Angola has written off a loan of $100 million (United States Dollars) it extended to Chad in 2017. According to Chad officials, the country failed to debt the loan in cash, forcing the two African nations to settle the debt with cattle.
The barter trade mode of the transaction had a resounding revival in the repayment of a 100 million united states dollar debt owed by Chad to Angola. The two African states agreed to settle the debt with Chad paying Angola in 75, 000 herd of cattle. This is a great approach adopted by the two African states as it clearly shows an advanced level of transacting.
This transaction fell through due to the trading nations being on the same continent that could relate better to the political climate they are facing.
During the civil war, Angola lost close to hundreds of its livestock including cattle. Furthermore, in some places, the country is affected by drought resulting in the death of multiple cattle.
Moreover, Chad is an oil-exporting country that is still trying to get its economy running. After oil-exporting the second largest export commodity for the African nation is cattle.
It is thus trite to note that Angola requires cattle, whilst Chad does not have much in money it has plenty of cattle. The transaction made sense for both nations as Chad would extinguish the debt it owes Angola and would later attain the needed cattle.
The debt is being extinguished by 75,000 cattle with each beast costing US$1,333.
This mode of the transaction shows a flexible business climate within the continent that needs to be nurtured and emulated by other nations. It is common cause that most African nations have vast natural resources from minerals to agriculture. It is prudent for African states to adopt a trading method which includes using the resources at their disposal for trade especially within the continent.
The adoption of such a trade method assists African countries because most of them are indebted to international financial institutions and other western nations. Quartz Africa reported that as of 26th March 2019 the Africa Eurobond debt passed 100billion after Ghana issued a 2.7 billion bond. It was reported that “unsettling is the rapid rate of increase in debt, rising debt servicing costs and the nature of the debt structure relative to the “highly indebted nations” years.
This clearly shows that African countries doe not have the money to service its debt. The continent needs to trade in raw materials and resources similarly to Angola and Chad. The countries in the given.
However, countries should identify a trading partner beforehand and not wait until they discover that they cannot pay a debt. There should be an identification of a country with an economy that makes money available easier and more frequent.
Such transactions assist nations in servicing their debts to eventually focus on growing their local industries and find their way out of the (developing country/ Third world country) bracket.
The model of transacting as shown by Chad and Angola is worth emulating and will prove extremely beneficial to most African countries if adopted within the continent.