The Legal Protection of Developing Countries in Africa in International Loan Transactions

Abstract

Due to their poor economies and several other factors, most developing countries in Africa gladly take the option of international loan transactions to fund their annual budgets and execute capital projects that are expected to help foster the development of their country’s economy. This article evaluates the extent of legal protection available to developing countries in Africa when undertaking these international loans transactions. It considers whether or not there are sufficient clauses in these loan agreements to protect the interest and future of developing countries that take on these international loans, the financial aid given to these countries by international financial institutions (IFIs) and the collateral used to obtain these loans to know whether or not they outweigh the economic benefits of the Loan. This article appraised these international loan transactions and the international financial institutions that offer these loans to determine whether or not they have positively and adequately helped these developing countries as expected or as claimed. It observes that these international financial institutions have through these international loan transactions indeed taken giant steps to aid the economies of developing countries by providing them with financial aid when needed, however, the impact of these international loan transactions on the economies of developing countries have over time revealed that these international loan transactions are padded primarily with the interest of the developed and rich countries who are owners/shareholders of these International Financial institutions that offer these loans as they have critically employed steps, policies and clauses in the loan agreements that aim at solely protecting their own interest far above those of the developing countries who are helpless and in dire need of these funds. The article suggests ways developing countries can be legally protected when undertaking these international loan transactions and other viable options available to them.