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Africa's dependence on foreign debt 'quite serious'

Finance Minister Pravin Gordhan says Africa needs to work on creating capital markets on the continent.

FILE: Finance Minister Pravin Gordhan. Picture: Christa Eybers/EWN.

KIGALI - Finance Minister Pravin Gordhan says Africa's dependence on foreign debt is quite serious and the west is really the only place to borrow from.

He's speaking on a panel about financial markets at the World Economic Forum (WEF) Africa meeting in Rwanda.

Gordhan says the continent's dependence on foreign lenders is serious and one of the lessons of managing that debt is to keep foreign-denominated debt at around 10 percent.

WATCH: The challenges of doing business in Africa

He believes Africa needs to work on creating capital markets on the continent itself and he's encouraged leaders to create conditions for local currency bonds to become attractive for international investors.

The finance minister goes on to say that investors in Africa need to become far more aware of the political economies of the countries they're putting money into.

Meanwhile, Investec's Hendrick du Toit, who's speaking on the same panel, says some African policy makers are in denial about currency flexibility.

He says South Africa has coped well with the decline in the rand's value because of currency flexibility, which led to a boom in tourism.