African countries seek debt relief amid COVID-19 pandemic

African countries are currently facing a critical decision regarding debt repayment amidst the ongoing global pandemic. The COVID-19 crisis has put immense pressure on African economies, with many nations struggling to meet their financial obligations while also dealing with the devastating impact of the virus. In a bid to save lives and salvage their economies, African leaders are calling for debt relief and cancellation to free up resources that can be directed towards essential services and economic recovery. CNBC Africa recently interviewed Dr. Andrew Mold, Chief Regional Integration and AfCFTA at the Sub-Regional Office for Eastern Africa, UNECA, to shed light on the situation facing these countries. Dr. Mold highlighted the significant current account deficits in Eastern Africa, which are in urgent need of financing. With export revenues plummeting and tax revenues shrinking due to the economic downturn, many countries in the sub-region are facing a dire need for financial relief. The call for debt relief has become a priority for African nations grappling with the economic fallout of the pandemic. The interview further discussed the implications of debt relief on potential creditors and investors. While some may view debt cancellation as a deterrent to future investments, Dr. Mold emphasized the necessity of a moratorium on debt payments in the current global economic turmoil. The moratorium, proposed to last for two years, aims to provide much-needed breathing space for governments struggling with escalating debt service payments. The recent agreement by the G20 to offer a moratorium on debt service payments until the end of the year for low-income African countries has been deemed insufficient by many. Countries like Kenya, which are highly indebted but not classified as low-income, and Seychelles, severely impacted by the tourism crisis, are in need of comprehensive debt relief measures. The interview also delved into the long-term repercussions of the increased borrowing by African countries. While there have been concerns about rising debt levels in recent years, Dr. Mold distinguished between short-term measures to combat the current crisis and the broader issue of debt sustainability. Countries like Kenya and Rwanda, which have invested heavily in infrastructure development, are now facing the challenge of balancing debt repayment with the need for economic stability during the pandemic. The unique circumstances created by the COVID-19 crisis call for immediate action to support African countries through debt relief initiatives, while also addressing the long-term implications of borrowing practices. As the global community navigates the economic fallout of the pandemic, solidarity and cooperation will be essential in ensuring the recovery and resilience of African economies.