Strategists want financial restructuring as debt distress strangles Africa
African countries are being challenged to strengthen the implementation of measures intended to reduce increasing public debt which is suffocating development programs on the continent.
The call has come at a time over 32 African nations are in debt distress with huge sums of money being directed towards debt servicing as opposed to investments in sectors such as health and education.
Current statistics indicate that debt on the continent has risen to 1.13 trillion US dollars, representing 374.80% increase in debt from the years 2000 to 2024.
The appeal was made during a journalists training from 35 African countries organized by the African Forum and Network on Debt and Development (AFROMED IV) held in Abidjan, Cote d’voire.
Addressing participants virtually, Jason Rosario Braganza, Executive Director for AFRODAD said the training was intended to empower African journalists with skills and knowledge to effectively report on matters relating to debt.
“It is important for journalists to investigate on debt to amplify the African voice and promote transparency and accountability in debt management,” Braganza said.
However, he said it was worrisome to note that over 30 African countries were in debt distress, a situation threatening the attainment of the Agenda 2063.
Besides, Shem Joshua Otieno, Policy Analyst and Advocacy Officer – Sovereign Debt Management for AFRODAD emphasized the need to restructure the global financial architecture for African Nations to reduce reliance on aid funding.
“It is important to champion a common African position on debt including special drawing rights and global debt architecture reform, shifting Africa from a rule taker to a rule maker.
“There is need to bring up the Africa central bank that will allow the continent to do inter-trade and provide alternatives for Africans to have their currency stabilized. Africa loses at least 80 billion dollars annually under illicit financial flaws, if we don’t have enough resources to grow our economies, Africa may not achieve the agenda 2063’. Otieno said.
According to him, focus must be on practical alternative solutions some of which were discussed last month at the Africa heads of state summit.
Among other solutions, Otieno stressed the need to promote responsible borrowing, enhanced participation in loan contraction processes, resource mobilization and securing concessional funding to address climate impacts.
In early 2000’s debt in Africa stood at 238 billion US dollars, however between 2019 and 2023 the debt to GDP ratio in most African countries has increased, a situation impeding implementation of development projects as a large sums of money are being directed towards debt servicing.
On the other hand Dr. Lyla Latif, Senior Legal adviser to the Ministry of Information Communications and the Digital Economy in Kenya challenged African nations to take charge of debt negotiation processes with development partners, arguing debt had purely become a business creature of contract law.
She said African nations are given high interest rates as well as binding terms that are one sided which creates a debt trap for most countries on the continent.
Also, Latif, stressed the need for citizenship participation to promote transparency and accountability in debt management in Africa.
She said1 citizens have the duty to hold government accountable on the purpose of the loan and demanding clarification on the interest rates charged on the loans obtained from development partners.
“Citizens need to make sure that government is responsible in terms of administering the loan, managing it and doing a cost and benefit analysis and that the loan addresses their present needs and also considers a sustainable future “Latif said.
She also empowered journalists to be vigilant when reporting on debt issues by focusing on key issues such as how much is the debt contracted for, its purpose , third party rights and contract dispute resolution processes.
In an earlier interview, Dr. Fadhel Kaboub, Senior Adviser for Power Shift Africa told MIJ Online that Africa’s external debt stems from three key areas of economic decencies, food, energy and manufacturing deficits.
He said the IMF and the World Bank have systematically contributed to deepening those structural traps by financing and mandating policies that prioritize investments in cash crops for export rather than core crop production to restore food sovereignty.
According to Kaboub, the policies neglect the deployment of renewables and deepen Africa’s position at the bottom of the value chain by forcing the continent to specialize in low value added manufacturing
Between 2019 and 2023, debt to GDP ratio has risen in most African countries with Egypt at 86%, Sudan 198%, Russia 83% and Morocco 70%. Also in Zambia, Mozambique and Democratic Republic of Congo, debt to GDP ratio has increased with over 100%.
Also, current statistics from the International Monetary Fund indicate a significant rise of Malawi’s pubic debt to 12.56 trillion kwacha as at end of November 2023, with the government currently implementing a debt restructuring program to solve the crisis.
Launched in 2021, the AFROMEDI media initiative aims at enhancing journalist existing knowledge and understanding of debt management and related issues and to increase media participation in the campaign for prudent debt management.
This year’s participants were drawn from 36 African countries including Malawi, Ethiopia, Burkina Faso , Burundi , Morocco , Kenya , Mozambique, Sudan , Tanzania, Togo and Nigeria.
