Debt in Africa

Fleur Anderson Excerpts

Tuesday 21st November 2023 Westminster Hall

[Fleur Anderson (Putney) (Lab)]

It is a pleasure to serve under your chairship, Mr Vickers.

I congratulate my hon. Friend the Member for Slough (Mr Dhesi) on securing this very important debate and on such a well-informed and impassioned speech, which outlined the absolute reason for urgent action on debt cancellation.

I start my contribution by declaring an interest. Before being elected to this place, I was a Jubilee 2000 campaigner back in the 1990s, along with others, and I was then a trustee for the Jubilee Debt Campaign, which is now Debt Justice. As a campaigner for Christian Aid, then for Methodist aid and then for the Catholic Agency for Overseas Development or CAFOD, I led ordinary people in protests up and down the country. Those people all absolutely understood the stranglehold that debt repayments have over so many Governments that would otherwise use that money to educate girls, invest in clean water and sanitation, tackle climate change, and invest in infrastructure such as roads to increase trade and boost the economy.

Together, across the country, we wrote to MPs. Yes, I used to be one of those people who wrote to MPs, sending in postcards. We held protests in our towns and villages, and made endless amounts of red chains to symbolise the need to be free of unjust chains of debt. In 1998, 100,000 people circled Birmingham to make a human red chain to influence the G8 that was meeting there. In 2001, we went to Genoa. I remember coachload after coachload of all ages, sometimes very elderly. There were parishioners, people from faith groups across the country, going to Genoa for the G8, because they were so determined to make the change. In 2005, we marched through Edinburgh, and celebrated when the previous Labour Government made huge inroads, taking the lead in brokering a deal that cancelled £4 billion of debt of the world’s poorest countries.

Jubilee 2000 was a huge joint global campaign that led ultimately to the cancellation of more than £100 billion of debt owed by 35 of the world’s poorest countries. I saw the difference it made on the ground. Having campaigned for the reduction under the IMF’s heavily indebted poor countries initiative, I was delighted to see a teachers’ house in a village in Zambia bearing the huge letters HIPC. Enabled by debt-reduction payments, that house provided teachers for a whole generation, boosting opportunities and the economy, all from debt reduction.

But where are we now? There simply has not been the same UK leadership on this since 2010. That has been a glaring missed opportunity, which undermines any warm words the Minister might be about to say on leading on sustainable development goals. I welcome the Select Committee on International Development report on debt relief in low-income countries, published in March this year, but I do not welcome as much the lukewarm response from the Government.

I also welcome the inclusion of debt in many places in the international White Paper, published yesterday, and agree with its assessment that high and rising debt vulnerability poses a significant development challenge. There needs to be more focus on debt reduction for the world’s most fragile and conflict-risk states. That is vitally linked to climate finance but, again, will there really be the significant action we need to see following that White Paper?

Lower-income countries have been facing increasingly high debt over recent years, with external debt payments increasing by 150% between 2011 and 2023. They have now reached their highest levels in 25 years. There are currently 54 countries in debt crisis, including many in Africa, such as Zambia, Ghana, Mozambique and Kenya. As the thousands of people from across the country who took action in the Jubilee 2000 campaign on debt know, those current unsustainable debt levels have a serious impact on the lives of millions of people across the continent, and on any chance of achieving the sustainable development goals.

A reported 72% of the sustainable development goals to achieve poverty eradication are off track. According to the UN, they are “woefully off track”, dangerously so. The increasing amount of unsustainable debt is one of the major reasons for that. Many countries were forced to reduce public spending during the pandemic, to keep up with debt payments. That is spending on education, health, water and sanitation. Lower-income countries spend five times more on debt repayment than on addressing the climate crisis.

Countries have had no choice but to turn to fossil fuels to generate the funds needed to meet their colossal debt repayments. I will be at COP28 in a few weeks’ time with a delegation of MPs, and I will make this case to those attending from across the globe. I look to the Government to make the same case and the links. I hope the Minister will say something about the link between debt cancellation and climate finance, which is essential.

The Government could show global leadership and rectify flaws, especially in the common framework agreed by the G20. Four countries have now applied to the common framework, but none has received any debt cancellation so far. Zambia applied in February, but there is a gap of a mechanism to induce private creditors to accept the same terms as other creditors, which leads to disastrous impasses; it is a frozen system. Zambia has £6.3 billion of debt and, in the words of my hon. Friend the Member for Slough, is in that debt doom loop. Yet the UK is in a unique position to strengthen the legal framework to ensure the participation of private creditors, as 90% of the bonds issued by countries eligible for the common framework are governed by English law. The UK could pass legislation to incentivise private creditors to take part in debt relief. Two possible legislative options are to replicate the Debt Relief (Developing Countries) Act 2010 and to extend UK corporate law on debt restructuring so Governments can restructure their debts in a similar way to companies. There are ways to fix the issue, but as it is currently set up, it just will not be the answer to debt cancellation that it should be.

I end by asking the Government and the Minister to take the action needed to end the debt crisis. Specifically, will the Minister commit to consulting on new legislation to compel private creditors to participate in debt relief to tackle the debt crisis in lower-income countries?