the Arab-Israeli war there was a sharp rise in oil prices and governments in poor countries invested in profits from oil sales (petro dollars)in richer countries banks.

These banks offered loans at low interest rates to recycle their large reserves of petro dollars. Poorer (African) countries were encouraged to borrow to fund development but in the 1980s western countries faced recession and so tried to combat rising inflation with increasing interest rates.

The debt crisis and stunted development still exists because high interest rates have made it impossible for Africa to pay back.