Mounting debt is choking the world’s poorest nations, draining resources from essential services and stalling development, former African leaders warned on Thursday. They are urging a bold new collective relief plan to ease the financial strain on heavily indebted countries.
South African President Cyril Ramaphosa, currently chairing the G20, aims to push for a fairer global financial system, including debt relief. However, the initiative faces strong headwinds, particularly from the U.S. and UK, where aid cuts threaten multilateral cooperation.
A Call for a New Debt Relief Framework
Speaking at a G20 finance ministers’ meeting in Cape Town, former Nigerian President Olusegun Obasanjo, who leads the African Leaders Debt Relief Initiative, warned that crushing debt burdens were stifling progress.
“Funds meant for education, healthcare, and human development are being swallowed by never-ending debt payments,” Obasanjo said.
The initiative—backed by seven former African heads of state—seeks a comprehensive debt restructuring modelled on the Highly Indebted Poor Countries (HIPC) program of the 1990s. The plan would allow nations to negotiate debt relief collectively rather than individually.
Global Debt Crisis Demands Immediate Action
The proposal covers private bonds, loans from official creditors, and debt owed by countries in Africa, Asia, the Caribbean, and Latin America. The goal is to reduce borrowing costs and restore liquidity to struggling economies.
A United Nations Development Programme (UNDP) report earlier this week warned that worsening debt levels were depleting financial reserves in developing nations. The UNDP estimated that a 60% debt reduction could free up nearly $80 billion for the world’s 31 poorest countries.
The Failure of the G20’s Common Framework
The G20’s existing debt restructuring plan, the Common Framework, has proven ineffective, with only a handful of countries benefiting from it.
“The case-by-case approach isn’t working,” said Patrick Njoroge, an adviser to the initiative. “We need a system that brings all indebted countries to the table at once.”
Meanwhile, growing divisions in global financial diplomacy are slowing progress. The absence of key officials at the G20 finance ministers’ meeting and the impact of aid cuts from the U.S. and UK have raised concerns about the future of multilateral cooperation.
Former Malawian President Joyce Banda stressed the urgency of the situation:
“We cannot wait for the world to solve this for us. To rebuild our economies, we need a fresh start—and that means forgiving these debts.”
