Why the EU should take the global lead in cancelling Africa’s debt

Africa needs debt relief

[From The Archives]

The EU adopted a new EU-Africa Strategy in mid-March, which outlined a “stronger, more ambitious” partnership with Africa. In the build-up to this strategy, European Council President Charles Michel and Commission President von der Leyen called for a “partnership of equals” that would move away from the donor-recipient relationship that has long characterised EU-Africa relations. Rather, the EU-Africa Strategy aimed to pave the way for genuine peer-to-peer cooperation, beyond outdated views of the African continent and moving on from the legacies of a colonial past.

Less than two weeks after the adoption of this new strategy, Africa was facing a major economic crisis caused by the pandemic, one that is already outweighing the health emergency on the continent. Indeed, the Covid-19 crisis led to a fall in commodity prices and increasing costs of imports, while income from tourism, remittances and raw materials dropped. Developing countries are also experiencing the largest ever capital flight and a brisk withdrawal of international investment. According to the World Bank, the pandemic has already triggered the first recession in Sub-Saharan Africa in 25 years.

The EU’s global corona response: stronger, more ambitious?
In line with commitments under the new EU-Africa Strategy, High Representative Josep Borrell announced in late March that the EU would assist partners around the world in combating the virus, in particular Africa “because we want to underline that we will not forget about our sister continent when addressing this global pandemic.” This pledge became more concrete when the EU launched its ‘Team Europe’ package to support partner countries in their fight against Covid-19.

Team Europe channels €3.25 billion of existing foreign external action resources to Africa – the largest geographical portfolio under the €20 billion package. Debt relief for African countries was not addressed in this Team Europe approach, although the EU – like other G20 nations – has agreed to offer a debt moratorium for the poorest countries. This means that bilateral government creditors will suspend debt repayments for, among others, 38 African countries that request forbearance, while urging private investors to do the same. In the meantime the IMF has also announced a debt relief of six months for IMF debt obligations to 25 of the most vulnerable countries worldwide, 14 of which are in Africa.

For more please go to CEPS.EU 

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