Bright Simons, a policy analyst at the IMANI Center for Policy and Education based in Accra, Ghana, recently participated in a thought-provoking podcast hosted by Doha Debates, discussing the current sentiment on African debt cancellation. The podcast came on the heels of the G20 finance ministers' meeting in June, where the issue of debt cancellation for developing countries was among the topics on the agenda.
In the podcast, which was hosted by journalist and senior analyst at the International Crisis Group in Nairobi, Nazanine Moshiri, Bright Simons shared his perspective on why the traditional arguments for debt cancellation are no longer applicable in the present context.
Simons pointed out that the nature of debt lending has evolved, stating, “Because the nature of who is lending has changed, the debates we all supported around the early 2000s about owing debt no longer apply.” He elaborated on the historical shift, noting that in the early 2000s and the 1990s, a significant portion of Africa‘s debt was owed to official creditors like the IMF, World Bank, and rich country governments. These institutions lent money based on specific programs, which meant that if countries were unable to repay, blame could be shared between the lenders and the governments.
However, Simons emphasized that the situation is different with private investors. He stated, “In the case of private investors, they don't have that influence. If Ghana's policy fails, and the Ghana government cannot pay back, we cannot expect the same degree of blame sharing.”
Furthermore, Simons raised questions about fiscal responsibility within his own country, Ghana, citing the controversy surrounding the construction of the National Cathedral, which is estimated to cost $1 billion. He urged Global South leaders to scrutinize their fiscal systems and take responsibility for their spending decisions.
The podcast also addressed concerns raised by campaigners seeking debt cancellation in Africa. Simons highlighted the fact that a substantial portion of debt service and burden is owed to domestic credit lenders, urging a more comprehensive analysis that includes domestic debt when discussing debt concerns.
Simons emphasized the need to differentiate between debt restructuring and debt cancellation, explaining that the latter involves complete write-off of debt without providing an opportunity for learning from past mistakes.
Regarding the impact of the COVID-19 pandemic and conflicts in various regions, Simons acknowledged the varying experiences of African countries. He stressed that some countries have managed their debt and economic growth effectively, while others faced significant challenges.
Concluding his arguments, Simons highlighted the importance of respecting local diversity and nuances when engaging in global campaigns for debt relief. He referenced past debt relief initiatives, which led some countries to borrow commercially, exposing them to new risks.