The call comes months after African Union leaders adopted the Common African Position on Debt, which seeks to strengthen Africa’s collective hand in debt negotiations and push for changes to the global financial system.
Africa must turn its natural resources, market size and technological capacity into bargaining power to secure a stronger voice in the global financial system, experts said on Wednesday at the sixth African Conference on Debt and Development (AfCoDD VI) in Nairobi, Kenya.
The experts said Africa’s debt burden was not simply a question of how much governments borrow or how they repay their loans. They stated that the problem was also compounded by revenue lost through illicit financial flows, poor returns from natural resources and gaps in the information governments need to negotiate effectively with creditors.
The call comes months after African Union leaders adopted the Common African Position on Debt, which seeks to strengthen Africa’s collective hand in debt negotiations and push for changes to the global financial system.
The issue featured prominently in Nairobi as debt experts, policymakers, civil society organisations and technology specialists examined the factors limiting Africa’s ability to negotiate from a position of strength.
During a session themed, “Deploying the Continent’s Strategic Assets to Rewrite the Rules of International Debt Governance,” the Stop the Bleeding Campaign launched its Black Paper, linking Africa’s debt difficulties to natural-resource extraction, illicit financial flows and debt servicing.
Presenting the paper, Jean Marcelin Brou, a professor, stressed that Africa needed to move from being a rule-taker to a rule-maker in the international financial system.
The paper describes what it calls a “triple drain”: natural resources extracted without sufficient returns to African economies, illicit financial flows that weaken public revenues, and debt obligations that consume money that could otherwise finance development.
It estimates that African governments spend an average of 16.7 per cent of their revenue on debt servicing, while more than 30 African countries spend more on servicing debt than on healthcare.
The paper also cites research by Léonce Ndikumana and James Boyce estimating that about $2.4 trillion flowed out of Africa between 1970 and 2018, including imputed interest.
The campaign calls for governments to audit and renegotiate extraction contracts, strengthen tax systems and give communities affected by mining and other extractive activities a greater say.
It also advocates using resource revenues to support manufacturing and agriculture, including industries producing machinery, fertilisers and other inputs that African countries currently import.
Chenai Mukumba, executive director of Tax Justice Network Africa, noted that illicit financial flows, debt and extractive exploitation should be treated as interconnected problems.
She noted that negotiations for a United Nations Framework Convention on International Tax Cooperation offered African countries an opportunity to play a greater role in shaping international tax rules.
Kenyan senator, Okoiti Omtatah, who formally launched the Black Paper, said the scale of Africa’s financial outflows made collective action necessary.
Referring to the paper’s $2.4 trillion estimate, Mr Omtatah explained that African resources were leaving the continent only to return as loans carrying interest.
He stated that Kenya’s debt burden was already competing with spending on universities, schools, hospitals and infrastructure.
“These are not separate problems,” he said, describing a cycle in which lost revenues contribute to budget deficits, governments borrow to fill the gap and debt repayments then consume an increasing share of public revenue.
The Black Paper proposes reclaiming resource sovereignty, ending illicit financial flows through tax justice, advancing debt justice and recognising care and gender justice.
It also supports a UN sovereign-debt workout mechanism, greater use of local-currency financing and currency swaps, stronger African-led credit assessment institutions and an African debtors’ club.
The debate also examined the social cost of debt and austerity.
Memory Kachambwa, executive director of the African Women’s Development and Communication Network (FEMNET), stressed that the effects of debt and austerity were not gender-neutral.
“When public services are withdrawn, women’s unpaid labour expands,” she said.
Ms Kachambwa noted that women often became the “shock absorbers” of economic crises because they took on additional unpaid care work when governments reduced spending on healthcare, education, water and other public services.
Janet Zhou, executive director of the African Forum and Network on Debt and Development (AFRODAD), said Africa’s debt crisis should not be viewed solely through the financial decisions of individual governments.
She stated that African countries remained dependent on external institutions, markets and creditors and needed stronger continental institutions and mechanisms for collective action.
A representative of the African Union Commission, Patrick Olomo, stated that implementing the Common African Position on Debt would require governments to tackle illicit financial flows, weak tax systems, losses from natural resources and high debt-service payments.
He said the AU Commission would continue working with civil society organisations on debt, tax reform and illicit financial flows.
Speakers explained that Africa’s natural resources would not automatically translate into negotiating power if governments lacked reliable information and the technology needed to analyse it.
That concern featured in another AfCoDD VI panel, where experts examined the role of artificial intelligence and data in debt management and negotiations.
