Ghana President Akufo-Addo Calls for Comprehensive Debt Relief for Africa

A Summit on Financing African Economies was hosted by French President Emmanuel Macron in Paris on May 18. This is undoubtedly a crucial topic, in particular after over one year of the devastating effects that the Covid-19 pandemic has had on developing countries – both directly and even more so indirectly through the economic repercussions from a lockeddown developed sector. Unfortunately, the conclusion was disappointing.

The decision was made to provide the continent with $33 billion more Special Drawing Rights issued by the International Monetary Fund, of which $24 billion for sub-Saharan Africa. Emmanuel Macron expressed confidence that that sum could be increased to at least $100 bn if other countries contribute part of their share, but the IMF itself estimates that Africa will suffer from a funding gap of about $290 billion by 2023.

The problem for Africa was presented quite forcefully, by the President of Ghana Nana Akufo-Addo, who pointed out that the current global financial architecture has proven to be “incapable of supporting lives and livelihoods, and allocating sufficient long-term resources to support Africa’s economic transformation”. And now, including as a result of the pandemic, “the total fiscal deficit of Africa rose from 4.7% of GDP in 2019 to 8.7% in 2020”. At the same time, overall debt levels “have increased from 57 % of GDP in 2019 to 70% in 2021”.

To prevent Africa from truly becoming “the forgotten continent”, he said, “there is urgent need for comprehensive debt relief and debt cancellation”.

President Nana Akufo-Addo noted that by 2050, Africa will have become home to a quarter of the world’s population and more than half of the global youth population – and could potentially become an economic powerhouse. Thus, he told the gathering, it is “in our collective interest to create the conditions that will enable such a development to be of benefit to the entire globe.”

Despite the call from Ghana, there was reportedly no serious discussion during the summit in Paris of debt cancellation. The G20, which had agreed to suspend the reimbursement of the debt of the poorest countries last year due to the pandemic, has agreed to extend the suspension until the end of 2021, but that only covers a very small fraction of the total debt.

A big part of the problem is that all the calculations are made in monetary terms. The challenge is to ensure the development of the physical economy, which concretely raises the standard of living. Real wealth comes not in the form of money, whose value can fluctuate wildly, but in terms of infrastructure, agriculture, education and healthcare.