Former African Leaders Launch Initiative to Mitigate Debt Crisis

Eight former African leaders today launched an initiative to ease the debt crisis that is suffocating dozens of countries on the continent and in the global south, as calls grow for reform of the global financial architecture.

"We are concerned about the issue of debt. What it does is stifle development and money that should have gone to essential areas of human welfare and development, education, health, nutrition, is given to pay a debt that seems endless," said former Nigerian President Olusegun Obasanjo.

The former leader was speaking at a press conference on the sidelines of the first meeting of G20 finance ministers and central bank governors, under the South African presidency of the group of developed and emerging countries, which has been taking place since Wednesday in Cape Town, in southwest Africa.

"And we are not just speaking on behalf of Africa, we are speaking on behalf of all developing countries in the world, in Latin America, in the Caribbean, in Asia, where this (debt) relief is needed," Obasanjo said.

He is joined by former presidents of Senegal (Macky Sall), Malawi (Joyce Banda), Tanzania (Jakaya Kikwete), Mauritius (Ameenah Gurib-Fakim) and Ghana (Nana Akufo-Addo) in promoting the so-called African Leaders' Initiative for Debt Relief.

Former Ethiopian Prime Minister Hailemariam Desalegn and former Nigerian Vice President Yemi Obasanjo also signed the document.

In their statement, the leaders call for "a predictable, fair and inclusive debt restructuring process that involves all creditors - private, bilateral and multilateral", as well as "debt freezing mechanisms to create fiscal space for development and climate investments", also mentioning debt cancellation as another possibility during the press conference.

The debt crisis is precisely one of South Africa's priorities in its G20 presidency.

In Africa, around 20 countries are at high risk of external debt distress or already have it, out of a total of 35 developing nations affected by this situation, according to the International Monetary Fund (IMF).

As a solution, the G20 countries decided in 2020 to create a Common Debt Management Framework, which was joined by four African countries - Zambia, Ghana, Ethiopia and Chad.

But not only has this mechanism not been fast enough, with negotiations to restructure the debt taking years, but its use further lowers the risk rating of states for investors, among other problems.

Unlike the Common Framework, in which each country asks for help individually, African leaders want to advocate a scenario in which they can negotiate with all creditors at the same time, although they did not give further details on what form this mechanism would take.

The G20 is made up of 19 countries (Germany, Argentina, Australia, Brazil, Canada, China, South Korea, France, India, Indonesia, Italy, Japan, Mexico, Russia, Saudi Arabia, South Africa, Turkey, the United Kingdom and the United States) and two regional organizations: the European Union (EU) and the African Union (AU).

South Africa, Africa's most industrialized economy, ends a cycle in which the group's 19 countries took turns holding the presidency, with Washington coordinating the organization in 2026.