Friends of the Earth Australia has supported a call from WoMin African Alliance for the African Union, African Heads of State, International Financial Institutions, Chinese Lending Bodies and Private Creditors for a total and unconditional cancellation of African debt.
According to WoMin, to ideal with the current COVID-19 pandemic, only debt cancellation could help put resources at the disposal of African countries. The call includes a demand that the ecological and climate debt owed towards the countries of the South should be recognised and reparation and/or compensation provided by imposing taxes or fines on the corporations responsible for the pollution.
The current pandemic, like unfolding environmental disasters such as climate change, has hit women disproportionately hard across the world. As primary caretakers for the young and elderly, women are at the frontlines of caring for community during ecological disaster and the COVID-19 crisis.
WoMin say that Africa's outstanding public debt was US$1,330 billion in 2019, i.e. 57% of the continent's Gross Domestic Product (GDP), and now stands at US$500 billion. For some countries, debt servicing represents more than 25% of their revenues, and most countries spend more on debt payments than on health.
According to the communiqué of the G20 Finance Ministers and Central Bank Governors, the six-month moratorium on debt repayments which has been agreed for 77 countries, 40 of which are in sub- Saharan Africa, could be extended for a further six months. However, a moratorium is a limited and inappropriate response.
Pure and unconditional debt cancellation is economically possible. The global debt amount of countries eligible for the G20 initiative (including other poor countries outside of Africa) is estimated at just over US$750 billion, i.e. 1% of the G20's GDP in 2019 (USD 78,286 billion dollars), The pure and simple, unconditional cancellation of the debt is economically quite possible, but there is no political will to consider it.
Friends of the Earth join WoMin and the Committee for the Abolition of Illegitimate Debts in demanding:
- African Heads of State, in particular President Cyril Ramaphosa, current Chairperson of the AU, should call for the total and unconditional cancellation of the African debt, which is the only
solution to ease the social and economic impacts of the debt and health crises.
- Countries should conduct an audit of their debt as soon as possible, with citizen participation, to repudiate those debts that are illegitimate, illegal, and/or odious.
- Countries of the South should create a united front against the payment of illegitimate debts, as proposed by Thomas Sankara in 1987 at the meeting of the Heads of State in Ethiopia.
- Countries should take unilateral measures to free up financial resources to protect their populations and ensure the fulfilment of fundamental human rights. In this regard, international law can be invoked for at least three arguments: state of necessity, fundamental change of circumstances and force majeure.
- International finance institutions, private creditors, States of the North, and China should take note of the current health, economic and political situation in Africa, recognise their responsibilities and accept without concession the call for debt cancellation by African peoples and African States.
- Institutional debt should be cancelled by converting these into investment programmes aimed at the needs of economic recovery and social resilience in a post-Covid-19 world. These should focus on the expansion of essential public services under social control, the promotion of food and energy sovereignty, and respect for the land and natural resource rights of peasants, indigenous communities, and women etc.
- The systematic promotion of the private sector, in particular through the mechanism of Public Private Partnerships (PPPs), to finance the development of the countries of the Global South for the benefit of sponsoring countries and their corporations, and the further privatisation of public services and assets should be rejected.
- G20 and other powerful countries should commit to closing all loopholes for tax evasion, trade mis invoicing, unlawful transfer pricing, and the corruption of government officials by corporations headquartered in their territories.
- “Ill-gotten goods” by the rulers and dominant classes of the South should be expropriated and handed back to the populations concerned and placed under their control.
- Official development assistance should be replaced with an unconditional “contribution of reparation and solidarity” in the form of donations, including the settlement of the climate debt.
- The ecological and climate debt owed towards the countries of the South should be recognised and reparation and/or compensation provided by imposing taxes or fines on the corporations responsible for the pollution.
- The immediate suspension of loan repayments to microcredit institutions without interest and late payment penalties. In a post-Covid context these microcredit institutions should be transformed into self-managed savings and credit cooperative with zero interest rate and no clientelism.