While the explosion of debt raises the specter of a paralysis of the world economy, several experts evoke the alarming situation of sub-Saharan Africa, which is going through “the worst crisis in its history”, with a rise in rates interest rates and excessive debt which prevent many States from financing their development.
After the global economic crisis of 2009, international financial markets opened up to countries in the South, which until then had mainly borrowed from public creditors.
“Many developing countries that desperately needed to inject liquidity into their economies rushed to these low-cost loans, in markets without rules,” notes Kenyan economist Attiya Waris, independent expert at the UN .
From 2015, the fragile African economies, dependent on the export of raw materials (hydrocarbons, wood, ores, etc.), suffered the full force of the fall in world prices. Their income has plummeted. A situation made worse by the COVID-19 pandemic and the war in Ukraine.
Short of cash, several countries then took out new loans in order to pay their debt service, creating a vicious spiral that prevents vital investments in infrastructure, health and even education.
Today, 22 countries are at high risk of debt distress or have already reached it, the World Bank calculated in April 2023. Among them, Ghana and Zambia, which have defaulted, as well as Malawi and Chad, under IMF assistance. Ethiopia, placed in “partial default” by the Fitch rating agency in December, is also negotiating an aid plan.
Blocking of private creditors
In 2022, public debt in Africa will reach $1,800 billion, up 183% since 2010, according to the UN.
Gathered under the aegis of the G20, Western public creditors and several partners, including China – sometimes accused of having “trapped” governments by building costly infrastructure projects in exchange for debt – are trying to find compromises to restructure that of 40 African states.
But the problem lies with the private sector – pension and investment funds – which has become in a few years the leading creditor of African public external debt: 42% in 2022, compared to 38% for multilateral institutions (IMF , World Bank, etc.) and 20% for bilateral partners, mainly China (11%).
“China is often presented as the “big bad”, but it has understood the importance of giving breathing space to states in great difficulty, and is now participating in the efforts even if it took time,” underlines Mathieu Paris , coordinator of the French Debt and Development Platform.
The case of Zambia is instructive. After two years of difficult negotiations, Lusaka obtained in June 2023 an agreement presented as “historic” with its public creditors to restructure 6.3 billion dollars of debt – out of the 18.6 billion contracted abroad.
However, according to one of the clauses of the agreement, it cannot be applied if the private sector does not provide a comparable effort.
Another agreement in principle was then concluded in October 2023 with a group of private creditors to the tune of three billion dollars (out of 6.8), including the American asset manager BlackRock, one of the majority creditors of the debt Zambian, however, is not part of it.
As early as 2022, around a hundred economists and development experts called on BlackRock in an open letter to cancel part of the debt. Three economists interviewed by Agence France-Presse (AFP) question the attitude of the company, which, by not participating in recent discussions, has according to them “blocked all of the negotiations”, says Attiya Waris.
“BlackRock has not been asked by the Zambian government to engage in its current debt restructuring procedure,” the American giant wrote to AFP, which says it is “ready” to approach these procedures “in a manner constructive and in good faith”, while “protecting the financial interests” of its clients.
Inflation and poverty
With the accumulation of debt at ever higher interest rates, “African countries are seeing their currencies fluctuate dangerously, and inflation galloping,” explains Ghanaian economist Charles Abugre. “The impact is dramatic for the poorest: explosion in the cost of transport, food, housing, while wages stagnate,” he laments.
Faced with evaluations sometimes considered arbitrary by major international agencies, the African Union (AU) is calling for better representation of Southern countries in institutions such as the World Bank.
For Amine Idriss Adoum, Director of Infrastructure at the AU Development Agency, “the real question today is not how to get out of debt, but rather how to get into debt intelligently.” without it being to the detriment of investments in health or energy.