As African countries grapple with devastating economic crises, the UK government is being urged to support a private member’s bill that aims to speed up debt restructurings and prevent private creditors from suing nations during negotiations. The bill, which has gained momentum, seeks higher repayments than other creditors.
The UK Government’s Role in Africa’s Debt Crisis
A Growing Concern for Southern and East African Countries
Demonstrators in South Africa protesting against debt levels in 2022. The country’s high commissioner to the UK has signed the letter calling for the government to back a Labour MP’s bill.
African diplomats from eight southern and east African countries have come together to urge the UK government to support a private member’s bill that aims to speed up debt restructurings, following economic crises that have hit the region. The bill, introduced by Labour MP Bambos Charalambous in November 2024, would prevent private creditors from suing countries while debt relief negotiations are taking place and seek higher repayments than other creditors.
The United Kingdom's government is a parliamentary democracy, with the monarch serving as head of state.
The Prime Minister is the head of government and is responsible for appointing ministers to various departments.
The UK Parliament consists of three branches: the House of Commons, the House of Lords, and the monarch.
The House of Commons has 650 elected members, while the House of Lords is composed of appointed members.
The UK's government is divided into several departments, each led by a minister.
A Growing Debt Crisis
The average developing country is spending 9.5% of its government revenues repaying debt, double the level of a decade ago. The poorest countries are spending 15% of their revenues on debt repayment, according to the UN development programme. Public spending on debt has grown faster than on health and education since 2012.
The African continent is burdened with a significant amount of debt, estimated to be over $500 billion.
This debt is primarily owed to international creditors and has been accumulated over several decades.
Many African countries have struggled to manage their debt, leading to economic instability and limited access to essential services such as healthcare and 'education'.
The G20's Debt Service Suspension Initiative aims to provide temporary relief to eligible countries, but long-term solutions are needed to address the root causes of African debt.
The Role of London in African Debt
90% of debt owed to private creditors by the world’s poorest countries is governed by English law and is transacted through the City of London. This is why any relief from undue profit to private lenders relies on the UK government‘s support. Signatories to the letter, including high commissioners to the UK from Zambia, Mozambique, and South Africa, have made tackling the ‘unprecedented debt crisis among many African countries‘ a priority of their G20 presidency this year.
Zambia is a landlocked country located in Southern Africa, bordered by eight countries including the Democratic Republic of the Congo, Tanzania, Malawi, Mozambique, Zimbabwe, Botswana, Namibia, and Angola.
The country has a diverse geography, with mountains, forests, and savannas covering over 75% of its area.
Zambia's economy is primarily driven by agriculture, mining, and tourism, with copper being one of the main exports.
The capital city, Lusaka, is home to over 3 million people and serves as the country's administrative center.
Challenges in Debt Restructuring
Countries that can no longer afford to repay their debts have to negotiate loan writedowns or extensions with lenders, including state-owned development banks from China, the US, and Europe. However, western private creditors have refused to pause debt repayments after the Covid pandemic hit, an issue that aggrieved China. Zambia stopped repaying its international debts in November 2020 and sought to restructure its loans under a new G20 process called the common framework.
The UK’s Position
A UK government spokesperson said: ‘The UK fully agrees that private creditors should participate in restructurings on comparable terms.‘ However, the UK is not currently pursuing a legislative approach to ensuring private creditor participation in restructurings.
