African countries’ inadequate access to debt relief and scarce resources is a recipe for social unrest, United Nations Secretary-General Antonio Guterres said on Thursday, proposing fresh reforms to the international financial architecture.
A growing debt crisis across the 1 billion-strong continent has seen a conflagration of civil unrest in recent months, after protests in Kenya, where police clashed with demonstrators rallying against proposed tax hikes, inspired people to take to the streets in Nigeria and Uganda over the cost of living.
Challenges with Debt Reconstruction
African nations have been attempting to reconstruct their debts using a restructuring framework established by the G20 called ‘Common Framework.’ However, the initiative has not accelerated discussions among a wide range of stakeholders, including Chinese state-owned banks, London-based asset managers, and New York banks, as anticipated.
Zambia in June became the first country to successfully restructure its debt through the scheme, more than three years after it defaulted on its loans.
Guterres told a major China-Africa Cooperation Summit in Beijing that Africa’s debt “situation is unsustainable and a recipe for social unrest”.
“They have no access to effective debt relief, scarce resources, and clearly insufficient concessional funding to respond to the basic needs of their population,” he said.
Guterres proposed “deep reforms to the outdated, ineffective and unfair international financial architecture” and further stimulus “to provide developing countries with the liquidity they need while seeking medium- and long-term solutions.”
China’s Economic Support to Africa
Beijing, the world’s biggest bilateral lender, is hosting 50 African nations for the ninth Forum on China-Africa Cooperation Summit this week, at which China’s President Xi Jinping pledged 360 billion yuan ($50.70 billion) in fresh financing to the continent over the next three years.
China approved loans worth $4.61 billion to Africa last year, the first annual increase since 2016.
Guterres praised China’s initiatives across Africa and said they could drive a “renewable energy revolution” and “be a catalyst for key transitions on food systems and digital connectivity.”
Angola’s finance minister on Tuesday told Reuters that Luanda was considering proposals from Beijing, Brussels and elsewhere, with a view to quickly securing funds to help bring down inflation and do more through public-private partnerships.
($1 = 7.1005 Chinese yuan renminbi)
(With inputs from Reuters)
