With the world crisis resulting from the Covid-19 pandemic, the French government and international institutions are sending out mixed signals about the African public debt.
On Monday 13 April 2020, the French President Emmanuel Macron sent out a call to massively cancel the public debt of African countries. On 15 April 2020, this clear announcement enabled France to obtain from bilateral creditors (G20 and Club de Paris) the commitment to suspend until end 2020 the debt service of 40 African countries. The World Bank is not taking part in this initiative but is working with the IMF, which approves an immediate alleviating of the debt of 25 countries throughout the world. Alongside this, the French minister of the economy, Bruno Le Maire, speaks of an “absolute economic emergency” and uses the success of the moratorium to support Emmanuel Macron’s cancellation suggestion, adding that this will be on “a case-by-case basis, and in a multilateral context”.
Every year, a third of commercial exports from Africa and 13% of African states’ revenue service the public debt. The level of real interest rates in Africa is often over double the rate of economic growth, thereby severely restricting wealth generation and inexorably slowing down the continent’s development. That being said, can we speak of over-indebtedness of African states? By way of comparison, in 2019 the public debt of Côte d’Ivoire represented 37.8% of GDP, while France’s stood at 98.8%…
In this context, which is at once technical, political and media-related, we must ask ourselves several questions. What are the real issues at stake for African states? What role do international relations play in current position-taking? What are the positions of African governments on the subject? Is debt cancellation necessary and desirable? Which debts and which lenders are we talking about? Could an alternative be the renegotiation of the commercial terms of public debts, in line with the risk profile of debtor countries? The current context offers a unique opportunity to conduct a global and in-depth reflection on this recurring
Gide has organised a webinar on 28 April 2020, from 9:30 to 12:00, moderated by Gide partner Nicolas Jean, a specialist in structured finance and project finance, in particular relating to the African continent, with African and European economic, financial and legal experts, to further explore and deepen the discussions and reflections initiated by our specialists. Our primary objective was to give the floor to committed practitioners able to provide practical and concrete insights on the topic, addressed through an international relations, local and international issues approach, from a political, economic, financial and legal standpoint.
Hubert Védrine, former French Minister of Foreign Affairs and former Secretary-General for the Presidency of the Republic
Mario Pezzini, Director of the Development Centre of the OECD
Najat Vallaud-Belkacem, France Director of the NGO ONE, former Minister and Government Spokesperson
Guillaume Chabert, Head of multilateral affairs, trade and development policies in the French ministry for the economy and finance, Co-Chair of the Paris Club and Co-Chair of the G20 Working Group on International Financial Architecture
Gomiluk Otokwala, Senior Counsel at International Monetary Fund (IMF)
Jean-Marc Brou, Advisor to the Ivorian Prime Minister Amadou Gon Coulibaly, in charge of Public Debt
Hamet Aguemon, Southbridge partner, former advisor to Benin Prime Minister Lionel Zinsou
Tariye Gbadegesin, Managing Director & Chief Investment Officer at the ARM-Harith Infrastructure Fund, formerly director of industry and telecoms within the Africa Finance Corporation and listed in the Choiseul 100 African Economic Leaders for Tomorrow
Omar Cissé, Director-General of InTouch Group and promoter of Teranga Capital
Thomas Lambert, managing partner within Lazard’s Sovereign Advisory practice
Zinda Sawadogo, partner within Ivorian firm KSK, advising the Côte d'Ivoire State on financing operations on international markets
The forthcoming webinar of Gide's African Debt taskforce will take place on tuesday 19 May 2020, from 9:30 to 12:30 a.m. on the topic of "African public debt: new roles, new challenges for the African Union". Stay tuned!