There are growing calls for international lenders to cancel or at least reschedule significant portions of Africa’s debt as economies one after another across the continent sink into recession as a result of the worsening COVID-19 outbreak. Earlier this month, Ethiopian Prime Minister Abiy Ahmed sounded the alarm when he called on international lenders to forgive African debt. He later received support from Senegalese President Macky Sall, South African President Cyril Ramaphosa, and even major creditors, including the World Bank and the International Monetary Fund.
What’s interesting, though, is that neither Prime Minister Abiy nor any of his counterparts directly addressed the Chinese in their appeals. Considering that China owns 20% of the debt in Africa and is the largest bilateral creditor in a number of the continent’s major economies, Beijing plays a disproportionately important role in this discussion.
China’s outsized role in the African debt issue highlights the fact that this is now a much more complicated issue than it was back in the day when there was just a small group of Western lenders, known as the Paris Club, which could make these decisions on its own. Today, Africans have borrowed extensively from private capital markets, the Chinese, and others, making it far more difficult for a small group of U.S. and European leaders to decide what to do independently.
Tim Jones is following the African debt relief issue closely in his role as the head of policy for the Jubilee Debt Campaign, a London-based NGO that advocates for debt relief and fair lending practices in developing countries. He joins Eric and Cobus to discuss the complexities involved in the current debt relief debate in Africa amid the ongoing COVID-19 pandemic.
