ADDRESSING the 79th session of the United Nations General Assembly, Malawi’s President Lazarus Chakwera appealed for debt relief for African nations struggling with mounting financial obligations. Chakwera highlighted the ‘hardships’ African countries are facing as they attempt to manage and service their increasing debt.
‘We are doing everything possible to manage our debts,’ Chakwera said, ‘but if there is consideration for either restructuring or completely writing off some of these debts, Africa would finally have some breathing space.’
Africa’s growing debt burden
Chakwera’s plea comes as Africa’s external debt continues to rise. According to the World Bank, Africa’s collective external debt increased from $1.12 trillion in 2022 to $1.152 trillion by the end of 2023. The increasing debt burden has raised concerns about the continent’s financial sustainability.
The role of resource-backed loans
The president of the African Development Bank (AfDB), Akinwumi Adesina, also addressed the debt issue recently, warning that ‘non-transparent’ resource-backed loans are hindering Africa’s economic potential. Speaking at a summit in Washington, Adesina explained that these opaque loans complicate debt management and obstruct the path to financial recovery.
‘African countries are spending 65 percent of their GDP on servicing external debt,’ Adesina said, emphasising the need for transparency and accountability in debt agreements. He called for an end to these resource-backed loans, which often place a strain on African economies.
Calls for better debt management
In recent months, the World Bank and the US government have also advised Malawi to improve its debt management. The country’s external debt currently stands at $4bn, posing significant challenges to its economic growth and development.
As African nations continue to struggle with rising debt and economic uncertainty, the call for debt relief and restructuring is growing louder. Leaders like Chakwera hope that international cooperation and financial reforms can offer a pathway to economic recovery for Africa.
Credit: Reuters
