Ahead of 4th Financing for Dev't confab: Experts proffer solutions to address Africa's debt conundrum, unlock dev't.

This is in a bid to advance a coherent position for African governments as they look towards negotiating a new international dispensation under the upcoming 4th Financing for Development conference at the United Nations, to be held in Seville, Spain, in June.

Reflections to this effect dominated exchanges during the 11th Session of the Africa Regional Forum on Sustainable Development and a pre-event on financing sustainable development, held in Kampala, Uganda. 

The Executive Director of the African Forum and Network on Debt and Development, AFRODAD, Jason R. Braganza, briefed reporters on the developments during a webinar on Thursday, April 10, 2025. 

His outing was titled: “Unlocking Africa’s Sustainable Development through Innovative Financing and Debt Reform”.

In his submission, Braganza said the Africa as a continent, a region and as a people, still faces a multiple-pronged crossroads.

“As we speak today, four countries continue with the G20 common framework. Besides that, there are over 25 African countries that are in debt distress or at high risk of being in debt distress. So, in total, that's over half the continent facing a formidable debt crisis,” he stated, noting that this is “against a very polarised international architecture, both in terms of politics, economics, and security”.

Braganza said key issues raised during talks in Uganda has been on how to generate opportunities that have been afforded to Africa through the African Continental Free Trade Area, through curbing illicit financial flows, and also building momentum and coherence around a comprehensive debt reform package that is needed to advance as a continent and to reform the global debt architecture.

The AFRODAD Executive Director said African governments lack a collective platform to negotiate and strategise on how to restructure or renegotiate their debt dispensation with their creditors. 

“Part of the reason for this is that the debt architecture has changed quite dramatically over the last 20 to 25 years, whereas we've had a situation where our creditors were largely bilateral or multilateral,” Braganza explained. 

He said the current situation is such that new bilateral lenders do business “very differently from what we have been used to”, added to the emergence of “private and commercial lenders who do business very differently, but whose interests tend to be more short-term than medium to long-term”.

Braganza said these changes in the landscape, coupled with lack of debt restructuring needs, have made many countries to be “reluctant to look into how they can restructure their debt for fear of actually losing out on international private capital markets, in particular”. 

Illicit financial flows deepening debt crisis 

The AFRODAD official said the second issue handled during the discussions was around illicit financial flows, which he insisted remains a “huge problem because it contributes to having deficits on the continent, which then forces governments to borrow”. 

“The amount of money lost through illicit financial flows is estimated to be around 80 to 90 billion U.S. dollars annually. This is both through licit and illegal ways of doing business on the continent,” he detailed. 

Braganza said the huge chunks lose to illicit financial flows is money that African governments have to find through taxation, largely through regressive taxes. 

“The opportunities therein need to be very specific in terms of national-level interventions, but also coherent in terms of a coordinated continental set of interventions. Some of these are presented in the high-level panel report on illicit financial flows, the Beckie panel report of 2015,” he detailed. 

Implementation of AfCFTA to spur growth 

The third dimension to tackling the debt conundrum as discussed in Uganda, Braganza stated, is around the African Continental Free Trade Area, AfCFTA. 

“There are teething problems, but yet there are still opportunities in which the Continental Free Trade Area can act as a catalyst for development and increased trade and movement of goods and services across the continent,” he stated. 

Braganza said the three areas are the kinds of interventions and dimensions that will help make a coherent position for African governments in negotiating a new international dispensation under the upcoming confab. 

He said a major aspect that came up during discussions is that of diversion of resources from public investments, whether in public services, social services, or creating incentives for domestic businesses to flourish, towards debt servicing. 

“We must critically think about the debt crisis's impact on the continent—not just on our ability to develop and grow our economies but also on creating the right incentive structure for domestic businesses and industries to emerge and spur growth, development, job creation, and wealth for us as a continent and as a people,” he noted.

Dealing with the challenges and how we catalyze opportunities presented through Agenda 2063, he said, is extremely important in getting “meaningful negotiated outcome” at the upcoming 4th Financing for Development conference in Spain.