Public debt in Sub-Saharan African, according to AfDB (2020) continued to rise despite debt forgiveness that was given under HIPC and MDRI. The frequency of natural disasters and pandemics such as COVID-19 further increase the need for borrowing while constraining the ability of most developing countries to service their debts. Climate change is exposing Africa to exponential collateral damage, posing systemic risks to its economies, infrastructure investments, water and food systems, public health, agriculture, and livelihoods, threatening to undo its modest development gains and slip into higher levels of extreme poverty. Estimates indicate that about US$3 trillion will be needed to finance adaptation and mitigation to climate change in Africa by 2030 (AfDB, 2019).
Recently, most African countries have been borrowing from IFI and domestic market to fight the covid-19 pandemic. Economic growth especially in Southern Africa remain fragile but at the same time several countries are gravitating towards falling into debt distress. Sub-Saharan Africa will need about $574 billion per year until 2030 to finance the SDGs. While projected spending in a few countries, such as Botswana or Mauritius, will meet their SDG financing needs, for many countries in the region, there is a substantial financing gap totalling $256 billion per year. Policy makers are faced with a difficult task of balancing public borrowing and at the same time steering the country on a sustainable economic development path. Tax revenue ratios remain on average of 20% of GDP in Africa which is lower than the average of 30% of GDP in developed economies. Illicit financial flows are more pronounced in Africa than other regions since the trade is dominated by commodities. Between 1980 and 2018, sub-Saharan Africa received nearly $2 trillion in foreign direct investment (FDI) and official development assistance (ODA), it emitted over $1 trillion in illicit financial flows. These flows remove domestic resources that are crucial for the continent’s development.
Zimbabwe started experiencing problems in servicing its external debt in 2001and multilateral financial institutions since then found it difficult to further lend the country. Since then it has resorted to bilateral borrowing and issuing treasury bills on the domestic market. Zimbabwe requires about US$33.8 billion to build the enabling infrastructure for development (AfDB et al (2019). However, the investment in such sectors has been falling behind by far which threaten the achievement of SDGs (UNCTAD, 2019). Many developing countries rely on commodities which are subject to external shocks hence affect government revenue. Official credit has been declining over the past years and this has given rise to private creditors which is more expensive way of financing development.
However, accountability and transparency in the use of public resources remains a major concern. Borrowing from China has been on the spotlight since most of the loans and their terms remain undisclosed to citizens. Recently, the public raised an alarm regarding the abuse of public funds in procurement of covid-19 materials which then resulted in the arrest of Health Minister Hon Moyo. Many donors and IFIs who contributed resources towards responding to Covid-19 preferred to channel resources through UN agents citing lack of accountability on government. New issues such as Global Compensation Agreement increasing external debt by US$3.5 billion with no clear strategy of funding the debt. Perennial issues of non-compliance to PFM legislation where government continues to spend outside parliament approval as revealed by the Auditor-General’s reports and Parliament Portfolio Committee on Public Accounts reports. The need for fiscal discipline has been emphasized even by IMF during its last Article IV Consultations in 2019. The attempt to remove borrowing from foreign entities from parliamentary scrutiny in constitution amendment Bill (No.2) threatened sustainable public finance management.
The 2020 Annual Debt Conference will explore transparency and accountability issues around public finance management as well as issues around sustainable debt management with the ultimate objective of promoting inclusive development. The conference will pick up outcomes of the 2019 debt conference to deepen the understanding of a cross section of issues, and the related opportunities and challenges.
The Zimbabwe Multi-stakeholder Debt Conference is hosted by African Forum and Network on Debt and Development (AFRODAD) in collaboration with Zimbabwe Coalition on Debt and Development (ZIMCODD). The conference will bring together different stakeholders from diverse backgrounds such as government, parliamentarians, think tanks, civil society organizations, International Financial Institutions, the private sector, academia and the media.
- Communicate clearly on the issue of debt and provide regular and detailed updates.
- Recognize that the impact of Zimbabwe’s debt on citizens in terms of impact on public service delivery, human rights,
- Build collaborative plans and strategies to tackle Zimbabwe’s rising debt.
- Continue to consult with stakeholders and share policy recommendations that would potentially address Zimbabwe’s debt situation
The two-day Multi-stakeholder Conference on debt will be delivered through presentations, panel sessions and stakeholder discussions. The Conference Sessions will include:
- SSA natural Disasters, Pandemics and Public Sector
- Zimbabwe’s Public debt situation – Illicit financial flows, Inequality and public debt
- Impact of Public debt on Citizens – social service delivery, human rights, inequality
- Debt Transparency and accountability – procurement and tendering in government projects
EXPECTED CONFERENCE OUTCOMES
Major expected outcome: improved influence on Public finance management policy and legislative reforms through research, dialogue and analysis
- sharing experiences and exchange of views between governments, international organizations, people from the academia, the private financial sector, and civil society, on current debt management issues.
- Improved transparency and accountability for post covid-19 recovery and sound debt management.
- Increased inclusiveness in public resource allocation.
- Improved responsible borrowing.
DATE & VENUE
- Cresta Churchill in Bulawayo
- 07-09 October 2020
 AFDB, UN and World Bank (2019). Joint needs Assessment for Zimbabwe: Identifying challenges and needs.
 SDG Investment Trends Monitor https://unctad.org/en/PublicationsLibrary/diaemisc2019d4_en.pdf