Debt in Africa

Debate between Tony Lloyd and Martin Vickers

Tuesday 21st November 2023 Westminster Hall

[Tony Lloyd]

rose—

[Martin Vickers (in the Chair)]

Sorry, I call Claudia Webbe.

--- Later in debate ---

[Tony Lloyd (Rochdale) (Lab)]

Thank you, Mr Vickers. I was so excited at the prospect of speaking in front of you that—

[Martin Vickers (in the Chair)]

We were excited to listen to you, Tony.

[Tony Lloyd]

Thank you. I congratulate my hon. Friend the Member for Slough (Mr Dhesi) on introducing this debate. It is timely. I think we all know that the crisis in Africa is real. We—as a world, not simply as a country—need now to address that. I would like to start quite a long time ago, rather like my hon. Friend the Member for Putney (Fleur Anderson). When we look back over the history of the debate around indebtedness—to “break the chains” and all those phrases that used to trip off our tongues about the need for change—I believed that the world would be very different.

I want to relate something from around 30 years ago. I went to the funeral of a very young child in Mozambique. The baby died because the mother simply could not feed that baby. It was shocking at the time to see a baby denied the nutrition that I would expect for my own grandchildren, for my constituents and for our world. At the time, I would have said, “It will change.” I would have said that we would move down the path of debt relief. Had we had this debate 30 years ago—we probably did have it—we would have been told, “Don’t worry: with a combination of looking carefully and kindly at debt management, at the transmission of technical aid and assistance and at the growth of trade, the world will be very different.”

Well, the world is very different: it is worse for those in Africa. In practical terms, the little baby from all those years back, whom I talked about, is now replicated by many others. Debt is an enslavement of the generation to come, and that is, of itself, something that we ought to rail against. How can a child be born into the enslavement that debt causes? My hon Friends have given different accounts of debt, and we can probably argue about the figures. The hon. Member for Leicester East (Claudia Webbe) used a particular figure, but the figure I have about the GDP-to-debt ratio is that debt will now be something of the order of 60% of GDP across sub-Saharan Africa. Whether that is exactly right or wrong almost does not matter. It matters in general terms—we can talk trillions or billions of dollars or pounds—but debt impinges on the quality, the reality and the possibility of life of millions of people across the African continent. It is at the human level that debt matters.

If we look at the battle against poverty, the battle against poor health, the battle for education, the battle to create the health services and the battle around climate change, we are losing those battles. We are losing them in this generation—at the moment—and we have to change. We have to change in a particular way, because, at some point, we have to make our minds up and say whether we are prepared to create a very different relationship: the indebted no longer as clients of those who hold the debt but, instead, as partners. My hon. Friend the Member for Slough made some very profound points about this.

If we are not a partner to African nations and the people of Africa, we lose battles such as climate change, which is our common battle together. It would be remarkable for Africans to know that we are losing it together, because they make so little contribution to the problems that we have all caused around climate change. African nations as a whole are insignificant at the moment, although an Africa of the future, if not helped through transition to those climate change-consistent policies, will potentially be a major producer of greenhouse gases. We should therefore be partners, but if we are going to be partners, we have to be meaningful about what debt really means.

Those who were in the Chamber earlier heard the international development Minister, the right hon. Member for Sutton Coldfield (Mr Mitchell) make a very good series of statements on the White Paper. I welcome that White Paper, but there is a challenge that the Minister of State, Foreign, Commonwealth and Development Office, the right hon. Member for Berwick-upon-Tweed (Anne-Marie Trevelyan) has to take back to the Prime Minister and others. It is not enough to print the words in the White Paper; we need the political will to translate that into national action in the UK and international action. On national action in the UK, when I looked into our history of debt relief, the only figures I could come up with showed that the UK’s spending on debt over the last 10 years or so has been £44 million. That is absolutely insignificant against the scale of the problem. We have to do more by way of debt forgiveness, but not simply on our own. We have to be a part of that global coalition that challenges debt and looks at debt restructuring in a real and rational way.

We have to look, for example, at Zambia and the number of people who have evidenced the situation there. Zambia could not come to an agreement, partly because it was the private debtholders who caused the crisis there. Zambia then offered to pay them some 73 cents on the dollar, compared with 55 cents on the dollar for intergovernmental loans. That was a massively bigger rate of return for the private investors, even though they charged massively higher interest rates on their debt. Bear in the mind that the reason for charging higher interest rates is relevant to risk. They put the risk premium in, but having put the risk premium in, they then wanted to be paid a superabundant return on their investment. The reason that failed is that it was inconsistent with the G20 common framework, which said that there had to be a rough equivalence between Government and private debtholders. That is right; there should be that kind of equivalence. We have to be in this together.

A challenge for the Minister is this: are this Government prepared? As a lot of that debt is operated through UK law, it is in our capacity to ensure that that debt, which is factored through the City of London and so on, is managed in a way that says to private debtholders that they have to pay their fair share of debt forgiveness and debt relief, if we are genuinely going to restructure on these issues.

We can make a change. I may not have been able to give hope to the mother of the child I talked about before, as I do not think I would have been so bold as even to say to her that something could be better at that stage of her life. Perhaps I would have said to other people that the world can change, and it can change for the better. Let us ensure that we can do it in this generation. Let us ensure that now is the time.

This has to be a political priority, and I believe my party will take this on board. I hope that in a year’s time or thereabouts we will be sat around having this debate again, and we will be sat on different sides of this little horseshoe. It will be about political will. As I have said to the Minister, the challenge is whether the political will is there from the Prime Minister. Is there the political will to say that the decision to cut the development assistance in the way this nation did took us in the wrong direction? Is the political will there to raise those very powerful points, as my hon. Friend the Member for Leicester East did, about the history of post-colonial Africa?

Even now, we subsidise, for example, Rwanda and Uganda in terms of their education and health service. That is the right thing to do. In turn, however, the armies of those two countries have been part of the exploitation of the mineral wealth of the Democratic Republic of the Congo, which of course is then shipped over to the west, where it is paid not at a value-added rate, but at the market rate. Who controls the market? It is not the producers of those rare earth minerals that we take from African soil.

We need to think not simply about debt relief, but about the bigger picture and how we alter the terms and conditions of trade and exploitation, which our system is part of. I do not say that in any sense of whipping myself; I say it rationally, because if we are going to make that change, we have to think about that.

I say to the hon. Member for Strangford (Jim Shannon) that I have always been puzzled by the parable of the stewards. I always felt it was little unkind on the perhaps slightly less competent steward with his one talent. I never quite understood why he should be treated so badly, because clearly there was a steward who thought he was doing the best—he buried the talent in the ground, and that talent did not lose any value in that process.