Statement on the Outcome of the Third Summit of the Group of 77 (G-77) and China
21st to 23rd January in Kampala-Uganda
The Heads of State and Governments of the Member Countries of the Group of 77 and China met from 21st to 23rd January in Kampala, Uganda for the Third South Summit with an aim of boosting South-South Cooperation in the areas of trade, Investment, sustainable development, climate change, poverty eradication, and digital economy; under the theme, ‘Leaving No One Behind’. This is a follow-up to the Charter of Algiers adopted in 1967, the Summit outcome acted as a cornerstone in enhancing the principles of unity, complementary, cooperation, and solidary of the developing economies.
The Summit comes in the wake of several developing economies including Africa experiencing exacerbating poly-crisis including debt crisis, climate change predicaments, unbalanced global financial architecture, artificial war crisis in Ukraine-Russia, Palestine-Israel, most parts of Northern Africa countries which are as a result of neo-colonialism creation. Precisely, in Africa, more than 22 countries are either in debt distress or at high risk of debt distress. This means that African governments are struggling to pay the debts that they incurred on behalf of their states. For example, Mozambique and Zimbabwe are already in debt distress. The Summit outcome is a confirmation of AFRODAD’s continuous call for the need to establish UN-led multilateral legal framework to re-shape the global financial architecture. As a result, AFRODAD welcomes the concrete actions outlined in the outcome that ensures that all countries are better equipped to prevent, detect, respond to and recover from increased poly-crisis
In recognizing the spirit of South-South cooperation and the need to explore best strategies to leverage themselves from continuous socio-economic suppression, AFRODAD welcomes the G77 Member States in championing for both development and space equity in the global arena (Outcome 22). The Summit noted with the concern the widening gap between developed and developing countries generated by the current unfair international economic order. The system itself has also inflicted inequalities within and among countries, including deepening gender inequality, and the growing challenge and adverse effects of climate change. AFRODAD therefore calls for unconditional, systematics and strategic global cooperation in reforming the global order system to reflect true face of humanity as highlighted in the Harare Declaration that is aligned to citizenry and people’s voice.
AFRODAD voices its support in upholding and strengthen the role of the United Nations, in particular the General Assembly and ECOSOC in dealing with the reform of the international financial architecture (Outcome 35). With several African countries lining up to restructure their debts under the G20 Common Framework, countries like Chad, Ethiopia, Ghana, Zambia, and others who have already begin the restructuring process have been made to adhere to the creditor’s outlined strategies that to a point limits its spending on sectors that are fundamental to Africa Agenda 2063. There is therefore a need for an effective efficient, equitable, comprehensive and predictable mechanism for managing debt crises in a way that is aligned with the development needs of all developing countries away from G-20 Common Framework. AFRODAD is concerned that if the system is not rectified, most of the Africa countries will not be able to come out of debt trap and will continue being squeezed and forced to uptake the austerity measures that will in the long run deny them opportunity to compete with the developed economies on a fair ground. Thus, the outcome is a clear demonstration from the South-South countries for the need to ensure that the voice of every nation is heard and considered in such important matters pertaining to global governance.
It is lately a worrying trend to the fact that by the start of the year 2024, more than half of the African countries have seen their debt increase by over 30 percent over the last ten years. At the same time IMF has been instrumental in providing loans to developing economies whose long-term interest and repayment service will become much higher than fiscal expenditures for health, education, and social security by the year 2025. We welcome the Summit call (Outcome 39) in castigating and calling on IMF to suspend its surcharging policies that charges and surcharges Global South higher interest on loans which keeps oppressing economic stabilities of these nations. This is in recognition of stretching effects of unstainable debt on social safety nets, causing socioeconomic distress and constraining sustainable development.
The summit called for scaling up debt swaps for SDGs (Outcome 43), however, we tend to look at the dynamics of this policy from a different lens. While sovereign debt swaps hold great promise, they are not without challenges since negotiating with creditors to secure favourable terms requires striking balance between immediate relief and the long-term implications of their debt restructuring choices including the impacts on on credit ratings, market perceptions, and long-term financial stability. However, these processes can not be achieved before levelling the global financial architecture ground since it still requires a country and its bilateral or commercial lenders to write off part of its debts or waive interest. AFRODAD therefore strongly believe that African countries must find a way of addressing their debt sustainability and environmental vulnerabilities separately, as relying on debt-for-nature swaps still need a long-term strategic mapping. However, we suppose the notion of the summit outcome that categorically confirms that debt swaps cannot replace broader debt treatments in unsustainable debt situations.
Finally, the Summit called for increased concessional resources to developing countries instead of the debt creating loans as reflected in both outcome 37 & 38. The drying up of concessional resources from MDBs has forced African countries to finance their national development plan through private finance. AFRODAD has always championed for the need to rechannel unutilized quotas of existing and newly allocated SDRs from developed countries with strong external positions to the developing countries most in need of liquidity and regional development banks. However, with the continuous unbalanced global financial landscape has led to Africa as a continent receiving a penny of global SDRs of 5% in the year 2021 compared to 17% received by the United States. We therefore emphasize the Summit outcome on a possible affair approach that will guide further quotas in terms of quota realignment, including through a new quota formula, under the 17th General Review of Quotas by June, 2025.
In conclusion, the Third South Summit should act as an indicator for the developing economies in tightening and strengthening their cooperation and championing for a UN-led solution to the poly-crisis. At the same time, we call upon the developed economies to lead by example in amplifying the need to reform the global financial architecture including theneed for a new mechanism for international debt restructuring, curtailing the holdout behaviour of Vultures funds, convincing the private creditors to participate in debt relief initiatives, and regulate the operations of credit rating agencies. AFRODAD continues to call for a sustainable solution to current crisis that includes fundamental reforms of the global debt and financial architecture, addressing illicit financial flows, and supporting initiatives that spur domestic resource mobilisation.
For further information contact: Jason Braganza – [email protected] or Shem Joshua – shem@afrodad,.org