Debt Data

We reiterate our position that African countries did not take part in designing the current international financial architecture, embedded in their historical subjugation. Resultantly, as highlighted by the President of Ghana, Nana Akufo-Addo, it is “skewed significantly against developing and emerging economies” in favor of rich countries. A reform of the governance structure of the Bretton Woods institutions is required as a significant step towards recognizing African countries and citizens as rule makers in the re-design of the international financial and debt architecture.

AfSDJN & FES-Addis Civil Society Forum Focusing on Sovereign Debt Alongside March 2021 AU Ministers of Finance, Planning and Economic Development Conference

In the meantime, since the re-entry of Mozambique into the international debt markets may take time, the poor communities may not have the wherewithal to survive that long.  So, what is the last piece of the puzzle? An IMF arrangement with conditionalities? What conditionalities? My next piece intends to consider this.

We recognise that the current proposal is limited in resolving the longer-term debt burden of developing countries. The stay of enforcement does not introduce any changes in the substantive obligations contracted by the parties. Thus, the standstill will only temporarily suspend the execution and enforcement of eligible financial obligations during the designated period. Meanwhile, interest on the principal will continue to accrue. The proposal is also meant to be used as a ‘shield’ rather than a ‘sword’, i.e. the stay will only be triggered as a defence by the sovereign debtor in the event of a claim against it by a private creditor.

The Mozambican case of odious debt is an illustration of several similar cases around the world whereby consultants from multinational corporations identify development countries with something of value, such as minerals, and persuade the authorities of these countries to secretly take on huge development loans with banks. In most cases, the money never reaches the countries. Rather, the money is transferred directly from the banks to contractors and the countries are then left with massive debts. Resources and companies from developing countries are given as collaterals for these loans. Therefore, the resources that countries should use to invest in development are transferred to service these odious debts. In summary, this is what happened in Mozambique.

On May 8, 2020, the Mozambique Constitutional Council decided that non-concessional loans totaling 622 million USD borrowed from two London-based banks – Credit Suisse and Russian VTB - was illegal, null and void. The Mozambican borrowers were three State Owned Enterprises that at the time did not been formally constituted. The basis of the Constitutional Council’s decision was that this loan was obtained without approval of Parliament. Further, the Council held that amount was in excess of the borrowing limit permissible under the Constitution and laws of Mozambique.

IDLU is pleased to invite academics, researchers, industry experts, policymakers, and officials in civil society organizations and international organizations to submit abstracts for papers to be presented at the conference and included in an e-book on sovereign debt in Africa.

The COVID-19 crisis is likely to make countries in the global south accumulate more debt in a global economic environment where repayment of current debt will be difficult. The speech by Thomas Sankara on the morality of debt repayment asks us very difficult questions which humanity must collectively confront if debt crises are to become relics of past economics. The collective inability by the global south to assert itself on negotiating tables and to recreate itself in the aftermath of various global crises has been a sad misuse of crises.

As the Covid-19 disrupts life as we know it globally and nationally, it will test to the core the ability of the state to defend its citizens from experiencing the most holistic crisis we have ever faced as a country. Kenya has lived through curfews, food shortages, economic difficulties but all at different stages and periods. With growth prospects reduced, lower than expected tax revenues, and Kenya’s debt to GDP levels is already in the doldrums.