In a landmark initiative to tackle the debt crisis in Africa, seven former African Heads of State have teamed up to sign the Cape Town Declaration, calling for urgent debt relief and fairer borrowing terms for African nations.
The so-called African Leaders Debt Relief Initiative (ALDRI) was described as a unified effort to push for a comprehensive debt solution and a contribution towards re-shaping the global financial system.
ALDRI called for “bold and urgent action on a comprehensive plan for debt relief for Africa and other developing countries suffering under excessive debt burden.”
As reported in the Nigerian publication, Business Day, The Cape Town Declaration was unveiled alongside the South African G20 Presidency’s Summit of Finance Ministers, which “placed debt sustainability and debt relief at the heart of the global economic agenda.”
The paper said the Declaration also aligned with the African Union (AU) agenda 2063, which reinforced Africa’s long-term vision for sustainable development.
The African leaders who signed the Declaration comprised Olusegun Obasanjo, former President of the Federal Republic of Nigeria (Chair); Yemi Osinbajo, former Vice President of the Federal Republic of Nigeria; Macky Sall, former President of the Republic of Senegal; and Joyce Banda, former President of the Republic of Malawi.
Other signatories were Jakaya Mrisho Kikwete, former President of the United Republic of Tanzania; Ameenah Gurib-Fakim, former President of the Republic of Mauritius; and Hailemariam Desalegn, former Prime Minister of the Republic of Ethiopia.
Transformative Solutions
ALDRI stated its commitment “to breaking the silence on the sovereign debt crisis and advocating for transformative solutions.”
It said Africa stood at the epicentre of “a deepening debt crisis” – the worst in 80 years – made worse by the COVID pandemic, escalating food and energy prices, and climate change impacts. Over 50% of the continent’s population lived in countries where more money was being expended on debt interest payments, instead of funding education and health.
Additionally, mounting climate challenges across the continent required financial investment in climate resilience and sustainable green growth. But the combination of “external debt levels and the cost of capital exceeding projected growth rates,” had led to many African economies being “caught in a vicious cycle of debt, underinvestment and climate risk.”
The leaders also said that the G20 Common Framework for Debt Treatments, which was meant to assist hard-pressed economies, had “fallen short in providing timely and predictable debt restructuring.”
The statement affirmed: “ALDRI seeks to mobilise African leadership for urgent action. The time to act is now.”
It also warned that most African countries wouldn’t be able to meet United Nations 2030 Sustainable Development Goals and Paris Agreement targets, unless there was “significant debt relief to unlock the necessary funding.”
The current crisis had been compounded by the escalating impacts of climate change, which had devastated economies and deepened financial instability.
Two-tiered, country-specific approach
ALDRI proposed a two-tiered approach, applicable to each country’s debt burden and sustainable growth plan.
Firstly, a comprehensive Debt Restructuring for highly indebted countries, including:
a) A predictable, fair and inclusive debt restructuring process involving all creditors—private, bilateral and multilateral.
b) Ensuring comparability of treatment across creditors to avoid fragmentation and prolonged crises.
Secondly, lowering the cost of capital for all developing countries, including:
c) Credit enhancements through multilateral institutions to unlock affordable financing.
d) Debt suspension mechanisms to create fiscal space for development and climate investments.
Welcoming South African President Cyril Ramaphosa’s commitment to prioritising debt sustainability for developing countries, the statement said: “We stand at a historic crossroads. 2025 marks the first African presidency of the G20, led by South Africa. One of the key objectives of the G20 is to solve global financial crises. This is its moment of truth.”
It continued: “Debt relief is not charity. It is an investment in a prosperous, stable, and sustainable future—for Africa and the global economy.”
The leaders added that a stronger Africa would mean a stronger world. It was also a pre-condition for the successful implementation of the African Union’s Agenda 2063.
“Unlocking Africa’s economic potential will drive global growth, strengthen supply chains and accelerate the green transition,” the statement concluded.
Obasanjo, Osinbajo, African leaders move to tackle debt crisis – Businessday NG
African Leaders Debt Relief Initiative — Breaking the Silence, Driving Solutions
