Introduction

The African Forum and Network on Debt and Development (AFRODAD) is a pan African organisation established 25 years ago with the aim of advocating for accountable and transparent public debt management; debt cancellation; efficient mechanisms for mobilisation and utilisation of domestic resources; as well as the use of international public financing instruments by African countries. Today AFRODAD remains committed to this mission by promoting the long-term development of the African continent through finding sustainable policy solutions to the complex development financing challenges faced by African countries in the implementation of their development agenda – notably national development Plans (NDPs), the Sustainable Development Goals (SDGs) and African Union Agenda 2063. As part of the mandate mentioned above, AFRODAD in collaboration with its partners, has since 2015 been providing capacity building through the Summer Schools to a broad range of development stakeholder drawn from the African continent. This has made the Summer School a yearly AFRODAD flagship event that aims at keeping Africa’s development stakeholders abreast of topical issues in the fast-evolving area of development finance. It is in this regard that this year, AFRODAD and its partners will be organizing the 2021 Summer School. This year’s event will run from 22^nd to 26^th November 2021 under the theme “Building Capacity Towards a Common African Position on Issues of Development Financing in Africa”.

The Summer School theme aligns with the expectations of recently held Pan African Conference on Debt and Development and its main outcome document “The Harare Declaration” which emphasizes the need for Africa to emerge as a “rule maker not the rule taker” in its quest for development. The event also builds on the successes of the previous Summer Schools and other AFRODAD flagship events that have fully equipped Africa’s development stakeholder with the right knowledge and skill sets required to defend Africa’s development interests and to challenge the global debt architecture, influence advocacy spaces and push for prudent debt management in Africa. This has contributed immensely to enriching and advancing AFRODAD’s advocacy work in the continent.

The two-day long 2021 AFRODAD Summer School shall bring together stakeholders -parliamentarians, policy makers, civil society actors, faith leaders, individuals, the academia and the media – with the overall aim to further enhance their capacity on issues of development finance. This includes issues around transparent and accountable debt management, efficient mechanisms for the mobilization and of domestic resources, as well as use of resources provided through international public finance.

The focus of this year’s conference sets out to highlight that mobilising African people to speak in common terms regarding their development plight requires a profound understanding of current and evolving issues in the field of development finance and how they are intricately woven to provide African countries with opportunities that can enhance sustainable and inclusive development outcomes.

This year’s Summer School will be the last to be known by this name as the event will transition into the Debt and Development Academy (DADA).

Background and Context

Prior to the Covid-19 pandemic, a number of African countries were already grappling with unsustainable debt burdens and with some showing signs of debt distress. A quick scan of Sub-Saharan Africa shows that roughly 40% of countries are on the risk of debt distress and their debt to GDP ratios had reached unsustainable levels based on the Regional Economic Communities (RECs) standards – on the average of 70 percent after 2021. Due to a surge in public financing needs as governments had to spend more to mitigate the socioeconomic consequences of the pandemic, a number of countries have seen their debt stocks increasing.  On average, the debt-to-GDP ratio of many Africa countries has worsened by 10 percent – rising from about 60 to 70 percent between 2019 and 2020; with resource intense economies being the most affected. The high debt to GDP ratios reached by countries is detrimental to macro-economic stability as they imply that a great chunk of the country’s economy is consumed by debt. In addition to new demands to finance caused by the outbreak of Covid-19, other major drivers of debt dynamics are high inflation, weak governance, security spending, and weaknesses in revenue mobilisation.

The current trend speaks of a worsening situation over the past 2o years in the continent, as growth in gross government debt outpaces growth in government revenue – a situation that is not likely to improve before 2026 according to recent UNCTAD analysis. The situation is further compounded by limited investments and the fact that borrowing has been accompanied by little adherence to prudent debt management principles as some countries have abandoned good debt management principles. Of special concern is the violation of transparency and accountability principles, where loan contracts are signed behind closed doors without parliamentary borrowing approvals and public scrutiny. In some countries, special legislation has been put in place during the state of emergency period, making it impossible for any person or corporate body to raise questions on the dispensation of emergency assistance. This has led to corruption in the use of the borrowed funds. Further, the non-adherence to debt thresholds has resulted in many countries borrowing above their limits further plunging into debt traps.

It is worrisome to note that developing countries have been targets of vulture funds which have an effect of increasing their debt stock. Vulture funds are companies that buy off debt from poor countries very cheaply and just as the debt is about to be written off. These companies then sue for the full value of the debt at an added interest – which is sometimes ten times more than what they paid for it. This increases the debt obligations of the poor nation. Given that many of these vulture funds are based in tax havens there is greater secrecy as there is limited or no information on who owns them.

Despite this increase in debt levels, countries still have to honor their debt commitments and this worsens macro-economic stability.  At the global level, measures such as the G20 Common Framework and the Debt Service Suspension Initiative (DSSI) were initiated to give some relief to indebted African countries. It is important to note that the effect of these on African countries is not significant and inadequate as countries are expected to recommence their debt payments when the moratorium lapses at the end of 2021. For DSSI to successfully ease debt burdens, create fiscal space for countries to respond to the pandemic and allow for a resilient recovery, it needs to provide for several measures such as; including multilateral debt, making private creditors participation mandatory and widen eligibility to all middle-income countries. Furthermore, DSSI should be extended to a period of at least four years. This extension can provide the time and space to properly assess and move forward with necessary debt restructurings and cancellations that must be conducted fairly and transparently based on debt sustainability assessments that consider human rights obligations.

To further assist countries to deal with the pandemic, there was growing pressure on the IMF to release funds through Special Drawing Rights (SDRs) which would give countries access to financial resources. The issuance of the SDRs is viewed as one of the most viable and sustainable financing options to fight against COVID-19 and aid African economic recovery. While the developed world and rich G20 countries may not need new issuance of SDRs, developing countries desperately need it. SDR allocations can play a role in providing liquidity and supplementing member countries’ official reserves, as was the case during the global financial crisis. Of the USD650 billion allocation, about $260 billion will reach low- and middle-income countries, which is a small amount of their estimated needs but by far the largest amount of funds to reach these countries.

It is important to highlight that domestic resources mobilisation and international public finance instruments provide alternatives to relying on debt. The high incidence of debt in Africa is partly due to these alternatives not being viable enough and boasting them is critical in ensuring that countries reduce the debt burdens. For instance, the continent is losing roughly USD 89 billion through illicit financial flows. Should countries manage to stem IFFs, reliance on debt as a financing mechanism would be minimal. It is therefore important to stem IFFs.

A holistic approach to address the debt problem requires concerted efforts to challenge the global debt architecture that is tilted towards creditors at the expense of borrowing countries. Behind the façade of assisting developing countries, debt is seen as a profit-making business which syphons financial resources from poor and desperate African countries.  At the global level, credit rating agencies continue to have the ability to trigger a crisis by downgrading country ratings and this can mark the onset of capital flight and balance-of-payment problems. This results in an unfair sovereign debt narrative that places greater priority on the fulfilment of creditors’ interests at the expense of social and environmental justice. It is therefore indispensable for African countries to start seeing the need to approach these issues of debt from a pan-African lens and the summer school provides a building bloc towards this. This builds on the AFRODAD narrative that Africa is a rule maker not a rule taker. This narrative challenge the perception that Africa should take rules from outsiders.

To challenge the global debt architecture, it is imperative to strengthen a solid foundation for an African debt movement that revives, galvanizes advocacy on debt and influence policy-makers at country and regional levels on prudent debt management and equitable investment in public services. The Summer School provides such a platform to equip stakeholders with proper advocacy skills. Further, the Summer School seeks to contribute in address the current knowledge gaps around these issues that the summer school seeks to fill – for instance on the subject of SDRs. It is against this back drop that AFRODAD 2021 Summer School will focus on setting a solid foundation that is needed for a strong African debt movement.

Specific Objectives

• Contribute to building stakeholders capacity for a solid Pan African ideation on issues related to prudent debt management and related development finance mechanisms;
• Highlight the initiatives and mechanisms that African countries may utilise to prudently manage their debts for the benefits of its citizens; and
• To contribute to strengthening an African debt movement that is capable of influencing the international debt landscape for the benefit of African people

Methodology and Structure

The Summer School will include interactive sessions, group discussions and work, parliamentary sessions as well as guest presentations by lead experts on:

• General concepts (theory and practice);
• Comparative analysis of current situations (nationally, regionally and globally);
• Case studies;
• Policy labs to analyse cases and develop practical analytical skills;
• Policy discussions/group work and conclusions;
• Follow ups with individual participants and organisation.
• Breakaway sessions / use of working groups

The 2020 Summer School will be a week-long event which will combine both physical meetings and virtual participation for those outside of Zimbabwe.

Modules

• Political economy of debt
• Evolution of Africa’s debt
• Principles of debt management (AFRODAD borrowing Charter)
• Special Drawing Rights
• Debt and IFFs
• Debt, IPF instruments and emergence of private lenders
• Accessing debt information, Debt advocacy, digital advocacy and social media influence
• Movement building and CSO engagement

 Outcomes

• A more knowledgeable, engaged and active citizenry on public debt management and public finance management issues.
• Civic Society organisations that lobbying their national governments and advocating for improved mineral debt management and effective utilisation of borrowed funds; and
• Power holder that have the capacity to make policy decisions on an informed position.

Date and Place

17^th to the 19^th of November 2021

Contact Persons

Rangarirai Chikova [email protected]

Theophilus Yungong Zhong [email protected]

Rachel Jambo [email protected]