Civil rights bodies call for debt cancellation at WEF

Civil rights bodies and advocacy groups are sounding the alarm on the unsustainable debt burdens faced by many African countries, with a particular focus on the case of Ethiopia. According to a recent report released by the African Forum & Network on Debt And Development (AFRODAD) in collaboration with other partners, 32 African countries are allocating more funds to servicing external debts than to critical sectors like healthcare and education. This trend is exacerbating the risk of massive debt defaults and hindering these nations from adequately addressing urgent public service needs and climate change challenges. CNBC Africa recently had a conversation with Jason Braganza, the Executive Director of AFRODAD, shedding light on the pressing issues and potential solutions. Braganza highlighted the alarming situation in Ethiopia, where creditors are engaging in negotiations that could have dire consequences for the country's economy. Despite the potential for creditors to profit from debt restructuring, agreements have been rejected, leaving Ethiopia in a precarious position. The call for debt cancellation and better policies to address the debt crisis is becoming increasingly urgent. Braganza emphasized the need for a revamped debt restructuring framework, pointing out that the current Common Framework established by the G20 is inadequate. He suggested implementing a debt service suspension to provide temporary relief while more effective solutions are developed. Proposals such as a global debt authority and a UN Framework Convention on Sovereign Debt have been put forward as potential paths to more sustainable debt management. The upcoming jubilee year declared by the Catholic Church in 2025 offers an opportunity for countries burdened by excessive debt to seek cancellation. The risks for countries like Ethiopia, often seen as economic powerhouses in Africa, are multifaceted. Political, social, and economic stability are all threatened by the inability to allocate sufficient resources to essential services. With a greater focus on debt servicing than investments in key sectors, there is a growing risk of societal unrest and economic stagnation. Countries like Kenya and Uganda have already experienced social unrest related to high debt burdens, indicating the urgent need for comprehensive debt restructuring solutions. The implications of failing to address these challenges could lead to a cycle of poverty and dependence on external aid, further eroding the economic prospects of these nations. Action at the policy level is critical to prevent a deepening debt crisis in Africa and safeguard the well-being of its citizens.