The New York Times recently published a letter jointly authored by Kenyan and Zambian presidents, the AU Commission Chair, the AfDB Group president, and the Global Centre on Adaptation Chief Executive, asking for a breather on Africa’s foreign debts.
In the letter published a day just before the IMF and World Bank gathering of finance ministers and central bank governors in Morocco, the first in Africa in 50 years, the authors argued that many African countries were likely to default on international debts and suffer more when that happens, hampering investment in essential sectors like health, education, renewable energy, and climate action.
That 23 of the more than 50 external debt defaulter countries in the last three years are African is not news. Rightly put, the nations are debt-burdened and suffering the aftermaths of the Covid-19 pandemic, rising energy and food prices, high-interest rates, and climate disasters, pushing them to more loans. The IMF just approved a $1.3 billion loan to Morocco, which suffered a devastating earthquake that killed thousands, for natural disaster preparedness.
One glaring issue is Africa’s debt repayments may hit $62 billion in 2023, exceeding an estimated $50 billion needed yearly for climate resilience investments, including on infrastructure.
The authors also outlined the inadequacy, discrimination and inefficiency of the nearly 80-year-old global financial system and said Africa is not asking for favours, as mechanisms, such as debt-for-nature swaps in Seychelles, have worked.
The nexus between Africa’s climate change and debt burden has been bold. In 2021, World Bank Group President David Malpass said the debt crisis had intensified in developing countries and sought a “comprehensive approach… to reduce debt, increase transparency, and facilitate swifter restructuring so countries can focus on spending that supports growth and reduces poverty.”
Head of UN Development Programme Achim Steiner spoke about it in 2022, during COP27, calling for the injection of “targeted liquidity into countries” for more investment in energy transitions and climate adaptation.
Many African countries spend more on servicing debt than addressing pressing development and climate change-related issues. According to the World Bank, by 2021, Sub-Saharan Africa’s total external debt stock (minus South Africa’s) was $591 billion. That year, Zambia spent nearly 30 per cent of its revenue servicing debt, while Ghana spent 46 per cent.
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Meanwhile, according to the Global Commission on Adaptation, an annual climate finance gap of $70 billion may hinder Africa from adapting to the impacts of climate change by 2030. While several fingers may point back at Africa on the responsibility to address climate and other crises, the one pointing at international actors demands funds for adaptation, mitigation, loss and damage, increased knowledge and technology transfer, clear reporting of what has been achieved, research and more, considering Africa’s least contribution to global warming. This one finger demands actions in recognition of Africa as a continent with special needs and a shift to more grants than loans, besides the break on loan interest payments.
The Marrakech meeting that ends tomorrow should, therefore, expedite debt renegotiation and get Africa at least a 10-year moratorium on loans’ interest payments. Creditors, including China, must participate in finding solutions to the debt crisis. In Kenya, for instance, we are already doing the necessary to enable global prosperity through local climate action.
Africa is not acting victim! It needs space to juggle development, climate extremes, food insecurity and health challenges. Let Africa breathe!
-The writer is an advocate of climate justice. @lynno16