Reacting to a recent request by President Muhammadu Buhari for European countries to grant African countries debt relief, a Twitter user, Manney Uto claimed that debt relief had already been granted to African countries and extended to 2022. This implied that President Buhari made a needless request to the international community.
Verdict: Misleading. The claim that debt relief has been granted to African countries except Nigeria is misleading. Debt service suspension and not outright debt cancellation was granted. Nigeria rejected debt service suspension offers.
Even at that, private creditors that hold commercial debt and some countries have not participated in debt relief for Africa. Though some multilateral and bilateral creditors, including the G20, had granted some African countries debt service suspension, President Buhari made a case for outright debt cancellation for Africa.
A Twitter user, Uto, via his handle, @BrosManney, faulted President Buhari’s debt relief appeal, saying African countries had already benefitted from debt pardon.
He said the debt relief to Africa had also been extended.
“Who writes Buhari’s speeches? Debt relief has been granted to African countries, extended to 2022,” he stated.
Describing the request for debt pardon for Africa from the international community as “disgraceful,” Uto said Nigeria was excluded from the debt relief.
Nigeria “was excluded because of the massive direct payments to government officials by ministers and chief executive officers of ministries, departments and agencies with no consequence management,” he said.
Buhari’s request to European countries
President Muhammadu Buhari attended the recent Financing Africa Summit held in Paris, France, where he urged countries in Europe and multilateral lenders to consider the restructuring of debt portfolios of African countries as a full relief towards helping them tackle the effects of the COVID-19 pandemic.
Speaking in Paris on the theme, “External Financing and Debt Treatment,” Buhari said the fall in commodity prices as COVID-19 took a toll on the global economy further slowed growth in some countries and strained health facilities.
He was quoted in a statement by his Senior Special Assistant on Media and Publicity, Garba Shehu, saying: “It is in this vein that we solicit the support of the French government with its influence in the European Union to lend its voice to the efforts being made to mobilise additional resources for developing economies, most especially Africa, in order to strengthen the quantum of investments to our economies.”
Meanwhile, is it true that debt relief had already been granted to Africa, implying that President Buhari’s request was needless?
A lecturer of Finance at the University of Cape Town, Misheck Mutize, explained that a debt service relief package had been approved by some of the world’s biggest lenders for more than 25 African countries.
The arrangement includes the World Bank, the International Monetary Fund, the G20, the African Development Bank, and all Paris Club creditors.
Mutize explained that the goal was to free up more than $20billion that governments could use to buttress their health services.
For instance, the Executive Board of the International Monetary Fund (IMF), on April 1, 2021, approved the third tranche of grants for debt service relief for 28 member countries under the Catastrophe Containment and Relief Trust (CCRT).
This approval followed two prior tranches approved on April 13, 2020, and October 2, 2020, respectively.
A statement released by the IMF on April 5, 2021, clarified that the debt service relief would enable “the disbursement of grants from the CCRT for payment of all eligible debt service falling due to the IMF from its poorest and most vulnerable members from April 14, 2021, to October 15, 2021, estimated at SDR 168 (US$238) million.
The Fund revealed that subject to the availability of sufficient resources in the CCRT, debt service relief could be provided for the remaining period from October 16, 2021, to April 13, 2022, amounting to a total of about SDR 680 (US$964) million.
However, beyond the debt service relief for some African countries, in the 2021 African Economic Outlook christened, “From Debt Resolution to Growth: The Road Ahead for Africa,” the president of the African Development Bank Group, Dr Akinwumi Adesina, called for “one last holistic debt relief for Africa.”
“The time for one last debt relief for Africa is now. But such relief would require that African countries credibly commit to their share of the deal through bold governance reforms to eliminate all forms of leakages in public resources, improve domestic resource mobilisation and enhance transparency, including on debt and in the natural resource sector,” Adesina stated in the report published in March 2021.
He explained that Global partnership efforts were being made by the G20 to support temporary debt relief for developing countries through the Debt Service Suspension Initiative.
“However, debt payments are only deferred, and the initiative covers only a small fraction of Africa’s total bilateral debt,” he stated.
Similar to Adeshina’s call for a comprehensive one last debt relief for Africa, Mutize explained that some experts “have called for outright debt cancellation to lessen the debt burden on African countries as they emerge from the crisis of the COVID-19 pandemic. Most African states will have high public debt as they use all available lines of credit to secure resources to fight the pandemic.”
Mutize noted that private creditors that hold commercial debt had not been willing to participate in debt relief as they “have criticised the G20’s call for freezing all debt repayments.”
However, the official spokesperson of the president, Garba Shehu, posted on his Twitter handle, @GarShehu that President Buhari told the Summit that Africa needed “complete reliefs,” not just debt service relief for some African countries.
“According to him, many African countries were already experiencing debt distress and the Debt Service Suspension by France and G-20 does not go far enough,” Shehu tweeted.
On the claim that Nigeria was excluded in debt relief granted to Africa, Daily Trust on Sunday recalls that in October 2020, the federal government refused debt service suspension overtures from the IMF.
The Minister of Finance, Budget and National Planning, Mrs Zainab S. Usman had announced the federal government’s decision to reject the debt relief at the public presentation of the 2021 budget proposal- breakdown and highlights held in Abuja.
Similarly, in April, the World Bank’s Development Committee and the G20 finance ministers endorsed the Debt Service Suspension Initiative (DSSI) in response to a call by the World Bank and the IMF to grant debt service suspension to the poorest countries to help them manage the severe impact of the COVID-19 pandemic.
But the federal government said the risks of debt relief now far outweighed the potential benefits. “No, we are not taking the World Bank debt relief offer,” the minister declared when asked.
The claim that debt relief has been granted to African countries except Nigeria is misleading.
Debt service suspension and not outright debt cancellation was granted.
Nigeria rejected debt service suspension offers. Even at that, private creditors that hold commercial debt and some countries have not participated in debt relief for Africa.
Though some multilateral and bilateral creditors, including the G20, had granted some African countries debt service suspension, President Buhari made a case for outright debt cancellation for Africa.
This was also in line with the recent call of Dr Adesina for “one last debt relief for Africa.”