Between 2015 and the present, Sub-Saharan Africa’s debt, as a ratio of GDP, has grown from 31,7 percent to 50,4 percent.
For SADC countries like Mozambique and Angola, that figure is as high as 118,9 percent and 106,8 percent. In simple terms, it means these countries owe more than what their economies generate annually.
Such figures have come to the fore within the context of Zambia’s charm offensive to get creditors to accept a deferment of payments of interests on the country’s debt until April next year.
With the economic downturn occasioned by the COVID-19 pandemic, this has been a problem brewing for months, and not just for Zambia but for almost every developing country.
If anything, decades of a multiplicity of factors incorporating skewed trade, foreign ownership of the means of economic production, under-investment in local industry, and a penchant for borrowing that can only be described as silly, have brought Africa to this point.
As far back as the 1980s, many voices tried to tell the world that many African countries were fast reaching a point where they would simply be unable to pay back the interest and the principle.
Every once in a while, an international lobby makes enough noise for there to be a largely cosmetic debt relief programme for the world’s poorest countries.
The creditors pat themselves on the back, the African politicians strut at election rallies like millennial messiahs, the media quickly lose interest, and … the countries fall back into unsustainable debt just quickly.
Of course, some countries learn that they need long spoons when supping with the devil. But for many, the reality of underdevelopment sucks them back into the vortex of borrowing and failing to pay.
Within the context of COVID-19, in April this year the G20 announced a suspension of bilateral debt payments for 73 of the world’s poorest countries until year-end.
Half of the countries that should benefit from the moratorium are in Africa.
It looks good on paper, and any relief is welcome.
But as Ethiopia’s Prime Minister, Abiy Ahmed, noted: “It should involve not just debt suspension but debt cancellation.”
Further, he said, a sustainable plan should outlive COVID-19 and should cover dues owed to commercial lenders.
Loes Debuysere of the Centre for European Policy Studies expounds on this perspective thus: “While debt cancellation in itself is not a silver bullet as it does not immediately tackle internal (ie corruption, poor governance) or external (ie inequitable world order) root causes of debt accumulation, it does free developing countries to spend more on healthcare, education and tackling poverty.
“This is particularly relevant today, as the coronavirus means that many African governments need to decide whether they channel their diminishing government resources to their lenders to avoid default or to meeting the vital health and economic needs of their population.”
She goes on: “Debt payments are in fact one of the reasons that Africa’s public health needs are so high in the first place: more than 30 African countries spent more on debt payment in 2019 than they did on public healthcare. The much criticised structural reforms that condition IMF and World Bank loans – some of which African governments still need to repay – have also hollowed out African healthcare institutions.”
Debuysere continues with the arguments that all African leaders should be making, but which are being left to too few individuals to articulate.
“Given that European countries, together with the US and Japan, dominate the governance and agenda-setting of the IMF and the World Bank, and thus bear responsibility for its failing policies, there is surely an argument for the EU and its member states to take the lead in cancelling Africa’s debt during the COVID-19 crisis.
“But Europe’s historical responsibility goes back even further. In fact, Africa’s debt crisis can be traced to the colonial period when major foreign trade defects, such as high export dependence and high concentration on a few commodities, became characteristic of Africa’s economy.
“These defects, a legacy of European colonialism, have laid the foundations of Africa’s debt crisis. If the EU, whose initial integration was deeply intertwined with the colonial project, and EU member states are genuine about fostering a more ambitious and equal partnership with Africa, they should use this momentum to pay back some of their own direct and indirect colonial debt through a debt jubilee for Africa.”
And then beyond that, there is need for a comprehensive review of these debts are accumulated in the first place.
Again, we turn to a Western think tank to enunciate the arguments we as Africans should be raising.
Vasuki Shastry and Jeremy Mark of the Atlantic Council say, “In addition, what is needed post-pandemic is an independent review of Eurobond and other contracts signed by African governments. These contracts are heavily skewed in favour of creditors, with no flexibility to deal with emergencies like a pandemic.”
For Africa to raise these arguments in a meaningful and persuasive manner, there has to be unity and clarity across the continent’s leadership.
Researcher Susan George (“Uses and Abuses of African Debt”) said, “One reason the cancer (of unsustainable debt) is metastasising is that African governments have never seriously sought to unite under a single debt-negotiating banner although they have had every reason to do so - and this is what bodies like the (African Union) are supposed to be for.
“This inability to arrive at a common stance has made it even easier for creditors to isolate and browbeat individual debtors when they take the Paris Club witness stand… The consequences of this failure are grave and have proved that disunity is a luxury Africa can ill afford.
“Many African governments still appear to be under the illusion that their countries are more important in the world scheme of things than they are. They also seem to believe that their legitimate concerns are genuinely taken into consideration by the industrialised countries.
“Sadly, neither is true. Yet many Africans, when told this bluntly by people who are basically on their side, still protest vehemently, insisting that they are important because the rich world cannot do without their raw materials and their cheap labour.”
George wrote that in 1992.
Twenty-eight years later, the people of the continent are still waiting for their leaders to make these compelling arguments in a unified and convincing manner.