Amid falling prices of raw materials, recession, and now COVID-19, Africa is in serious trouble as debt burden grows. According to World Bank data, 18 countries are at high risk of debt distress – a number that has more than doubled since 2013 – while 8 countries are already in distress. The COVID-19 pandemic has worsened the situation. The issue is not about how much debt has been accumulated, but rather the high servicing cost driven by higher borrowing rates. Since the World Health Organization declared COVID-19 a global pandemic in March 2020, countries, societies, and individuals have struggled to respond to the pandemic’s devastation of health systems, economies, trade, and human wellbeing. While Africa has been spared the pandemic’s harshest health impacts, it has absorbed a heavy economic burden. Read the statement that was sent to Africa Finance Ministers calling countries of the African Union — or as many of them as possible — to demand for a broad debt cancellation. African governments can also be united in taking action to expand domestic tax revenue through ambitious and progressive tax reforms. Stopping the race to the bottom on corporate tax by agreeing on a minimum rate (for example of 30%) would be transformative. In the light of Covid-19 there is also a compelling case for introducing new digital taxes, for example on big tech companies that have seen their profits rise dramatically during the pandemic.
