Africa’s debt is at its highest level in over a decade. With debt service sucking up increasingly large proportions of budgets and revenues, a wave of defaults in the world’s most vulnerable countries is on the horizon—and the cost of avoiding defaults could be even worse.
Before the pandemic, African debt was high and finances tight. As a result of COVID-19 and Russia’s invasion of Ukraine, the situation has gotten much worse. With international attention elsewhere, we ignore debt issues at our peril.
The reality is that international efforts have failed to deliver a solution. The G20’s Debt Service Suspension Initiative (DSSI) offered limited breathing room for select countries struggling with the aftershocks of the pandemic. Its successor, the G20 Common Framework for Debt Treatments, is yet to prove that it can offer an effective solution to resolving debt crises at the scale or speed required. Whilst leaders blame each other for the Common Framework’s failure, citizens in debt-distressed countries are suffering.