By DARLINGTON CHILUBAIF loans were given on the basis of collateral, countries endowed with rich natural resources such as Zambia, Angola or the Democratic Republic of Congo (DRC), and others would borrow and never default on their loans.We would simply assign a particular copper or gold mine to a given lender on agreed conditions until the debt is repaid.Unfortunately, in the real world, lenders do not grant loans on the basis of collateral. Natural resources like copper are important just for the lenders to know how the country utilises its assets to earn revenue. This is the principal of liquidity or cash flow. It is a way of knowing how quickly the borrower can repay the loan with minimum challenges.Lenders – also known as creditors – need a way of predicting any challenges that might affect a country’s ability to repay their loans. This is why information is more important than collateral in high finance […]
CHANGE AND NATIONAL ECONOMIC MANAGEMENT
