Museveni cancellation of African loans
President Museveni has called for the cancellation of all African loans, estimated at $284 billion. PHOTO/Softpower

President Museveni has called for the cancellation of all African loans, estimated at $284 billion.

Ugandan President Yoweri Museveni has called on rich countries to cancel all African loans to help the continent release enough money to fight the coronavirus.

President Museveni told the UN delegation that total forgiveness of debt would only show the world’s interest in helping Africa fight a disease that is not it’s own.

“External friends, if they are friends, must abolish all multilateral and bilateral debt because this issue is created by Asia for Africa,” he said.

While Western states and financial institutions such as the International Monetary Fund (IMF) and the World Bank have waived off a large portion of the debt owed by Africa’s poorest states in the past, a complete cancellation is unprecedented. The continent’s total sovereign debt burden increased to a record high of $284 billion this year.

Mr Museveni’s request appeared to be primarily aimed at China, which triggered Africa’s recent debts.

While the Western countries, the International Monetary Fund and the World Bank have taken steps to eliminate some of Africa’s debt, China has remained silent on the possibility of cancelling debts owed to Beijing by African countries.

Museveni cancellation of African loans
President Museveni has called for the cancellation of all African loans, estimated at $284 billion. PHOTO/Softpower

China is believed to have one-third of the continent’s sovereign debt and is said to have loaned more than $111 billion to African countries to finance major infrastructure projects.

While Africa desperately needs to develop its infrastructure, China has been criticized for the opacity of its credit agreements. Even the amount awarded is kept confidential, leaving educators to estimate the actual total.

African ministers claim that China has told their governments that the debt relief will only be granted to Beijing in accordance with the terms of the credit agreements. This has raised concerns that strategic ports, airports and mines in Africa may fall under Chinese control.

Zambia has threatened to seize a massive copper mine belonging to the British company Glencore and turn it over to China for debt relief.

Grouping the world’s richest countries, the G20, which includes China, has stopped debt collection from the world’s 75 poorest countries until the end of the year, giving some African governments some breathing space.

But it is estimated that $8 billion will be paid to Beijing by the end of December.

Withholding repayment of debt has provided only modest relief. African finance ministers say they need $98 billion to fund the measures needed to prevent the spread of Kovit-19 on the continent.

Africa has not yet saved the full force of the pandemic, and has so far recorded 51,734 confirmed cases and 1,954 deaths – but the lockdown, the decline in oil and commodity prices and the decline in tourism could have a major impact on the continent’s economy.

Britain lends relatively little to Africa, mainly because most of its funding comes from aid rather than loans. The UK is the second-largest bilateral donor on the continent.