WHO OWES WHO! African countries trapped in debt crisis as rich countries ignore obligations
A new report by ActionAid shows that African countries are in foreign debt crisis and distress forcing them to forego essential public services such as health, education, and climate action to service foreign debts owed to rich countries, private creditors, and global financial institutions.
Meanwhile, rich countries are not paying the climate debt of at least US$36 trillion that they owe to Africa and other debts for reparations, failed promises, and ongoing economic exploitation, the report reveals.
The report titled, ‘Who Owes Who? External Debts, Climate Debts and Reparations in the Jubilee Year,’ published in the week leading up to the AU Heads of State Summit in Addis Ababa, Ethiopia, includes a country-by-country breakdown of the climate debt owed to all low and lower-middle-income countries by rich polluting countries, especially for atmospheric appropriation.
It further analyzes Who Owes Who? Addresses reparations for the transatlantic slave trade and colonialism as well as payments that African countries are entitled to receive for continuing illicit financial flows, failed aid targets, surcharges, and the prejudice of credit rating agencies.
It also shows that unpaid debts owed to Africa far exceed the external debts that African nations are forced to pay.
According to the report, over three-quarters of all lower-income countries spend more on foreign debt than on their health systems and more than half spend more on debt servicing than education.
However, rich polluting countries owe low and lower-middle-income countries US$107 trillion in climate debt.
This is more than 70 times greater than the total foreign debt of US$1.45 trillion that lower-income countries collectively owe.
The new data also reveals that over 50 times more is owed to African countries by rich countries for polluting the atmosphere and triggering the climate crisis than is owed by Africans in total foreign debt.
“It is a travesty that African nations are being crushed under the weight of foreign debt, while the world’s richest countries continue to look the other way, evading their responsibility to pay for the climate crisis and reparations related to the slave trade and unfair economic practices,” ActionAid International Secretary General Arthur Larok said, commenting on the report.
Larok added; “By forcing countries to prioritize debt repayment over essential services such as health and education, or responding to the runaway climate crisis, the rich are pushing Africa to the brink.”
The Who Owes Who report states that in 2024, lower-income countries in Africa paid US$60 billion in debt repayments sacrificing health, education, people’s rights, and sustainable national development. This the report says has devastating impacts on the majority of people on the continent, particularly women, young people, and those on low incomes.
On the other hand, the data in the report shows that rich countries should be paying Africa twenty-five times more, at least US$1.4 trillion every year in climate finance.
“Servicing external debts and complying with conditions attached to IMF loans, is undermining spending on health, education, and climate action, particularly impacting women and girls. But rich countries get away without paying their debts to Africa. How is that fair” Chikumbutso Ngosi, ActionAid International Young Urban Women Programme Manager, said.
According to the report, the current situation is as a result of an unjust global credit rating system. For instance, the report says Africa is charged extortionate interest rates on loans compared to rich countries at an average of 9.8 percent in Africa, compared to the average of 0.8 percent for Germany.
The report shows that the year 2025 presents a real opportunity to align the international financial system to the challenges faced by low and lower-middle-income countries.
It says the African Union’s declaration that 2025 is the Year of Reparations presents an opportunity to stand up to both historical injustices and the continuing injustices that arise from colonial international financial architecture.
The report calls for the African Union and movements to prioritize the establishment of a new UN Framework Convention on Debt to replace the present unfair colonial architecture centered on the International Monetary Fund (IMF) and to unite to demand debt cancellation as part-payment of the climate debt and other reparations owed by rich countries.
“The reality is that for African countries to overcome the debt crisis and the impacts of climate change, there must be debt cancellation and a complete move away from colonial debt architecture that has burdened the continent for decades.
In this year of reparations, the African Union must ensure both debt cancellation and a new United Nations Framework Convention on Debt are agreed,” ActionAid Nigeria Executive Director Andrew Mamedu said.
“In this jubilee year, we need a fundamental overhaul of the global financial architecture, shifting the power over debt away from the IMF to a more representative and inclusive UN body,” ActionAid Zimbabwe Country Director Joy Mabenge added.
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