NGO WORK
African governments owe three times more debt to private lenders than China
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
Source: debtjustice.org.uk
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Minority Rights Group welcomes today’s decision by the African Court on Human and Peoples’ Rights in the case of Ogiek people v. Government of Kenya. The decision reiterates previous findings of more than a decade of unremedied violations against the indigenous Ogiek people, centred on forced evictions from their ancestral lands in the Mau forest.
The Court showed clear impatience concerning Kenya’s failure to implement two landmark rulings in favour of the indigenous Ogiek people: in a 2017 judgment, that their human rights had been violated by Kenya’s denial of access to their land, and in a 2022 judgment, which ordered Kenya to pay nearly 160 million Kenyan shillings (about 1.3 million USD) in compensation and to restitute their ancestral lands, enabling them to enjoy the human rights that have been denied them.
Despite tireless activism from the community and the historic nature of both judgments, Kenya has not implemented any part of either decision. The community remains socioeconomically marginalized as a result of their eviction and dispossession. Evictions have continued, notably in 2023 with 700 community members made homeless and their property destroyed, and in 2020 evicting about 600, destroying their homes in the midst of the Covid-19 pandemic.
Daniel Kobei, Executive Director of the Ogiek Peoples’ Development Program stated, ‘We have been at the African Court six times to fight for our rights to live on our lands as an indigenous people – rights which our government has denied us and continues to violate, compounding our plights and marginalization, despite clear orders from the African Court for our government to remedy the violations. This is the seventh time, and we were hopeful that the Court would be more strict to the government of Kenya in ensuring that a workable roadmap be followed in implementation of the two judgments.’
Kenya has repeatedly justified the eviction of Ogiek as necessary for conservation, although the forest has seen significant harm since evictions began. Many in the community see a connection between their eviction and Kenya’s participation in lucrative carbon credit schemes.
‘The Court’s decision underscores the importance of timely and full implementation of measures imposed on a state which has been found to be in breach of their internationally agreed obligations. Kenya must now repay its debt to the indigenous Ogiek by restituting their land and making reparations, among other remedies ordered by the Court’, said Samuel Ade Ndasi, African Union Advocacy and Litigation Officer at Minority Rights Group.
The decision states, ‘the court orders the respondent state to immediately take all necessary steps, be they legislative or administrative or otherwise, to remedy all the violations established in the judgment on merits.’ The court also reaffirmed that no state can invoke domestic laws to justifiy a breach of international obligations.
Both of the original judgments were historic precedents, breaking new ground on the issue of restitution and compensation for collective violations experienced by indigenous peoples and confirming the vital role of indigenous peoples in safeguarding ecosystems, that states must respect and protect their land rights, that lands appropriated from them in the name of conservation without free, prior and informed consent must be returned, and their right to be the ultimate decision makers about what happens on their lands. Today’s decision adds to this tally of precedents as it is the first decision of the African Court on Human and Peoples’ Rights concerning the record of a state in implementing a binding decision.
The case
In October 2009, the Kenyan government, through the Kenya Forestry Service, issued a 30-day eviction notice to the Ogiek and other settlers of the Mau Forest, demanding that they leave the forest. Concerned that this was a perpetuation of the historical land injustices already suffered, and having failed to resolve these injustices through repeated national litigation and advocacy efforts, the Ogiek decided to lodge a case against their government before the African Commission on Human and Peoples’ Rights with the assistance of Minority Rights Group, the Ogiek Peoples’ Development Program and the Centre for Minority Rights Development. The African Commission issued interim measures, which were flouted by the Government of Kenya and thereafter referred the case to the African Court based on the complementarity relationship between the African Commission and the African Court on Human and Peoples’ Rights and on the grounds that there was evidence of serious or massive human rights violations.
On 26 May 2017, after years of litigation, a failed attempt at amicable settlement and an oral hearing on the merits, the African Court on Human and Peoples’ Rights rendered a merits judgment in favour of the Ogiek people. It held that the government had violated the Ogiek’s rights to communal ownership of their ancestral lands, to culture, development and use of natural resources, as well as to be free from discrimination and practise their religion or belief. On 23 June 2022, the Court rejected Kenya’s objections and set out the reparations owed for the violations established in the 2017 judgment.
Source: minorityrights.org
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