KARIBA- A pan African organization has called for cancellation of debt obligations for low income counties as the debt conundrum pushes the region, reeling from direct economic shocks of Covid 19, on the brink of debt distress.
Jason Braganza executive director of African Forum and Network on Debt and Development (AFRODAD), which lobbies and advocates for debt cancellation in Africa, says there is need to cancel debt, underpinned by harsh terms and conditions negotiated with creditors.
Braganza was speaking at the start of a weeklong 6th edition of a Summer School focused on leveraging on the extractive sector for improved domestic resource mobilisation in Africa.
He said there was need to rid Africa of the albatross of the global architecture operates which is extremely extractive, focusing on repatriation of profits to the global north and leaves very little as tax revenue.
Braganza said the ability to reach a sustainable solution to the impending debt crisis is undermined by this unsustainable debt burden in the region, hence cancellation would spur development across the region.
Zimbabwe’s potential to leverage on vast mineral resources and demographic dividend being realized is muzzled by a growing public debt, which according to IMF and GoZ USD 18 billion is translating to about 86% of the GDP.
“Without debt cancelation we don’t see the continent being able to avoid a very severe crisis.
“At present the pandemic is pushing many countries in Africa towards the debt cliff edge, we stand to regress significantly economically and socially,” he said.
Braganza said the sustainable global solution should bring all creditors including bilateral, multilateral, and private creditors, to discuss debt relief and ultimately debt cancellation.
He said debt agreements should have protection clauses that cater for unplanned constrains like the Covid-19 pandemic, also known as “Force Majuer”, to provide relief to low income countries.
“As African governments we have been borrowing a lot from the private sector but the terms of borrowing are very hard and they don’t want to sit on the table and negotiate a debt relief.
“…we must continue to push and advocate for the private creditors to come to the negotiating table and negotiate a sustainable debt restructuring programme,” he said.
SADC countries are also facing increasing internal and external unsustainable debt, which reduces social expenditure and fuels inequality. Debt distress ratings are deteriorating from low to high risk for countries like Zambia, DRC and Mozambique.
This has been compounded by the COVID19 economic shock.
Mines and Minerals Development Portfolio Committee chair Edmund Mukaratigwa speaking at the same event, said despite the unsustainable debt overhang, government in the 2021 budget still reveals willingness to indulge in debt.
He bemoaned unsustainable national debt service interest bill, which he said was stifling economic growth and revenue generation by central government, has forced government to heavily tax citizens.
“We are investing in taxing our people and investors, and inhibiting significant local growth because of what has already been consumed and secured long gone interests.
“Africa has spiraling poverty levels coupled with less supportive environments for more durable and sustainable poverty reduction levers for its poor people.
“We have always attributed more capitalization as the panacea to our development challenge but our internal and external loans are not sustainably performing and thus, we have a ballooning debt,” said Mukaratigwa.
The summer school draws participants from across Africa in government civic society, media with an aim to enhance knowledge of participants on prudent debt management, domestic resources mobilisation and privatization, said Rangarirai Chikova.
Chikova head of AFRODAD domestic resource mobilisation portfolio, challenged participants to use knowledge gleaned to critique their governments’ on debt, domestic resource mobilisation and foreign aid.
“These events bring together government officials, parliamentarians, civil society actors, faith leaders and the media, with the overall aim to contribute to the development and implementation of transparent, accountable and efficient mechanisms for the mobilization and utilization of both domestic and external financial resources in Africa,” he said.
