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Calls for African Debt Relief Facing Strong Headwinds

April 13, 2020 (EIRNS)—Efforts for a write-off of Africa’s continental debt began in mid-March, when Ethiopian Prime Minister Abiy Ahmed asked lenders to write off all interest payments for government loans.

“Ethiopia proposes part of the debt of low-income countries should be written off,” Abiy said. “We suggest the remaining debt be converted into long-term low-interest loans with a 10-year grace period before payment.”

On April 3, the African Union—now under the direction of South African President Cyril Ramaphosa—executive bureau held a meeting on the issue, “reiterating the need for rapid and concrete support as pledged” by the G20, and further urging the World Bank and the International Monetary Fund to “review their current disbursement policies,” in light of the current crisis. “The [AU] also echoed the call for a comprehensive stimulus package for Africa, including deferred payments, the immediate suspension of interest payments on Africa’s external public and private debt in order to create fiscal space for COVID-19 response measures.”

The only global media reporting on that call was Hong Kong’s South China Morning Post on April 3, writing that “African countries ... have called for $100 billion in bailouts and debt relief,” of which $44 billion would be a straight write-off. Reporting that the World Bank calculates that Africa’s total indebtedness at $584.3 billion, of which China is the largest holder with over $100 billion, SCMP states that China has already written off debt worth over $100 million, in addition to rescheduling Ethiopia’s $3.3 billion loan for the Grand Ethiopian Renaissance Dam from 10 to 30 years.

Since April 1, French President Emmanuel Macron has gotten involved with the effort, after a discussion with Ethiopian Prime Minister Abiy Ahmed. Now in touch with AU President Ramaphosa, the two are “approaching the IMF, the World Bank, other international banks and national governments to support the plan, which includes considerable health support as well as debt relief and concessional loans,” according the South African Daily Maverick news site.

On April 9, a separate call was issued from eight African financial notables, “Africa Needs Debt Relief To Fight COVID-19.” They were led by two scholars at the Brookings Institution, Ngozi Okonjo-Iweala, a former finance minister of Nigeria and Chairman of the Global Alliance Vaccines and Immunization (GAVI); and Brahima Coulibaly, a senior fellow and Director of the Africa Growth Initiative at Brookings.

Declaring that the UN had recently warned that Africa’s assistance needs could rise to $200 billion, the group urges immediately “a two-year standstill on all external-debt repayments, both interest and principal,” during which “the G20 should task the IMF and World Bank with undertaking a comprehensive debt-sustainability assessment and considering further debt restructuring.”

The involvement of former Crédit Suisse CEO Tidjane Thiam in the effort even got the attention of the London’s Financial Times, where Thiam is quick to point out that their call is for a “standstill,” not for a blanket “moratorium.”

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