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A chance to transform Africa’s debt, climate and development agenda

Africa’s constrained fiscal space – fueled by high external debt levels and higher cost of capital – continues to stretch the socioeconomic safety nets for its people to near breaking point.

The burden of external debt service suffocates the fiscal policy space needed for strategic investments in education, health, housing, infrastructure, climate adaptation and other essential public services to millions of people.

About 30 African economies are spotlighted as heavily indebted. It doesn’t help that vast spaces of the continent are directly staring down the barrel of the climate crisis, ranging from severe droughts to deadly floods and cyclones.

Fanning the external debt crisis are three main economic weaknesses—deep deficits in food and energy security, and low value-added industrialisation combined with lopsided global finance, trade and investment rules. Africa’s food import bill – wheat and rice, among others – is expected to hit $110bn over the next two years, which is a threefold jump over the past decade, according to the African Development Bank. Yet the continent used to be the breadbasket for former colonial powers less than half a century ago.

These structural fault lines continue to widen trade deficits and weaken African currencies, raising the cost of imported food, fuel and medicine. As a result, African governments find themselves boxed into a tight corner where they have little wiggle room other than to tap more loans from institutions such as the IMF, whose lending conditionalities and policy advice commodify fundamental human rights creating an endless vicious cycle of poverty.

Similarly, the continent’s lack of voice in the governance of global economic decision-making, and very low levels of energy access and industrialisation means foregone jobs, foregone wealth, and a mountain of import bills.

The global financial institutions and frameworks created after the Second World War are still serving the global (colonial) economy of that time. This has to change to make the system more equitable and responsive to the growing SDGs and climate-related financing needs of developing countries in a rapidly changing climate.

As African leaders gather in Addis Ababa for the African Union summit from 14-18 February, the above issues are particularly expected to take a sharp focus. Human capital is probably the biggest asset any economy can have, which is why Educating an African fit for the 21st century has been made a theme of the AU summit – a chance to explore ways to improve the continent’s human development index.

With intensifying climate and ecological crises amid rising poverty and inequalities, a new pan-African industrial policy and vision is urgently needed; one that avoids reproducing the post-colonial industrialisation and energy traps.

It is imperative that African leaders build on AU’s admission as a permanent member of the G20 and its recent success in pushing for a Global Tax Convention at the United Nations, to push for a more democratic and inclusive global economic order, in which Africa occupies strategic seats and defines the menu at the high table.

The AU gathering follows the Group of 77+China (G77+China) meeting held in January in Kampala to champion the interests of the Global South countries. With Uganda as the new chair of the G77+China group and the president of the Non-Aligned Movement, Africa has a unique chance to demonstrate leadership by articulating a comprehensive and bold vision around which to rally the Global South for sustainable development, climate action and finance.

This vision must prioritise the continent’s food sovereignty through an agroecological food system—use of native seeds, organic fertiliser, natural pesticides, crop rotation, intercropping, among others— over cash crops for export. This could quickly take African economies to self-sufficiency again, while increasing resilience to climate change.

With the world having agreed to transition away from fossil fuels at COP28 in Dubai last year, Africa has a unique opportunity to leapfrog the dirty and obsolete energy systems of the past and pivot towards more sophisticated, people-centred renewable energy systems that integrate the advantages of centralised and decentralised systems. The continent’s strategic minerals are key to powering the global energy transition and driving green industrialisation that delivers sustainable prosperity and jobs for millions of its youth.

The signals are clear and this year’s AU summit should not just be like any other gathering of friends to toast champagne. African leaders should come out with a clear plan and priorities around which the continent will collectively rally around in engaging with the G20 club and other multilateral bodies.

Africa should use its new positions in the G20, G77+China, and the Non-Aligned Movement to reset its engagement within the multilateral space and turn around the fortunes of the people and planet.

Joab Okanda is a senior advocacy advisor at Christian Aid and Fadhel Kaboub is a senior advisor at Power Shift Africa

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