A clear plan that would move power over debt from colonial institutions to a more representative body is on the table.
The African Union (AU) has declared 2025 to be the Year of Reparations. The Pope has announced 2025 as a Jubilee Year, a year in which debts should be forgiven. And the United Nations has decided that the fourth Financing for Development conference in Seville in June-July 2025 will look to reform the international financing architecture.
Just two decades on from the celebrated Jubilee campaigns, we are back in debt crisis and the key lesson is that debt cancellation is not enough. We need to change the global economic system that creates debt, a system dominated by archaic institutions like the International Monetary Fund (IMF), created in the colonial era.
There is a clear alternative that is now on the table – taking the power over debt away from colonial institutions like the IMF to a more representative and inclusive UN body by agreeing to a UN framework convention on sovereign debt. This could agree to both a fair and transparent system to resolve debt crises and establish principles of responsible lending and borrowing, to reduce the risk of future crises.
As African leaders gather in Addis Ababa for the AU Summit on 15-16 February, a renewed push for slavery and colonial reparations is gaining momentum. This year’s summit, coinciding with the AU’s declaration of 2025 as the Year of Reparations, takes on added significance as new data reveals the staggering scale of the financial injustices faced by the continent.
A new report, Who Owes Who? External debts, climate debts and reparations in the Jubilee year, exposes the crippling burden of foreign debt on African nations, highlighting how it dwarfs the aid they receive and underscores the urgent need for debt cancellation.
The report paints a stark picture of the debt trap ensnaring Africa. Over three-quarters of lower-income countries on the continent spend more on servicing foreign debt than on vital healthcare systems. More than half allocate more funds to debt repayment than to education. This grim reality forces nations to make impossible choices, sacrificing the wellbeing of their citizens and hindering sustainable development. The report reveals that in 2024 alone, lower-income African countries paid a staggering $60 billion in debt repayments, a sum that could have been invested in health, education, and climate resilience.
But when we take a step back and look at the big picture of Who Owes Who, we find a very different reality.
A “climate debt” is owed by rich countries for polluting the atmosphere. The estimated sum has been calculated in the most systematic detail by Fanning and Hickel. Even by their lowest estimates, rich polluting countries owe lower-income African countries $36 trillion – fifty times more than the total foreign debt owed by lower-income African nations. By these calculations, Africa should be receiving $1.4 trillion annually in climate finance. This report turns the debt conversation on its head by revealing so much more is owed to developing countries than they owe developed countries.
It is a travesty that African nations are being crushed under the weight of foreign debt, at a huge cost to national development, while the world’s richest countries continue to look the other way, evading their responsibility to pay for the climate crisis, let alone making reparations related to the slave trade and unfair economic practices.
A key injustice relates to the role of global credit rating agencies. Investing in Africa is said to be high risk – even though the IMF has immense power to ensure all African debts are paid. This reality of enforcement is ignored, and so extortionate interest rates are charged on loans, averaging 9.8% in Africa, compared to the 0.8% average for wealthy nations like Germany. This is one of the root causes of the debt crisis.
At this weekend’s summit, the call for debt cancellation and reparations must be louder than ever. The AU’s declaration of 2025 as the Year of Reparations provides a crucial platform to address these historical and ongoing injustices. A fundamental overhaul of the global financial architecture, shifting power away from institutions like the IMF and towards a more representative UN body is a must. African leaders must use their collective voice in global spaces like the forthcoming Financing for Development conference to push for the establishment of a new UN Framework Convention on Debt to replace the current unfair, colonial system.
The AU Summit presents a pivotal opportunity for African leaders to unite and collectively demand debt cancellation as a partial payment of the climate debt and other reparations owed by rich nations. But debt cancellation alone will not be enough if we do not also transform the colonial architecture that is still in force.
This is an opportunity to use the Jubilee Year and the Year of Reparations to free Africa from debt and prevent future debt crises. The time for empty promises is over. The time for action is now.
Arthur Larok is the Secretary General of ActionAid International.
