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African governments owe three times more debt to private lenders than China

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African governments owe three times more debt to Western banks, asset managers and oil traders than to China, and are charged double the interest, according to research released today by Debt Justice. Western leaders through the G7 have attributed the failure to make progress on debt restructuring to China,[1] but the data shows that this is mistaken.

Just 12% of African governments’ external debt is owed to Chinese lenders compared to 35% owed to Western private lenders, according to the calculations based on World Bank data.[2]

Furthermore, interest rates on private loans are almost double those on Chinese loans, while the most indebted countries are less likely to have their debt dominated by China.

The figures have been released ahead of the G20 Finance Ministers meeting on 15-16 July in Indonesia. Campaigners are calling on Western countries, particularly the UK and US, to compel private lenders to take part in the G20’s debt relief scheme, the Common Framework. Three African countries have applied for the Common Framework, none have yet had any debt relief.

Tim Jones, Head of Policy at Debt Justice, said:

“Western leaders blame China for debt crises in Africa, but this is a distraction. The truth is their own banks, asset managers and oil traders are far more responsible but the G7 are letting them off the hook. China took part in the G20’s debt suspension scheme during the pandemic, private lenders did not. There can be no effective debt solution without the involvement of private lenders. The UK and US should introduce legislation to compel private lenders to take part in debt relief.”

Yungong Theo Jong, Head of Programmes at the African Forum and Network on Debt and Development (Afrodad) said:

“Multilateral and private creditors remain the biggest creditors to African governments. Loans from China have increased Africa’s indebtedness, but by far less than Western lenders. All lenders must participate in debt relief. Western governments must lead the way by making private lenders cancel debts.”

The calculations show that the average interest rate on private sector loans is 5%, compared to 2.7% on loans from Chinese public and private lenders.

12 of the 22 African countries with the highest debts are paying private lenders over 30% of their total external debt payments (Cabo Verde, Chad, Egypt, Gabon, Ghana, Malawi, Morocco, Rwanda, Senegal, South Sudan, Tunisia and Zambia). In contrast, debt payments to Chinese lenders are over 30% in just six of the 22 countries (Angola, Cameroon, Republic of Congo, Djibouti, Ethiopia and Zambia).

IMF Managing Director Kristalina Georgieva has called on the UK and US to pass legislation to stop private lenders blocking debt relief agreements.[3] President of the World Bank David Malpass has made similar calls.[4] Virtually all international debt contracts are governed by New York or English law[5], with 90% of bonds of countries eligible for the G20’s debt relief scheme are governed by English law.[6]

In 2020 and 2021 China took part in the G20’s debt service suspension initiative, but the scheme only suspended 23% of the external debt payments of countries which applied, because private and multilateral lenders were not included.[7] Western governments need to make their private lenders take part in debt restructurings to convince China to also move further on debt relief.

Notes

[1] For example the G7 Finance Ministers said in May 2022: “With regards to the implementation of the Common Framework, it remains essential that all relevant creditor countries including non-Paris Club countries, such as those, like China, with large outstanding claims on low-income countries facing debt sustainability challenges, contribute constructively to the necessary debt treatments as requested.” http://www.g7.utoronto.ca/finance/220520-communique.html

[2] All the figures and calculations are in the briefing ‘Who is African governments’ external debt owed to?’ available at https://debtjustice.org.uk/wp-content/uploads/2022/07/Who-African-governments-debt-is-owed-to_Media-Briefing_07.22.pdf

Summary tables are:

External debt of African governments by creditor grouping, and average interest rate

Creditor grouping External debt to creditor grouping as percentage of total external debt Average interest rate
Private creditors (excluding those based in China) 35% 5%
Chinese creditors (public and private) 12% 2.7%
Other governments 13% 1.4%
Multilateral institutions 39% 1.3%

 

Share of external debt payments from 2022 to 2028 by creditor grouping (% of total external debt payments), 22 African countries with external debt payments over 15% of government revenue

Private (not including China) China public and private Other governments Multilateral
Angola 29% 59% 2% 10%
Cameroon 18% 34% 13% 35%
Cabo Verde 33% 2% 25% 40%
Chad 33% 8% 14% 44%
Congo, Rep 6% 50% 24% 21%
Djibouti 0% 64% 11% 25%
Egypt 36% 3% 16% 45%
Ethiopia 23% 45% 7% 25%
Gabon 40% 16% 7% 37%
Gambia 0% 0% 25% 75%
Ghana 56% 11% 8% 24%
Kenya 29% 27% 11% 33%
Malawi 72% 5% 4% 20%
Mauritania 0% 14% 30% 57%
Morocco 36% 1% 14% 49%
Mozambique 7% 28% 33% 33%
Namibia 43% 4% 5% 48%
Rwanda 37% 9% 20% 34%
Senegal 37% 9% 20% 34%
Sierra Leone 0% 5% 14% 82%
South Sudan 81% 11% 0% 8%
Tunisia 31% 0% 24% 45%
Zambia 45% 37% 8% 10%
Median 32% 11% 14% 34%

[3] “We also are pressing for some of the changes, legal changes that need to happen in New York, in London, to close loopholes for vulture funds and others to prevent debt resolution. We are discussing how we can bring more contingency measures in debt agreements, how to press for more debt transparency.”
https://www.imf.org/en/News/Articles/2022/04/21/tr220421-transcript-of-the-imfc-press-briefing

[4] “Given the depth of the pandemic, I believe we need to move with urgency to provide a meaningful reduction in the stock of debt for countries in debt distress. Under the current system, however, each country, no matter how poor, may have to fight it out with each creditor. Creditors are usually better financed with the highest paid lawyers representing them, often in U.S. and UK courts that make debt restructurings difficult. It is surely possible that these countries—two of the biggest contributors to development—can do more to reconcile their public policies toward the poorest countries and their laws protecting the rights of creditors to demand repayments from these countries.” https://www.worldbank.org/en/news/speech/2020/10/05/reversing-the-inequality-pandemic-speech-by-world-bank-group-president-david-malpass

[5] https://www.imf.org/~/media/Files/Publications/PP/2017/pp113017third-progress-report-on-cacs.ashx

[6] https://debtjustice.org.uk/press-release/g20-debt-suspension-request-90-of-bonds-governed-by-english-law

[7] https://debtjustice.org.uk/press-release/g20-initiative-leads-to-less-than-a-quarter-of-debt-payments-being-suspended

Source: debtjustice.org.uk

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NGO WORK

Statement- Uganda: Seven Environmental activists brutally arrested, charged and released on police bail for protesting against the East African Crude Oil Pipeline Project

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On 27 May 2024, seven environmental human rights defenders were brutally arrested by armed police in Kampala, Uganda and charged by the Jinja Road police for unlawful assembly. This was reported by the Stop the East African Crude Oil Pipeline (StopEACOP) campaign on 29 May 2024.

The seven human rights defenders were peacefully protesting against the intended financing of the East African Crude Oil Pipeline Project (EACOP) by the Chinese government. According to the environmental human rights defenders, EACOP has caused severe human rights violations, poses significant environmental risks, and will contribute to the climate crisis. The EACOP is a project led by Total, spanning 1,443km from Kabaale, Hoima district in Uganda to the Chongoleani Peninsula near Tanga Port in Tanzania. It aims to transport oil from Uganda’s Lake Albert oilfields to global markets via the port of Tanga.

On 27 May 2024, seven environmental human rights defenders were brutally arrested by armed police in Kampala and charged by the Jinja Road police for unlawful assembly. The seven environmental activists were sitting outside the Chinese Embassy in Kampala in an attempt to present a letter of protest to the Chinese Ambassador expressing their complaints and demanding that his government refrain from funding an unfavourable project for them. Due to their arrest occuring before they had any chance of interacting with embassy representatives, their letter was not delivered. The peaceful protesters were violently rounded up by the police, who subsequently packed them in a vehicle and brought them to the Jinja Road police. The seven activists were released on police bail and were due to report back to the Jinja Road police station. On 18 May 2024, following several banks and insurance companies’ withdrawal from EACOP, Civil Society Organizations supporting energy just transition, climate and environmental conservatism, and land justice addressed the media and urged the Chinese President to rescind his interest in funding the project.

Local organizations have been denouncing that, in order to stifle complaints, silence protesters, and maintain pressure on those who defend climate, environment, and land rights, Ugandan authorities have turned to attacking and criminalising environmentalists, climate activists, and defenders of land rights. Uganda has recorded the most number of cases of violations against these human rights defenders, with 18 incidents documented in Africa, according to the Business and Human Rights Resource Center’s 2023 in their report titled People power under pressure: Human rights defenders & business in 2023. The majority of these attacks seem to center around the EACOP and the environmental human rights defenders campaigning against the project, which the State regards as a significant infrastructure initiative.

Front Line Defenders expresses its concern for the safety and security of the seven environmental human rights defenders and strongly condemns the recent instances of intimidation, criminalization and police harassment they have been subjected to, as it believes are an act of reprisal for their peaceful and legitimate work in defence of environmental and land rights in Uganda.

Front Line Defenders urges the authorities in Uganda to take the necessary measures to guarantee the security and protection of environmental human rights defenders during peaceful protests. The organisation also demands that the brutal arrest of these seven human rights defenders be condemned. Front Line Defenders calls Ugandan authorities to guarantee that all environmental and land human rights defenders, including human rights organisations working on environmental rights, are able to carry out their legitimate activities and operate freely without fear of police harassment.

Source: Frontline Defenders

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NGO WORK

TotalEnergies African legacy: 100 years of environmental destruction.

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TotalEnergies, the French petro giant company with a legacy of destruction on the continent, this year celebrates 100 years. To be clear, that is 100 years of profit, environmental destruction and damage to people’s lives.

The company’s damage is widespread, extensive and well-documented.

In 1956, TotalEnergies entered Africa, exploiting natural resources as it went along. In chasing down oil and gas, it has wreaked havoc on communities, land, and the environment.

A 2022 study by the Climate Accountability Institute found the total emissions attributed to the East Africa Crude Oil Pipeline totals 379 million tonnes of carbon dioxide, making TotalEnergies a key contributor to Africa’s carbon footprint.

As Charity Migwi, a senior campaigner at Oil Change International, a research, communication, and advocacy organisation, notes, the company has its hands on various projects on the continent.

The project noted above will have about 460km of pipeline in the freshwater basin of Lake Victoria, Africa’s largest lake, which directly supports the livelihoods of more than 40 million people in the region. On top of this, there are plans to extract oil from the fields in Uganda as well as the company’s prominent role in the Mozambique LNG Project, which is a major cause of carbon emissions

Closer to home, TotalEnergies has been given the go-ahead to explore for oil and gas off the south-west coast of South Africa, which sparked protests. As the company held its annual general meeting in Paris, France, protests by affected communities, civil society and activists in both countries took place.

Environmental justice group The Green Connection’s community mobilisation officer, Warren Blouw, said in a press release: “TotalEnergies and other oil and gas companies must consider the livelihoods of small-scale fishers, whose economic wellbeing is jeopardised by offshore oil and gas exploration. We must unite to protect Africa and its resources from those who only seek profit, at the cost of regular South Africans.”

Zinhle Mthiyane, of the South Durban Community Environmental Alliance, said: “We are protesting to protect the environment and prevent ocean pollution. Drilling for oil and gas in South African waters could degrade the environment, threatening livelihoods and cultural practices.”

One of those affected by TotalEnergies and its hunt for fossil fuels is Sifiso Ntsunguzi, a small-scale fisher from Port St Johns, on the Eastern Cape coast. Ntsunguzi made the trip to France to protest.

“We are in Paris to support the court case against TotalEnergies’ oil and gas projects. As a small-scale fisher and member of a coastal community, I do not support the exploration of oil and gas in the ocean. We use the ocean for cultural practices and as a means to sustain our livelihood. We are against exploration of gas and oil, as it may risk degradation of the environment and marine ecosystems, our livelihood and our health. I come from a fishing community and have become a fisher myself,” he said.

In another press release, environmental justice group Bloom wrote that TotalEnergies has been well aware of its climate harms as far back as the 1970s, yet the company still goes ahead with its oil and gas initiatives.

Initially, its strategy was to deny climate change, wrote Bloom. Now that it can no longer do so, it has changed tact and resorts to greenwashing, described by the United Nations as follows: “By misleading the public to believe that a company or other entity is doing more to protect the environment than it is, greenwashing promotes false solutions to the climate crisis that distract from and delay concrete and credible action.”

Total Energies portrays itself as a serious player in the renewable energy space and constantly punts its renewable efforts while going full steam ahead with its fossil fuel projects.

For example, it said of its project in the Northern Cape: “TotalEnergies and its partners are launching construction of a major hybrid renewables project in South Africa, comprising a 216 megawatt solar plant and a 500 MWh battery storage system to manage the intermittency of solar production.”

Bloom explained that chasing renewables is profitable but nowhere near as profitable as oil and gas, and it in no way negates the harmful search for and use of fossil fuels. For this reason Bloom and two other climate justice groups took TotalEnergies to court.

This case also hopes to halt the expansion of fossil fuel extraction. As The Guardian reports: “A criminal case has been filed against the CEO and directors of the French oil company TotalEnergies, alleging its fossil fuel exploitation has contributed to the deaths of victims of climate-fuelled extreme weather disasters. The case was filed in Paris by eight people harmed by extreme weather, and three NGOs.”

Joyce Kimutai, a climate scientist at the University Of Cape Town, said: “The fossil fuel industry will continue to undermine science, they will continue to expand their businesses,

they will continue to cause suffering to the people as long as they know that the law can’t hold them accountable.”

Whether the case will yield anything remains to be seen, but the important thing is people are standing up and fighting the harmful practices of these fossil fuel companies. International bodies like the UN climate change conferences yield very little results. It is up to us, the people on the ground, to unite for the good of our planet.

Source: mg.co.za

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NGO WORK

Incredible WIN! European Union withdraws from Energy Charter Treaty

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The Energy Charter Treaty (ECT) is an international agreement originally created with a focus on growing fossil fuel energy cooperation after the Cold War. Today, the Treaty is a major obstacle to effective climate action because it protects fossil fuel investments. By including investor-state dispute settlement (ISDS), the Energy Charter Treaty allows fossil fuel corporations to sue States that act to protect our climate when that action could impact a company’s profits.

Today, we celebrate because the European Council overwhelmingly adopted the EU’s proposal to exit the controversial Energy Charter Treaty (ECT), an outdated international investment agreement that protects and promotes fossil fuel investments.

CIEL and other organizations across Europe have worked tirelessly to educate European decision-makers about the dangers of the Energy Charter Treaty. Together, we proved how the treaty prevents effective climate action and is fundamentally incompatible with EU law.

This pivotal vote follows up an EU Commission’s proposal for the EU and European Atomic Energy Community to exit the Energy Charter Treaty.

The Commission found the ECT incompatible with the EU’s laws, investment policy and law, and energy and climate goals. Its proposal broke months of deadlock by offering EU countries the option to remain in the treaty while allowing other countries to exit. The European Parliament also adopted a resolution in April 2024 calling on the EU to withdraw from the ECT.

Today’s vote proves that people power can win critical victories!

Join us in celebrating this victory for the people, the environment, and the climate!

Demonstrators wear masks with the EU leaders under a sword that reads Energy Charter Treaty.

Why does this matter?

Fossil fuel investors have used the Energy Charter Treaty to sue States when they take climate action, claiming a right to compensation for alleged loss of investments. If they are serious about climate action, States must disentangle themselves from investor protections that allow fossil fuel companies to sue them in private courts when States act in the public interest to phase out fossil fuels. States could be squeezed from both sides: sued by communities for their climate inaction with ever greater frequency, and sued by investors when they do act to phase out the fossil fuel drivers of the climate crisis and accelerate the energy transition.

CIEL has worked for a long time to dismantle ISDS and ensure that the perspectives of communities inform ongoing arbitration.

A demonstrator holds a sign that reads 'Exit the Energy Charter Treaty'

Policymakers in Europe, and beyond, now have a duty to end their dependency on fossil fuels, exit the ISDS system that allows industry to sue States for enacting public interest policies, and accelerate the clean energy transition.

This win in Europe is a milestone in the fight against investor state dispute settlements. Now, we are leveraging this momentum for other States and clearing the way for effective climate action around the world.

Today we celebrate this victory with you. Tomorrow we will continue working to uproot the fossil economy driving the climate crisis, and the trade and investment deals that stand in the way of a renewable energy future.

Source: ciel.org

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