Calls Mount for United Front to Tackle Africa's Deepening Debt Crisis
"The EU works for EU’s interests, the US works for US interest. Africa needs to work for Africa’s interest.”-Mavis Owusu-Gyamfi, ACET.
ADDIS ABABA, Ethiopia—Calls grew louder for concrete action to tackle the continent's escalating debt crisis, as African leaders gathered in Addis Ababa for the African Union Summit focusing on debt, writes Winston Mwale.
Speaking on Friday during a high-level briefing that had both virtual and physical attendance options available, economic experts urged African governments to move beyond rhetoric and jointly implement structural reforms critical to addressing debt burdens and reshaping global finance.
The press briefing on Africa’s debt crisis was attended by Jason Braganza, the Executive Director of AFRODAD, Hannah Ryder, the CEO of Development Reimagined, and Mavis Owusu-Gyamfi, the Executive Vice President of ACET (African Center for Economic Transformation).
Also present was Dr. Patrick Ndzana Olomo, the Acting Head of the Economic Policy and Research Division of the African Union Commission.
The session was moderated by Joab Okanda, a Senior Advocacy Advisor at Christian Aid.
Their collective insights and expertise contributed to a comprehensive discussion on the solutions to Africa’s debt crisis.
With now over 30 African countries facing high debt distress, with the crisis exacerbated by COVID-19, climate shocks and rising borrowing costs, the experts highlighted the urgent need to break free from ongoing structural deficiencies trapping nations in debt dependency.
Jason Braganza, the Executive Director of AFRODAD, emphasized the need for a unified and strategic approach to industrialization and manufacturing in Africa.
He said, “We need to encourage our leaders to take a coherent and coordinated approach to industrialization and manufacturing. This is a huge opportunity, especially as our economies are beginning to seek and secure financing.”
He also highlighted the current climate emergency and the discussions around resource allocation to support Africa’s transition from its current energy sources.
“Perhaps this is an opportunity to leverage some of that finance, to figure out how to use that finance to develop and structure, transform our economies,” he added.
Braganza further stressed the need to reassess the continent’s investment approach and recognize the wealth of resources available in Africa.
“We need to start taking stock of the wealth of resources that we have on the continent and make sure that we understand what value we are bringing to global trade, global investment, and global commerce,” he said.
He pointed out that many reports clearly state that Africa is a net creditor to the world.
“As the heads of state meet this weekend, these are the kind of things that they should keep in mind when they are rethinking how to negotiate their investment programs and leveraging financing into the continent,” he said.
Mavis Owusu-Gyamfi, the Vice President of the African Center for Economic Transformation (ACET), highlighted the need for an overhaul of the global financial architecture that was established 80 years ago.
She said, “When they were set up, most countries on this continent were colonies. So when you think about that system, and you think about the fact that over the past 80 years, there’s been lots of tweaks to that system, rather than a major overhaul, it’s understandable why the world is asking for the financial architecture to be overhauled.”
She pointed out the intersectional challenges that the world is currently facing and the need for a comprehensive approach to financing.
“The days when you could build a health program or finance a health program and feel comfortable is gone. The pandemic has shown us. You can’t just finance a health program. The pandemic has shown us you can’t just finance a gender program. You really need to think about the interlinkages the world is navigating now is extremely complex,” she said.
Owusu-Gyamfi also emphasized the need for better and fairer money, institutional reform, and a voice for Africa.
“We need more and fairer IDA (International Development Association). And I think given how much Africa has given to the world thus far, requesting that the world gives us something back in the form of a much better replenished IDA (International Development Association) is not a bad thing,” she said.
She further stressed the need for the recycling of SDRs (Special Drawing Rights) and the importance of green finance.
“Green finance is not about necessarily saying to us, we’re not going to invest in anything to do with gas. It’s about building green value chains, okay? And Africa could be a real net contributor to our global climate challenge if the world works with us to invest in green value chains,” she said.
Hannah Ryder, the CEO of Development Reimagined, emphasized the need for global support in addressing Africa’s financial challenges.
She said, “This is an issue where African governments, we need a lot from the rest of the world, simple as that. While we can do a lot ourselves, and many governments are trying to do a lot, there’s a lot more that we can do domestically in things like having an industrial strategy.”
She pointed out the changes in the world, such as the green aspects, and the need for Africa to adapt to these changes.
“Some things have changed in the world, things like the green aspects and so on, in which we do need to take that into account and find our way to try to kind of make the most of what those things are that have changed,” she said.
Ryder also highlighted the unchanged structure of the global financial architecture and the need for its overhaul.
“The way that the world functions in terms of the global financial architecture is not good enough to meet those kinds of needs,” she said.
She further stressed the need for external finance to meet the infrastructure needs of African countries.
Dr. Patrick Ndzana Olomo, the Acting Head of the Economic Policy and Research Division at the Department of Economic Affairs of the African Union Commission, called for the need for Africa to move forward and engage firmly in the transformative process required to achieve growth.
He said, “We are at a shifting point where there is no other option than only moving forward and making sure that the continent is engaged firmly in the transformative process that is required to achieve the growth we need.”
He highlighted the relevance of the summit as a critical continental moment where leaders will gather to take decisive decisions.
“The relevance of the summit is one of the critical continental moment where our leaders will gather here in Addis Ababa to take decisive decisions, important decisions that are going to pave the way to the stronger continent that we are looking forward into perspective,” he said.
Dr. Olomo also stressed the importance of education, science, technology, innovation as critical enablers to build advantages of the African continent.
“When we talk about education, science, technology, innovation, these are critical enablers to make sure that we are able to build advantages of the African continent, Free Trade area, which is one of the larger market in the world today,” he said.
He further emphasized the need for Africa to industrialize and take advantage of the resources available in the continent.
“The resources that are needed to accelerate transformative processes globally, those resources are actually available in Africa. And the fact that we are not able to industrialize and to take advantage of those resources is the source of our problems,” he said.
Braganza, stressed the importance of not getting caught up in traps that keep Africa at the lower end of the global value and supply chain.
He said, “It’s important for us to not get caught up in these traps. And as you say, all of them are being used or being developed under the guise of the climate emergency, in particular as a way of keeping the African continent and keeping us at this very low end of the global value and supply chain.”
He highlighted the need for a coherent and coordinated position that talks about the ineffectiveness of these institutions and processes.
“We must not fall also into the trap of siloing these issues because there are significant intersections that exist. If you solve Illicit financial flows and you’re still exporting flowers, you’re going to be in the same position. If you provide debt cancellation and you’re still exporting copper ore, you’re going to be in the same position,” he said.
Braganza also emphasized the need for reform and change in the global trade.
“I hope also the ministers of trade, buoyed by the membership of the G21, will take a very strong message to Abu Dhabi about also having to reform and change the way in the global trade,” he said.
Owusu-Gyamfi emphasized the need for Africa to work for its own interests and not be distracted by the interests of other regions and countries.
She said, “As Africa, we need to acknowledge that other sub regions and other countries have their own interests. The EU works for EU’s interests, the US works for US interest. Africa needs to work for Africa’s interest.”
She highlighted the need for Africa to focus on unity and transformation.
“Our number one priority should focus on Africa and pushing our governments to stop talking about Africa unity and start acting for Africa unity,” she said.
Owusu-Gyamfi also pointed out the problems in Africa’s production and trade systems.
“Do you know that as a continent, our largest cost on production is actually on inputs. The influence we buy. So the machinery we use, the sugar we process, the this sugar we buy. But the irony of it is, if you are producing chocolate in West Africa, you buy solids in West Africa, you import milk from Europe,” she said.
She further stressed the need for Africa’s integration and unity to be at the heart of their agenda.
“And at the heart of our agenda should be Africa’s integration, Africa’s unity. That should be our north star. And whatever we negotiate should get us to doing that; so that we truly transform and deal with the structural challenges that we’re talking about,” she said.
Ryder emphasized the need for a healthy skepticism of different initiatives and the importance of thinking about African positions without being constrained by others’ interests or the way the system currently works.
She said, “Let’s have a healthy skepticism of these different initiatives. Yes, some of them can be helpful in and of themselves, but also remember sometimes that some of them are also in some ways papering over or in some ways saying, well, we can’t deal with this big issue, so why don’t we just try and do something small here which seems more feasible?”
She highlighted the need for a mindset shift and the importance of designing things from scratch.
“We need to get into the mindset of thinking about our position, African positions, where we are not constrained by what others’ interests are and that we’re not constrained by the way the system works,” she said.
Ryder also stressed the need for reform in the IMF quotas.
“If you’re thinking about if we were designing that from scratch, what would the quotas look like? They would look very different. We wouldn’t just have less than 5% of IMF quotas. We would have a much larger amount and therefore not just have access to those resources, but also be able to direct the way that IMF works,” she said.
Dr. Olomo, the Acting Head of the Economic Policy and Research Division at the Department of Economic Affairs of the African Union Commission, emphasized that development is not a technical issue, but a human problem.
He said, “Our development is not a technical issue. It’s a human problem. If you place people at the center of your priorities, you are sure that you will certainly achieve the transformative process that you are aiming to.”
He highlighted the importance of education that allows people to unlock their individual possibilities.
“What type of education should we have? Is it just education in certificates that are not giving the possibility to people to unlock their individual possibilities?” he asked.
Dr. Olomo also stressed the need for Africa to understand that it is on its own and that the stories of the big continental version supported by external forces never happened.
“We have to be quite clear on that. In the darkness of our problems, we have to find the light that will lead us to success,” he said.
He further emphasized that distractions, the groups that are created, and all those should never distract Africa from its path to prosperity.
“Because out of that, we have decided to follow, we have said we are leading our continent to prosperity. That is the only option and there is no other option,” he said.
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Friday's briefing organized by AFRODAD and Christian Aid highlighted the multifaceted challenges Africa faces in its quest for self-sufficiency and sustainability.
It outlined potential remedies centered on regional integration, industrialization, technology adoption and securing the continent's rightful place in global finance.
The urgent tone reflected accelerated calls for African unity and collective action to drive the reforms necessary for prospering in an unjust world order.
With developing countries facing declining assistance from traditional western partners, experts emphasize the need for African governments to rely first on themselves and each other.