African legislators make vain appeal for debt cancellation

By Eric Olander
Posted on Monday, 23 May 2022 13:58

Stockbrokers trade on the floor of the Zimbabwe Stock Exchange (ZSE) in Harare, February 24, 2015. ZSE on Monday lifted the suspension of hotel group Meikles Africa after the company threatened to take court action, shelve new investment and a possible listing of a subsidiary. Meikles, which owns two premier hotels in the capital Harare and the resort town of Victoria Falls, was suspended last week to allow for an investigation on whether it overstated a debt owed by the central bank. REUTERS/Philimon Bulawayo

Legislative leaders from across Africa issued a joint appeal on Tuesday for creditor nations to cancel some of the continent’s outstanding debts. 

The parliamentarians are meeting this week in Abuja for the first-ever gathering of the Conference of Speakers and Heads of African Parliaments (CoSAP) that was founded in 2019 and, not surprising, debt relief is among the top items on their agenda.

“We also agreed that in doing so, we are going to push for a tripartite agreement between the creditors, the executive other governments, and the legislators,” said Nigerian Speaker of the House of Representative Femi Gbajabiamila. “The reason being that even if your debt is forgiven and funds are freed up to be diverted in other areas like health, and education, your creditors will need to be assured that the institution that is responsible for appropriation is involved and that is the case we are making,” he told reporters.

Why this appeal is probably going to be ignored

Gbajabiamila and his colleagues are talking like it’s 1995 when the bulk of African debt was held by either Western governments or development finance institutions like the World Bank and the IMF. Back then, it was a lot easier to make these kinds of measures work. Today, not so much.

Traditional lenders have given way to bondholders and new sovereign creditors like China, both of whom have shown little to no inclination to cancel any of Africa’s outstanding financial obligations. Other than a handful of small grants, China’s two largest policy banks (CDB and China Exim) have repeatedly refused to write off any other loans to African or other borrowers in the Global South.

And it’s not like other creditors are any better. While the G20’s Debt Service Suspension Initiative deferred repayments, it did not reduce the value of the current debt stock that the legislators want to cancel.

Bottom line

This kind of rhetoric from Gbajabiamila and his fellow parliamentarians may make sense politically but in practical terms, it’s pure fantasy.

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