A civil society organisation, the African Network for Environment and Economic Justice (ANEEJ), is seeking debt relief for Nigeria and 10 other Economic Community of West African States (ECOWAS) countries currently in distress based on recent debt sustainability analysis.
Speaking to our newsmen, the executive director, ANEEJ, Rev David Ugolor stated this during the two-day International Hybrid Conference on Special Drawing Rights (SDRs) with the theme; “Making Special Drawing Rights work for the people.” yesterday in Abuja.
Ugolor stated that this has becomes even more worrisome when viewed against the backdrop that Nigeria remains the world poverty capital as designated by the World Poverty Clock report of 2023 it means debt will drive more Nigerians and indeed, West Africans into extreme and multidimensional poverty if urgent and drastic steps are not taken by our governments and the international community.
He further reinstated that the conference is in furtherance of the implementation of our “Tracking Special Drawing Rights Funds and Raising Citizens Voices to end Debt Crisis in West Africa” and project being supported by the Open Society Foundation.
The project was premised on the background that Debt crisis in the Economic Community of West African States (ECOWAS) region has risen steadily in recent years. While the International Monetary Fund (IMF) debt sustainability analysis as of February 2021 shows that the majority of countries in West Africa have remained in moderate debt distress, a further analysis indicates that debt accumulation prior to the outbreak of Covid-19 outpaces the ability of growth performance to support debt servicing.
Statistics from the DMO shows that Nigeria’s public debt stood at N87,379,401.75 trillion as at June 30 2023 and in the same vein, Ghana’s public debt stock rose to 569.3 billion cedis ($49.7 billion) at the end of April, 2023, according to figures obtained from the Bank of Ghana. Sierra Leone’s debt is classified as being at high risk of debt distress, largely due to heightened solvency and liquidity risks arising from the COVID-19 pandemic.
“For us in Civil Society, this is quite disturbing because most of our countries’ revenues are now being channelled to debt servicing obligations at the peril of basic social services, climate and other development exigencies. The debt crisis imperils the attainment of the Sustainable Development Goals and achievement of the Paris Climate Agreement in West Africa.”
He recalled that the high fiscal deficits in many African countries have made it difficult to build resilience and tackle the multiple shocks (i.e., Covid-19 pandemic, natural disasters and insecurity occasioned by terrorism and banditry). As at last year, eight African countries, including Ghana were in debt distress and thirteen at high risk of debt distress.
Against this backdrop, African leaders, recently who gathered at the Africa Climate Summit in Nairobi in September, called for debt relief across the continent to allow countries to get on with responding to the climate and other development crises.
According to him, of the 15-member states of the Economic Community of West African States (ECOWAS), eleven of them are currently in debt distress. A new report by the Nigerian Economic Summit Group and the Open Society Initiative for West Africa has disclosed that Nigeria and 10 other Economic Community of West African States countries are currently in debt distress based on debt sustainability analysis. The 10 other countries are Benin, Burkina Faso, Cabo Verde, the Gambia, Ghana, Guinea Bissau, Liberia, Niger, Senegal, and Togo. The report, titled ‘Debt Management, Restricting and Sustainability in ECOWAS’, was recently launched at the Debt Management Office here in Abuja.
Economic crisis in 2021, the Board of the International Monetary Fund approved the release of $650bn Special Drawing Rights (SDR) to help boost the liquidity of member countries. African countries received US$33.8 bn out of which Nigeria received $3.35bn as its share. There are concerns that the allocation of the 2021 SDR was insufficient to support post-covid economic recovery especially for low-income countries like Nigeria.
He noted” that some specific proposals on the amount of SDR on-lending which include: the French President’s call at the Summit on the Financing of African Economies to reallocate 100 billion SDRs to African countries; the request by six African Heads of State to on-lend at least 25 per cent of the new SDR issuance, equivalent to US$ 162 billion, to boost the COVID-19 recovery and contribute to the fight against the climate crisis and; a request by the Ministers of Finance of Côte d’Ivoire, the Democratic Republic of the Congo, Ghana and Nigeria for G20 to consider on-lending at least US$ 30 billion in SDRs to a new facility that would catalyse investments in Africa, reduce liquidity premiums on middle- income countries’ sovereign bonds and incentivize environmentally sustainable investments.”
In April 2022, the International Monetary Fund (IMF), announced a new Resilience and Sustainability Trust (RST) which came into effect 1 May 2022. The new Trust aims to help low- income and vulnerable middle-income countries address longer-term structural challenges that pose macroeconomic risks, including climate change and pandemic. According to the IMF, the RST seeks to amplify the impact of the US$650 billion SDR allocation implemented August 2021 by channelling resources from economically stronger members to countries where the needs are greatest.
Special Drawing Rights (SDRs) in Africa remains a highly technical subject with little access to information available to policymakers and the public about how they work.
In his part, the executive director of ACEP, Ghana, Benjamin Boakye, while making her remarks said, the journey we are our nations and the well-being of our people, commitment and let us make this seminar a pivotal moment in our shared journey toward support of the Open Society Foundation.
She said, “We have commissioned research on the commitments that have widened, reflecting the growing struggle to balance debt accumulation with. I am proud to announce the proactive steps taken by the Africa Centre for Energy Policy in extension, contributing to the prosperity of the entire ECOWAS region.
As we convene for this National Conference on SDR, let us embrace this opportunity not only to the results we seek through our collaborative efforts will undoubtedly have far-reaching
working hand in hand with all stakeholders to ensure the outcomes of our efforts positively.
implications for the entire African continent. As we delve into the intricacies of the debt crisis, its challenges go beyond numbers, ensuring transparency and accountability in the use of these funds.
“Ghana and Nigeria, along with nine other ECOWAS countries, find themselves in a state of debt sustainable solutions. We cannot ignore the fact that despite past debt relief initiatives, the fiscal economic recovery. Its willingness to strengthen collaborations and partnerships, the capacity for sustainable debt servicing.”
