Opinion

Our Perspective | Africa And Its Debt Crisis

Lusaka ~ Thur, 24 Sept 2020

By Editor

Many African countries are currently battling with effects of the COVID-19 pandemic which have put massive pressure on expenditures to fight the disease and at the same time, governments are implementing measures aimed at minimising as much as possible the social and economic effects this pandemic has had on their economies.
Most of these African countries did not foresee the current situation. A few months ago, Ghanaian President Nana Akufo said “We know how to bring an economy back to life. What we do not know is how to bring people back to life.” But the truth is that nobody knows how to resuscitate an economy after this emergency, because nothing like it has ever happened before; COVID-19 was not planned for and it caught many governments unaware.
While relief is being given to countries worst affected by the pandemic, developing countries like Zambia have been at the tail end of receiving such assistance and in most cases than not, the government has had to use its own resources to finance activities aimed at fighting the COVID-19. With this in mind, it is not surprising that most African governments are now pushing for debt relief because, with the financial pressures currently on their plates, debt repayments are proving a major strain and a serious disturbance to socio-economic programmes.
In mid-April, the G20 announced a suspension of bilateral debt payments for 73 of the poorest countries, half of them in Africa. The moratorium brought respite until the end of the year, with Ethiopian Prime Minister Abiy Ahmed saying; “This initiative needs to be even more ambitious. It should involve not just debt suspension but debt cancellation. It should last until well after the pandemic is over and cover borrowing from commercial lenders too.”
Realizing the tremendous effect COVID-19 has had on African countries, the African Union and a group of finance ministers called for a $100bn stimulus package for the continent, including $44bn of debt relief and a two-year suspension of payments.
Special envoy for the African Union (AU) and former finance minister of Nigeria, Ngozi Okonjo-Iweala, says “There is no question of anybody defaulting and not paying. But we need a standstill across the board to give us the breathing room.”
Mrs Okonjo-Iweala’s statement is exactly what the Zambian government is pushing for – debt relief and or cancellation, but has assured that there will not be any default for some of those debts that ought to be paid.
Zambia has since solicited suspension of debt interest payments and government has assured that it will continue to make debt service payments on outstanding Eurobonds if an agreement is not reached, finance permanent secretary Mr Mukuli Chikuba has revealed and explained that Zambia has maintained contact with all commercial creditors in a bid to reach consensus on how to address the debt as an ongoing process.
“We are just trying to be transparent. It is not a default. In fact, two days ago, we had interest payments due on the $750 million eurobond and we paid,” Mr Chikuba has said, an explanation that shows the government’s unwavered commitment to its debt payments.
And like Mrs Okonjo-Iweala has noted, the impact on the economies of the continent will not go away as fast as anybody could think and these countries, including Zambia, may require a little more time to recover economically and otherwise.

9 Comments

  1. Joey

    It is sad to see that the entire world is affected due to covid-19. But through the god grace and hard work of President Lungu and his government, the situation in Zambia is not as worst as compared with other African countries.

  2. Ivy

    No country was prepared for this new and rare deadly virus. The whole world was scared because of the high death toll. So instead of blaming and criticizing our President, as a citizen we must all come together and support him in the fight with Covid-19.

  3. Ron

    We must appreciate the efforts of President Lungu and his PF government. We cannot ignore the fact that due to their hard work the situation in Zambia is not worsened as compared with other African countries.

  4. Ruth

    Covid-19 pandemic has displayed the strong and positive leadership of President Lungu. Where most of the countries were panicking due to the rise in numbers. President Lungu was busy fighting and implementing all preventive measures to stop the spread of the deadly virus.

  5. Marge

    Debt repayments issue was obvious… Even the developed countries like Spain, America faced a huge economic downfall, then Zambia is still a developing country. Naturally, they will need more time to recover economically.

  6. Josh

    We cannot deny the fact that it was difficult for Zambia to handle the economy and Covid-19 side by side. But we must appreciate the hard work of President Lungu. He never gets distracted with negative criticism, and continues to show his best leadership qualities.

  7. Reagan

    It is true. Most African countries are worst affected by the pandemic than Zambia. And we must give all the credits to our President Mr. Lungu.

  8. Razor

    If we had another President than Lungu we would not have even felt the effects of covid. The dollar would have remained steadfast and life would have gone on as normal. In fact we would have been even able to support other countries which have been hard hit. Alas this visionless man just botched up everything.

  9. non nonsense

    Problem with Zambia’s is they are lazy, prefer to hold begging bowl and sing praises for incompetent, corrupt, stealing politicians than changing their work culture and dare to socially boycott the deviants and once government changes first thing to demand public execution of corrupt politicians and government officials. Allah is great. Bring Sharia law to Zambia

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