President Macron never intended to cancel African debt

4 May 2020 by Pauline Imbach

Had we been born yesterday, we would have been tempted to believe that the question of African debt was finally going to be taken seriously. Emmanuel Macron, wielding a magic wand, was about to cancel the continent’s debts, once and for all. Yet, like every bad magic trick, you could see how he did it and the illusion failed. Behind the cancellation announcement lies a real plan that will worsen the situation for all African countries.

Since 2011, Africa’s external public debt has more than doubled to reach 500 billion US dollars at present. Debt servicing [1] has followed the same growth curve and represents more than a quarter of some states’ total revenue (42% in the case of Angola, for example). On average, African countries spend 13% of their budget on servicing debt, and the situation will get worse. The situation will especially worsen for Sub-Saharan African countries where growth “is forecast to fall sharply from 2.4% in 2019 to -2.1 to -5.1% in 2020, the first recession in the region over the past 25 years.“ [2].

The African continent is largely dependent on export revenues and it is currently experiencing a drastic fall in commodity prices. Export revenues are indispensable for obtaining foreign currency reserves which enable debt repayments. Zambia, for example, which ranks 2nd in copper production on the continent, needs to restructure 1 billion dollars of its external public debt to avoid bankruptcy, yet since January 2020 copper prices have plummeted by 24% [3], while 75% of the country’s budget relies on mineral exports.

African countries’ fall in revenues is made worse by the global crisis which has seen financial capital repatriated to the North.

African countries’ fall in revenues is made worse by the global crisis which has seen financial capital repatriated to the North [4]. Large corporations and investment funds Investment fund
Investment funds
Private equity investment funds (sometimes called ’mutual funds’ seek to invest in companies according to certain criteria; of which they most often are specialized: capital-risk, capital development funds, leveraged buy-out (LBO), which reflect the different levels of the company’s maturity.
have moved their capital back to their parent companies and have placed them in fiscal optimisation schemes. On top of this, as a result of migrant workers’ revenues drying up due to lockdowns and the stoppage of large sectors of the economies in the North, there has been a drop in remittances sent by migrant workers to their home countries. According to the World Bank World Bank
The World Bank was founded as part of the new international monetary system set up at Bretton Woods in 1944. Its capital is provided by member states’ contributions and loans on the international money markets. It financed public and private projects in Third World and East European countries.

It consists of several closely associated institutions, among which :

1. The International Bank for Reconstruction and Development (IBRD, 189 members in 2017), which provides loans in productive sectors such as farming or energy ;

2. The International Development Association (IDA, 159 members in 1997), which provides less advanced countries with long-term loans (35-40 years) at very low interest (1%) ;

3. The International Finance Corporation (IFC), which provides both loan and equity finance for business ventures in developing countries.

As Third World Debt gets worse, the World Bank (along with the IMF) tends to adopt a macro-economic perspective. For instance, it enforces adjustment policies that are intended to balance heavily indebted countries’ payments. The World Bank advises those countries that have to undergo the IMF’s therapy on such matters as how to reduce budget deficits, round up savings, enduce foreign investors to settle within their borders, or free prices and exchange rates.

, remittances sent by migrant workers from the South amounted to 494 billion euros in 2019, that is three times as much as Overseas Development Aid, and over 700 million people in the South are directly dependent on that money. [5].

Countries dependent on the tourist industry and/or the massive presence of NGO workers have also seen a significant chunk of their revenue disappear. Other countries were already badly damaged by war and recent terrorist attacks (such as Burkina-Faso and Mali).

The current situation seems to be a dead end: a large number of countries on the Continent are on the verge of defaulting on debt repayments. In September 2019, the IMF IMF
International Monetary Fund
Along with the World Bank, the IMF was founded on the day the Bretton Woods Agreements were signed. Its first mission was to support the new system of standard exchange rates.

When the Bretton Wood fixed rates system came to an end in 1971, the main function of the IMF became that of being both policeman and fireman for global capital: it acts as policeman when it enforces its Structural Adjustment Policies and as fireman when it steps in to help out governments in risk of defaulting on debt repayments.

As for the World Bank, a weighted voting system operates: depending on the amount paid as contribution by each member state. 85% of the votes is required to modify the IMF Charter (which means that the USA with 17,68% % of the votes has a de facto veto on any change).

The institution is dominated by five countries: the United States (16,74%), Japan (6,23%), Germany (5,81%), France (4,29%) and the UK (4,29%).
The other 183 member countries are divided into groups led by one country. The most important one (6,57% of the votes) is led by Belgium. The least important group of countries (1,55% of the votes) is led by Gabon and brings together African countries.
declared that Congo-Brazzaville, Gambia, Mozambique, Somalia, South Sudan and Zimbabwe were already in a situation where they were defaulting on payments, and 11 other countries were close to doing so. [6].

This agreement states it will give “leeway for countries to quickly respond to the crisis” is actually nothing else than an abject media stunt.

When Emmanuel Macron spoke on 13th April he used the word “cancellation” in the middle of a lengthy speech on the Covid-19 pandemic, African debt was back in the limelight. Three days later, the G20 G20 The Group of Twenty (G20 or G-20) is a group made up of nineteen countries and the European Union whose ministers, central-bank directors and heads of state meet regularly. It was created in 1999 after the series of financial crises in the 1990s. Its aim is to encourage international consultation on the principle of broadening dialogue in keeping with the growing economic importance of a certain number of countries. Its members are Argentina, Australia, Brazil, Canada, China, France, Germany, Italy, India, Indonesia, Japan, Mexico, Russia, Saudi Arabia, South Africa, South Korea, Turkey, USA, UK and the European Union (represented by the presidents of the Council and of the European Central Bank). unsurprisingly announced a partial freeze of debt servicing, but there was no mention of cancellation. This agreement, which stated that it would give “leeway for countries to quickly respond to the crisis” [7] is actually nothing more than an abject media stunt.

The agreement actually consists of an 8 month deferment of debt servicing payments due between 1 May and 31 December 2020 for part of the debts of the 77 countries deemed to be the poorest. In order to access this mechanism, countries must be up-to-date with their payments to the IMF and the World Bank, meaning that creditors must deem them to be compliant. This delay is only applicable to bilateral debts between States, that is, 12 billion of the 32 billion euros of debt servicing scheduled for 2020 [8]. Meanwhile, States will continue to repay private creditors (including large banks) which hold 8 billion euros of debt, and multilateral creditors, such as the World Bank, which hold 12 billion euros of debt. Private banks will be able to make efforts towards deferment, on a voluntary basis… how nice! Finally, the repayments of actual debts scheduled for 2020 could be deferred until 2022, and then spread over 3 years, thus increasing the total cost of debt repayments! In 2022, 2023 and 2024, countries will have to pay back debt scheduled for those years and 2020 debt spread over those 3 years. In fine, “delaying debt payments will mean these will increase by 12.3 billion dollars, from 23 billion to 35,3 billion!” [9] It is undoubtedly this aspect which brings French Minister for the Economy and Finance, Bruno Le Maire, to deem this agreement “major progress” [10]...

Pure and simple debt cancellation, without any strings attached, is perfectly possibly economically; however there is no political will to do so.

It is worth noting that the total debt of the 77 countries eligible for the G20 programme amounts to 750 billion dollars, which represents approximately 1% of the G20’s GDP GDP
Gross Domestic Product
Gross Domestic Product is an aggregate measure of total production within a given territory equal to the sum of the gross values added. The measure is notoriously incomplete; for example it does not take into account any activity that does not enter into a commercial exchange. The GDP takes into account both the production of goods and the production of services. Economic growth is defined as the variation of the GDP from one period to another.
(78,286 billion dollars) [11], and is less than the German parliament’s own emergency funding programme (1100 billion euros), or that of the USA (2000 billion dollars), in the face of the Covid-19 pandemic… These debts are a drop in the ocean of finance! Pure and simple debt cancellation, without any strings attached, is perfectly possibly economically; however there is no political will to do so. What is at stake in the negotiations of the past few days and weeks has nothing to do with humanist ambitions. The pandemic serves as a smokescreen behind which creditors are setting up a system to manage the debts of the Global South to their advantage, in particular with historic creditors taking back control over the question of debt repayments.

Indeed, since 2005, the structure of African external debt has evolved significantly. Emerging economies (China, India, Kuwait and Saudi Arabia) have become essential creditors; China now holds 40% of the continent’s debt including 20% of public debt, amounting to 145 billion dollars. Alongside the Asian Infrastructure Investment Bank, China has become an unavoidable actor in financing large-scale projects, thus supplanting the World Bank in this domain.

Financial markets have acquired an important share Share A unit of ownership interest in a corporation or financial asset, representing one part of the total capital stock. Its owner (a shareholder) is entitled to receive an equal distribution of any profits distributed (a dividend) and to attend shareholder meetings. of sovereign debt Sovereign debt Government debts or debts guaranteed by the government. bonds (Eurobonds). Private creditors now hold 40% of Africa’s external public debt. In 2018, they received 55% of external interest Interest An amount paid in remuneration of an investment or received by a lender. Interest is calculated on the amount of the capital invested or borrowed, the duration of the operation and the rate that has been set. payments, whereas traditional creditors like countries in the Paris Club Paris Club This group of lender States was founded in 1956 and specializes in dealing with non-payment by developing countries.

(where France currently holds the position of secretary general) only received 28%, and 17% for international financial institutions, with the IMF and the World Bank in the lead. [12]. Thus, when African countries reimburse their external public debts more than half of the funds are earmarked for private creditors and there is no space for them to envisage defaulting on payments.

Thus, creditors can sleep soundly, as these new mechanisms will guarantee that their credits will be repaid and the vicious cycle of debt will continue: the newly “available” funds are not grants…

The risk is so great that even China, that usually operates independently, has agreed to discuss this issue with the Paris Club and the G20, which have both jumped at the chance to reassert their influence and attempt to reshuffle the cards. The big winners of this meeting are therefore creditors, especially private creditors. In what seems to be a repeat of what happened in the 2007 financial crisis, when large banks were saved by massive injections of public funds, the G20 has sent a strong message to capital markets and creditors by making available to them 1000 billion dollars’ worth of guarantees Guarantees Acts that provide a creditor with security in complement to the debtor’s commitment. A distinction is made between real guarantees (lien, pledge, mortgage, prior charge) and personal guarantees (surety, aval, letter of intent, independent guarantee). . Bruno Le Maire said that France applauded the IMF, the World Bank, and multilateral development banks for their swift mobilization in this crisis. (…) The IMF is ready to mobilize 1000 billion dollars. (…) The World Bank and regional development banks have already made 200 billion dollars available. (…) France has encouraged the international financial institutions to go even further in their response to the crisis, through the creation of new instruments. G20 Finance Ministers have taken the significant decision to encourage the IMF to create short term liquidity Liquidity The facility with which a financial instrument can be bought or sold without a significant change in price. lines to accompany countries that are facing temporary liquidity difficulties. [13].

Thus, creditors can sleep soundly, as these new mechanisms will guarantee that their credits will be repaid and the vicious cycle of debt will continue: the newly “available” funds are not grants. They are new credit mechanisms which will turn into debt that must be repaid! The economic decisions which have been taken are a new trap for the African continent, for the poorest countries, as well as for humanity in its entirety. The health-care crisis has laid bare the fact that we are all in this together. Numerous studies correlate the structural causes of the Covid-19 pandemic with a system hell-bent on over-exploitation of land and resources on an international scale. Debt is built on a system of unlimited extractivism and productivism; without the over-exploitation of resources, debt could not exist [14]. We therefore need a radical change of paradigm: cancellation of public debt is a matter of survival for everyone.

Translated by Vicki Briault and Dimitri Cautain for the CADTM


[1Debt servicing: the cost of meeting interest payments and regular contractual repayments of principal on a loan along with any administration charges borne by the borrower. See

[3Laurence Girard, « Le cuivre est laminé par le coronavirus », (Copper is steam-rollered by coronavirus), Le Monde, 21/03/2020. In French.

[4Éric Toussaint, « Suspendre immédiatement le paiement de la dette pour sauver des vies », (Suspend debt payments immediately to save lives), Le Soir, 09/04/2020. In French.

[5Julien Bouissou « La diaspora est devenue le bailleur de fonds le plus fiable » : l’indispensable argent des migrants, (The diaspora has become the most reliable creditor: the indispensable money of migrant workers) Le Monde, 15/12/2019. In French.

[6Milan Rivié, “New debt crisis in the South”, CADTM, 12/08/2019. The 11 African countries at high risk of being over-indebted are: Burundi, Cameroon, Cape Verde, Djibouti, Ethiopia, Ghana, Mauritania, Sierra Leone, Central African Republic, Chad and Zambia. The full list from November 2019 is available here:

[7Press statement by the French Minister of the Economy and Finance, 16/04/2020. In French.

[8Renaud Vivien, Antonio Gambini, Milan Rivié, « La fausse annulation de dettes africaines annoncée par le président Macron », (The phony cancellation of African debt announced by President Macron), Carte blanche, Le Soir, 16 April 2020. In French.


[10Julien Buissou, « Le G20 suspend le remboursement de la dette des pays pauvres, sans l’annuler », (The G20 suspends debt repayment for poor countries, stopping short of cancelling debts), Le Monde, 16 April 2020. In French.

[11Idriss Linge, « Moratoire sur le service de la dette accordé par le G20 : un peu d’aide et beaucoup de com’ », (The moratorium on debt servicing granted by the G20 : a little bit of aid and a lot of publicity), Ecofin, 19 April 2020 In French only.

[13Press statement: Bruno Le Maire’s response to the online meeting of G20 Finance, 15/04/2020 In French.

[14On this subject, seeNicolas Sersiron, « Pourquoi l’annulation massive des dettes africaines n’aura pas lieu », (Why wholesale cancellation of African debt will not happen), CADTM, 22/04/2020.

Other articles in English by Pauline Imbach (7)




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