• English
  • 日本語
  • France
  • Deutschland
  • Italy
  • España
  • Slovenia

Africa experiencing worst debt crisis in a generation

Guest content
22 May 2024

The majority of African countries spent more repaying external debts than on healthcare or education – and in some cases both – last year as the continent experiences its worst debt crisis in a generation, according to a new report by international aid agency Christian Aid with Debt Justice.

Researchers calculated that African governments spent over 50 times more on external debt payments than the entire UK aid budget to the continent in 2023. 32 African governments spent more on debt than healthcare and 25 spent more on debt than education. Consequently, millions of children are missing out on school and pregnant women are unable to give birth in a hospital, or even with the help of a midwife. 

The report, Between Life and Debt – which is backed by former UK Prime Minister Gordon Brown – finds debt in low-income countries is holding back their development and leading to lives unfulfilled or cut short.

Without tackling the debt crisis, the Sustainable Development Goals will never be reached, the report warns. Christian Aid and Debt Justice are calling for urgent action from the UK Government to wipe the debts of lower income countries – a move which approaching half (45%) of Britons agree with, according to new polling released alongside the report.

Former UK Prime Minister Gordon Brown said: “Africa, despite rapid improvements, is the only region expected to lag behind the rest of the world in life expectancy by 2050. The scale of this inequality between Africans and the rest of the world is so great that I am not sure the world will ever forgive us for failing to deliver urgent debt restructuring.

“In many African countries, more money is being spent on debt payments than on health or education, and so debt restructuring is a matter of life and death.”

The research also reveals that civil-war hit South Sudan – where millions are facing acute hunger – spends more than ten times more on external debt servicing than healthcare. Meanwhile in Malawi, where just 15% of children complete secondary school, twice as much is spent on debt than education.

Polling by Savanta, commissioned by Christian Aid, reveals the majority (62%) of Britons believe it is wrong that more than half of African countries spend more money on external debt than on health, education or combatting the climate crisis.

A similar number (57%) think it “absurd” that African counties spent more than 50 times more on external debt payments than the entire UK aid budget for Africa in 2023

As approximately 90% of the debt owed to private creditors by lower income countries is governed by English law, Christian Aid and Debt Justice are proposing the Government introduces legislation to:

  • Ensure private lenders play their part in cancelling debt when lower income countries are in crisis; something that nearly half (48%) of Briton’s agree with.
  • Tackle predatory private creditors who lend recklessly and charge the highest interest rates. At 6.2%, they are almost double that of Chinese lenders (3.2%), and far higher than multilateral (1%) and bilateral (1.3%) lenders.

“This would help create a fairer system, prevent future crises and improve the lives of millions,” report author Jennifer Larbie, Head of UK Advocacy and Campaigns at Christian Aid, said.

Last month Gordon Brown, along with 65 prominent global leaders and public figures, called on the New York State Legislature to pass the Sovereign Debt Stability Act. The New York Act is similar to legislation proposed by Christian Aid in the UK. Both build on a 2010 UK Act of Parliament which ensured private lenders took part in a previous international debt relief scheme. New York, alongside the UK, is the other key jurisdiction for government debt.

Larbie added: “Decades after independence, many African countries are trapped in a debt crisis which is not of their making with no way out. Rather than building hospitals and schools and training doctors and teachers, they have no option but to line the pockets of predatory private creditors.

“The UK Government, as a former colonial power, has a moral responsibility to support urgent debt relief for low-income countries so that millions of people can rise out of poverty. It’s a question of economic and social justice.”

Chief researcher for the report, Tim Jones, Head of Policy at Debt Justice, added: “Our new analysis reveals in stark terms just how much African nations are being forced to divert funding from crucial public services to pay external creditors. The figures confirm that the continent is experiencing the worst debt crisis in a generation, consigning millions to a life of poverty and ensuring the world will fail to meet the Sustainable Development Goals.”

The current debt crisis is rooted in the 2008 financial crisis which led to a period of lower growth and stagnating poverty levels. These conditions have been compounded by subsequent shocks including Covid-19, the ongoing climate crisis and the Russia-Ukraine war, which has led to soaring food prices and rapidly increasing interest rates.

African government external debt payments will be at least 18.5% of budget revenues in 2024, the highest since 1998, researchers said. This is almost four times as much as in 2010, and the highest of any region in the world. 

Key facts: 

  • African governments spent over 50 times more on external debt payments than the entire UK aid budget to the continent last year. 34 spend more on external debt payments than on health or education.
  • Former UK Prime Minister Gordon Brown backs Christian Aid and Debt Justice findings saying: “debt restructuring is a matter of life and death” and the report reveals “the urgent need for action”.
  • Approaching 50% of Britons think the UK should wipe the debts of lower income countries so they can spend the money on healthcare, education and tackling the climate crisis – poll.
  • Christian Aid and Debt Justice are calling for new legislation to ensure private lenders play their part in cancelling debt when lower income countries are in crisis and to tackle predatory private creditors who lend recklessly and charge the highest interest rates.

Original source: Debt Justice

Image credit: Some rights reserved by AMSOM Public Information, flickr creative commons 

Filed under: