Global debt relief frameworks designed to help poor countries are failing to deliver meaningful relief and, in some cases, are creating additional challenges for heavily indebted nations, according to finance experts in Africa.
They include the G20 Common Framework for Debt Treatments, an international mechanism designed to coordinate orderly, case-by-case sovereign debt restructuring for low-income countries facing severe financial distress.
Launched in late 2020 by the G20 in collaboration with the Paris Club, it aims to bring diverse, non-traditional lenders into a unified negotiation process. The other is the UN Framework Convention on Sovereign Debt, a proposed international legal system meant to handle government debt crises fairly, with fair debt restructuring, independent arbitration, and binding rules for all lenders as the core features.
Four nations- Chad, Ethiopia, Ghana, and Zambia have used the G20 Common Framework to restructure and seek relief on their sovereign debts, but experts say the outcomes of the processes have been mixed and that the frameworks need to be reformed before being applied by other African countries.
This was at a forum organised by the African Network on Debt and Development (AFRODAD) under the Stop the Bleeding Campaign, on the sidelines of the Joint 9th Session of the African Union Specialised Technical Committee on Finance, Monetary Affairs, Economic Planning and Integration and the 5th STC on Trade, Tourism, Industry and Minerals in Abidjan.
Jason Braganza, a Kenyan Economist and former AFRODAD Executive Director, says the countries that undertook the debt restructuring were all first forced to take up IMF credit facilities, which, he says, took away the fiscal policy space and condemned them to debt servicing amidst the restructuring process.
He also stressed that the crises the African countries were facing were misdiagnosed and therefore the wrong decisions were made regarding the expected debt relief. Hannah Wanjie Ryder, an expert on trade between China and Africa and chief executive officer of the consulting firm Development Reimagined, says among the reforms needed is the creation of a borrowers’ club.
This would mean more transparency, with African countries sharing information with each other about the sources of credit before they actually take on the credit. She says, for example, that the four countries accepted all the terms and conditions of credit from China and then later took their outcomes to the G20 framework, which, according to her, could no longer change anything. The “secret debts” by China ended up being the cause of the debt crises for the countries.
The speakers’ message was mainly that Africa could not continue operating within a debt system that prioritises creditors while citizens bear the social and economic costs. They want African countries to strengthen coordination, speak with one voice, and champion systemic reforms that place development, justice, and sovereignty at the centre of global debt governance.
Allan Mukungu, Senior Economic Affairs Officer at the UN Economic Commission for Africa, says that the debt restructuring processes and outcomes from the three countries have made it clear that reforms in the international financial system are necessary. He says, for example, that assessing debt using the Debt-to-GDP ratio is erroneous and should not be used to determine the debt sustainability of a country.
He wants instead the debt, productivity, and investments of the country to be studied to see which areas need improvement to enable the indebted country to pay its debt.
The speakers further emphasised the need for a borrower-led global debt architecture, including consideration of a UN Framework, stressing that Africa must move beyond reactive crisis management toward proactive debt governance through earlier intervention, stronger debt data reconciliation, improved sovereign risk assessments, and the establishment of an African Credit Rating Agency.
The G20 Common Framework was created to support countries facing debt distress, yet for many African nations, the process has proved slow, complex, and ineffective in delivering timely and meaningful debt relief. Mukungu also gave hope that the creation of the Africa Credit Rating Agency will go a long way in solving some of the challenges African countries face in getting credit from the international market, especially regarding creditworthiness.
Africa Credit Rating Agency (AfCRA) is a private-sector-led continental initiative headquartered in Mauritius, established to provide independent, context-aware credit assessments that complement global rating agencies and address perceived biases against African sovereigns. Mukungu says the three rating agencies in their rating criterion, miss out on important issues and end up making poor countries get credit at high interest rates or get ignored completely.
Uganda is one of the countries that explicitly support the creation of an African credit rating agency (AFCRA) and has pledged 1 million to the African Peer Review Mechanism, APRM. APRM was mandated by the African Union to establish Africa Agency as a homegrown continental institution, to reduce reliance on “the Big Three”: Moody’s, Fitch, and Standard & Poor’s.
Jane Nalunga, the Executive Director of SEATINI Uganda, an NGO focused on socioeconomic justice, has been leading other think tanks in the region to demand reforms in the global lending industry and remove the ‘biasness towards African countries’. She, however, also blames the Ugandan parliament in particular for approving any loans that the government seeks, without proper scrutiny, which she terms weak oversight.
African countries have long criticised these agencies for imposing high and, in some cases, unfair risk premiums, prompting a push for an alternative. Fred Muhumuza, an economist, also criticises the IMF/World Bank as well as the Ugandan government for relying on the debt-to-GDP ratio to determine the country’s indebtedness, saying it leads to erroneous decisions.
Uganda’s debt-to-GDP ratio rose to 53 percent this year, having breached the 50 percent ceiling in 2024.
Muhumuza says the means to determine indebtedness should be those that give the picture of the country’s ability to pay and what the loans are being used for. The African Union’s admission as a permanent G20 member in September 2023 is seen as providing a structural opportunity to rewrite the rules of sovereign debt treatment.
AU calls for a time-bound restructuring process, a clear and universally accepted methodology for comparability of treatment, automatic suspension of debt service for the duration of restructuring negotiations, expanded Common Framework eligibility for middle-income countries and a legal mechanism to enforce compliance with restructuring agreements once reached. It is also backing the call for a UN Framework Convention on Sovereign Debt as a more inclusive, rules-based alternative to the Common Framework.