Crippling African debt speaks to a global system that’s tainted by inequality

WEF Unedited – here is a large snip:

Speaking on the Reigniting Growth in Africapanel at the World Economic Forum’s Annual Meeting 2023, economist and Chairwoman of the Board of the Liquidity & Sustainability Facility, Vera Songwe said that for Africa, the polycrisis has four faces – conflict, climate, COVID-19 and the cost of living. 

African countries must advance on these four fronts to regain and surpass previous development records. To do so, there must be a level of austerity. Patrick Njoroge, former governor of Kenya’s central bank, said African governments must learn to live within their means because borrowing costs are high and debt levels are rising

Indeed, the debt question was raised in several discussions around Africa’s growth trajectory. Speaking during the Realizing Africa’s Centurysession, UNAIDS Chief Winnie Byanyima said that some African countries are paying two times more in debt repayments than their total budget for education, and four times more in debt repayments than their total budgets for health. She suggested that new solutions need to be found for this old problem.

“Debt is choking many countries, and it is urgent that it is resolved through a system that is better than the current framework. They need a multilateral, legal framework so that they can negotiate their loans and access the fiscal space they need to grow.” 

This crippling debt speaks to a global system that is tainted by inequality. In unpacking the disparities between developed and developing countries, Byanyima referenced the vaccine inequity that slowed international efforts to contain the COVID-19 pandemic. 

Najla Bouden, Tunisia’s first female prime minister, also cited the pandemic as an ‘imported crisis’ that African countries continue to deal with, among a number of other challenges. 

<b>Finding solutions</b>

For the Tunisian premier, taking charge starts with investing in people. Bouden said that Africa’s biggest potential is in its youth and its children. She highlighted Aspiration 6 of the African Union’s Agenda 2063, which envisions an Africa, “whose development is people-driven, relying on the potential of African people, especially its women and youth, and caring for children”. 

Bouden said that African women and young people must be encouraged to become start-up entrepreneurs and supported through capacity building. In a similar sentiment, Byanyima said that Africans must become self-reliant by building businesses, creating local markets and selling local products at competitive prices. 

In relation to local markets and products, Songwe, who spoke on Reigniting Growth in Africapanel, said that a lot of the global supply chains start on our continent and can finish on our continent, but only if African countries take steps to transform their raw materials into finished goods on the continent. Songwe said this would create jobs, add value, and deepen Africa’s involvement in global trade.

In a similar vein, Njoroge, a former central bank governor, suggested a ban on exporting certain raw materials to support the local manufacture of essential goods. This, he said, would circumvent global supply chain bottlenecks. Nonkululeko Nyembezi, independent, non-executive chairman of the Standard Bank Group, agreed, saying that Africa would be well on its way if governments extracted all of the cobalt and copper and nickel that the new green economy needs. She added, however, that in the short term, Africa would have to increase emissions.

Speaking on climate change, mitigation and adaptation, Njoroge pointed to role of solar and other renewable energies in reducing greenhouse gas emissions. On her part, Nyembezi, said that the world would only slay the climate change dragon through private/public partnership, but the world would have to be patient with Africa in the global pathway to net zero because to get to green, the continent will need fossil fuels. 

Bouden reinforced the fact that African counties need to become more climate resilient by embracing an energy mix that includes solar, wind and geothermal energy. 

<b>Hope for the future</b>

Speaking during the Realizing Africa’s Century session,Imtiaz Patel, chairman of MultiChoice Group Services, said that there is still much to be hopeful about when thinking about the future of Africa. He spoke about Africa’s young, ambitious and tech-savvy population, its fast-growing middle class, large and diverse market for goods and services, and the plus side of rapid urbanization.

Going forward, even as African governments take a stronger hold on their affairs, the role of public/private partnerships in Africa’s sustained development cannot be diminished. Alain Berset, President of the Swiss Confederation 2023 and Federal Councillor of Home Affairs, who was invited to sit on the panel described the ways in which Switzerland is partnering with Africa in health, education and blockchain technology.

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