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Ever rising debt burden: Is Uganda and Africa trapped?

Uganda President Yoweri Museveni

Uganda President Yoweri Museveni

There’s one data point in the World Bank’s latest Africa’s Pulse report, published last month, that is impossible to ignore.

More than 43 per cent of the people in Africa still do not have electricity. We are living in a time when tens of billions of dollars are being spent on developing artificial intelligence, advanced medicines, and space exploration.

But back on earth, over 600 million Africans are being denied the ability to turn on a light switch. And around 900 million people in sub-Saharan Africa are still cooking by burning charcoal and firewood, thus piling more pressure on the forest resources which escalates the impacts of Climate Change in the region.

Highly indebted countries in Africa are being stopped from investing their resources in research and development. For instance in Uganda, close to half of the national budget goes into debt repayment. This makes it harder for such a highly indebted country to promote research in developmental fields.

A report published last month by the African Development Bank shows that companies involved in mining Africa’s cobalt, lithium, and nickel for use in electric-vehicle batteries will make around $11 billion in 2025.

However, those that manufacture and assemble these batteries, most, if not all, of whom are outside Africa, will earn more than $1 trillion. The report, therefore, recommends that African countries establish centres of research excellence to help them participate in this higher-value manufacturing.

This is an excellent idea, and it should be supported. Unfortunately, this isn’t an option for countries where taxpayers are struggling to generate money to buy special meals, and clothes worth Shs 350 million among other extravagant expenses for a president every year.

By the end of last year, at least 22 African countries were in or at risk of debt distress. Their leading creditors, such as the International Monetary Fund (IMF) and governments, notably China, insist that debt repayments be prioritized, so they will need to spend most of what they earn through taxes on paying off debts.

But the dysfunctional nature of today’s geopolitics means that there’s little coordination between these creditors. The IMF typically requires indebted nations to increase taxes on goods and services and decrease public spending. China’s demands are rarely made public.

The IMF argues that its loan conditions safeguard spending on education, health and social protection. But a report last month from the international aid group, Oxfam says that countries find it impossible to both pay off debts and protect essential public spending.

All of this leaves highly indebted countries with little to spend on investments, including support for their research programmes. And that means that African countries will find it hard, if not impossible, to build long-term research and development capacity in areas such as renewable energy. And this will render all efforts aimed at environmental conservation futile.

In the past, Africa’s research policymakers have made the case for ‘debt-for-science swaps’ in which creditors agree to waive some debt for countries that spend more on research and development. This is not a new principle. The idea of reducing debt in exchange for a longer-term investment is already being applied by the IMF and other creditors to help tackle environmental issues.

Countries have been offered debt forgiveness in exchange for action on climate change or conservation goals, for example. Africa’s creditors should consider reviving this principle for research, too.

It’s a scandal that 600 million people in Africa lack access to something as fundamental as electricity and that this number is not declining. Without debt-for-science swaps and other creative solutions, too many of Africa’s countries are at risk of being trapped in a doom loop of debt and austerity that hurts the poorest and most vulnerable populations.

em-ojara@outlook.com

The author is an environmental scientist & political analyst


Comments

+1 #1 Akot 2023-06-03 14:41
[Ever rising debt burden: Is Uganda and Africa trapped?]

Africa needs real governance or it will be emptied of its young, educated migrating to developed world for chance!

What is more worrying is that Africans aren't concerned about being well governed, but complain all along while their useless rulers enjoy life & say all is well in the sinking continent being emptied of it's young, educated!
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+1 #2 Akot 2023-06-03 14:48
The more African useless rulers get donations, loans...the more they get rich while populations get poorer as nothing is done in term of development!

Only central capitals in Africa & presidential palaces, embasies, mps/ministers live in good buildings, whiel surbubes, towns, villages have never seen beginning of development!

But of course it's bad rule & poverty of populations in Africa...that makes UN so so strong & want more money while ensuring Africans...migrante to developed world!
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