The initiative, unveiled during the G20 Finance Ministers’ meeting in Cape Town, South Africa, seeks to address the growing financial crisis facing the continent.

The declaration aligns with the African Union’s Agenda 2063, reflecting the continent’s long-term economic goals. Dr Sizo Nkala, Postdoctoral Research Fellow at the Centre for Africa-China Studies, University of Johannesburg, explained that Africa is facing a debt crisis comparable to the one in the early 2000s. He said, “We are seeing a repeat of the debt crisis that plagued Africa in the early 2000s. With 21 countries now in debt distress and an external debt surpassing $685 billion, the situation is dire. This year alone, African nations are set to pay $88 billion in debt service, this is unsustainable.”

Nkala stressed the importance of establishing African-led financial institutions, praising recent efforts towards creating an African Credit Rating Agency. “If we can set up an African Credit Rating Agency, it will provide an unbiased assessment of our nations’ creditworthiness. This would help reduce expensive borrowing costs and offer more affordable financing options for African countries,” he said.

Strengthening national debt management and boosting domestic resource mobilisation were also identified as crucial steps to ease the debt burden. “African countries need to improve debt management at the national level, and there must be stronger efforts to mobilise domestic resources. Relying on international financiers and private creditors with dollar-denominated debts has proven problematic,” Nkala added.

The Cape Town Declaration is seen as a vital move towards addressing Africa’s debt challenges and pushing for reforms in the global financial system.

–ChannelAfrica–