Increasing G20 Cooperation on Debt and Investment in Africa

Africa’s long-standing and difficult history with international capital can be attributed to a complex set of factors, including historical legacies, structural adjustment programmes and, most recently, Chinese investment. In many ways, external finance has helped African countries create jobs, increase productivity, and improve competitiveness, with recent achievements even in knowledge- intensive sectors such as business services and fintech. However, the region is currently facing its most severe phase of debt and fiscal distress in this century, precisely when it needs to mobilise resources to meet development objectives and climate commitments. While Africa’s hard-won credit market access had been hailed as the key to boosting the region’s growth and development, countries now face significant challenges in their relationship with international capital, with profound economic, political and social implications. Despite tensions, China and the West share a common interest in helping African nations address their mounting debt problems and will need to step up their efforts to find a mutual understanding. The G20 must aid this process by supporting debt relief initiatives, coordinating debt restructuring efforts and working with the African Union to address underlying issues.