Borrowing costs: The G20 Common Framework for Debt Treatments is a mechanism created by the G20 in 2020 to help heavily indebted low-income
countries negotiate debt relief in a coordinated and predictable way. Photo: Delwyn Verasamy
Africa still has a chance to press for “ambitious” change in its debt problems under the G20 Common Framework, even though the United States is boycotting the annual summit of global heads of state in Johannesburg this weekend.
The G20 Common Framework for Debt Treatments is a mechanism created by the G20 in 2020 to help heavily indebted low-income countries negotiate debt relief in a coordinated and predictable way.
In August a G20 business summit heard that Africa pays some of the highest borrowing costs in the world, and there were calls for a coalition of willing institutions to address the issue. Data shows that African governments pay up to 500% more for capital market loans, with external debt service reaching $89 billion in 2024.
The US’s boycott of this year’s G20 under South Africa’s presidency — which is largely due to policy differences with Pretoria, is a chance for other global powers to step up, international development expert Desire Assogbavi told the Mail & Guardian this week.
“The absence of (America) is regrettable and symbolically important, but it does not stop the G20 from moving forward. It does not close the space for ambitious commitments that reflect African and broader Global South priorities,” Assogbavi said.
“By not showing up, Washington is voluntarily ceding influence to others, including the European Union, China, India, Brazil and the African Union at a moment when the rules and norms are being rewritten.”
US President Donald Trump has warned that he will not endorse resolutions from the G20 summit and urged other members not to do so as well.
The US has already blocked consensus on other G20 ministerial statements, such as the health ministers’ statement, over objections to language regarding multilateral action on climate change and the World Health Organization Pandemic Agreement, which the Trump administration opposes as an infringement on national sovereignty.
“The G20 decisions and many others are not legally binding. However, they carry considerable political weight, and we will maximise that,” an Asian diplomat based in South Africa told the M&G on condition of anonymity.
During its presidency, South Africa has made debt relief one of its top priorities. Earlier this month, President Cyril Ramaphosa warned that the burden of sovereign debt repayments, particularly in Africa, was stifling public spending and widening inequality.
Ramaphosa made the comments after being handed a report by the G20 extraordinary committee on global inequality, chaired by Nobel laureate and economist Joseph Stiglitz, which examined how debt and austerity have become structural drivers of inequality and pandemic vulnerability.
According to World Bank calculations, Africa’s combined external debt is approximately 24.5% of its GDP.
That’s US$685 billion in debt to external creditors. By the end of this year, Africa is expected to have paid $88.7 billion servicing its debt.
South Africa, Egypt, Nigeria, Morocco, Mozambique, Angola, Kenya, Ghana, Côte d’Ivoire and Senegal account for more than 60% of this debt.
It gets worse for low-income countries on the continent, Osten Chulu, the senior economic advisor and G20 advisor at the United Nations Development Programme told the M&G this week.
“About 20 African countries are already in distress, or at high risk of it. That tells you that governments are spending more of their incomes to pay off the debt, which has trapped them,” he said.
“Instead of building hospitals, schools and other developmental projects, the money is going to pay debts and interests.”
In 2024, African governments spent an estimated US$163 billion on servicing public debt, up from about US$61 billion in 2010. Interest payments reached roughly 16–17% of government revenues, the highest of any region, International Monetary Fund data shows.
Experts from institutions such as the African Union, UN Economic Commission for Africa, the African Development Bank and Open Society convened a G20 side event in Johannesburg earlier this week, themed “Rethinking Debt Sustainability and Exploring Africa’s Alternatives”, where they called for reforming the current system, describing it as “outdated and creditor-biased”.
They advocated for an African Credit Rating Agency and a UN Framework Convention on Sovereign Debt to create a fairer and more effective global mechanism for managing debt crises.
They also challenged the premise of Africa as solely a debtor, instead framing it as a net creditor due to factors such as climate change, resource extraction, and stolen wealth through a history of colonisation.
“We need debt restructured, but what we really need is a system that actually works to give countries incentives to do preemptive restructuring rather than to wait to hit a wall (distress),” said Dr Hanan Morsy, the Deputy Executive Secretary and Chief Economist at the UN Economic Commission for Africa.
So far, Chad, Zambia, Ghana and Ethiopia have applied for debt relief from the G20.