Africa: Between Defaulting and Development: Making a Case at the 7th AU – EU Summit in Angola, Luanda

Africa’s Debt Challenge:

Africa’s debt crisis has both internal and external dimensions. Internally, limited government capacity and, in some cases, political hesitation have hindered effective debt management strategies. Externally, the international financial system—structured after the Second World War—remains skewed against Africa, providing financing that is often inadequate, costly, and misaligned with development priorities. The result is a continent that is increasingly constrained in its ability to address urgent social, economic, and security challenges.

While Africa is engaging with a growing range of partners, the European Union remains its largest trading partner and a close ally. EU programs such as the Global Gateway and the Compact with Africa have maintained engagement on the continent, yet African experts argue that these programs require recalibration. Africa is seeking a partnership based on mutual interest and equality, where EU development and investment strategies are responsive to African priorities rather than predetermined frameworks that constrain ambition.

Debt and Its Impact on Development:

Today, 22 African countries are either in debt distress or at high risk of it. The rising cost of debt servicing is limiting fiscal space, leaving governments with fewer resources to invest in education, health, and social protection. Now more than ever, countries are spending more on debt repayment than on development, which directly undermines progress toward the UN Sustainable Development Goals (SDGs) and the AU Agenda 2063. In short, Africa is defaulting on development, not its debt.

The G20 Common Framework: Progress and Challenges:

After the COVID-19 pandemic, the G20 introduced the Common Framework (CF) to help low-income countries restructure and manage their debt. So far, only four African countries—Ethiopia, Ghana, Zambia, and Chad—have engaged with the framework, and the results have been mixed. The CF faces several challenges. Its process is slow and drawn out, producing uncertain outcomes. Only Ghana has reached a successful deal (in 2024), while Chad’s agreement offered minimal debt relief and lacked participation from major private creditors. Ethiopia and Zambia are still struggling to finalize agreements with private lenders. Participation has also been limited because many countries are discouraged by the CF’s strict preconditions, which rely on Debt Sustainability Analyses (DSA) from the IMF and World Bank. These assessments are often criticized for focusing narrowly on repayment potential while overlooking climate vulnerability and investment needs. To make matters worse, the CF does not provide a standstill on debt payments during negotiations, forcing countries to continue servicing debt even as they navigate lengthy restructuring processes—further straining already scarce resources and diverting funds from critical development priorities. 

The African delegation has made it clear that the EU must engage the African Union as an equal partner in resolving the debt crisis. This requires bold, structural solutions, including:

• Reforming the G20 Common Framework to make it inclusive, transparent, and responsive to Africa’s realities.
• Supporting the African Union’s Common Position on Debt at the upcoming G20 Summit in South Africa.
• Endorsing the African Group’s call for a United Nations Framework Convention on Sovereign Debt, providing a global platform for equitable treatment of African countries.

The message is political as much as technical: Europe’s engagement on African debt cannot be a side issue. If the EU is serious about partnership, trade, and security cooperation, it must address Africa’s debt crisis as a shared strategic priority at the AU–EU Summit in Angola.

For more information, please contact Mr. Amanuel Desalegne Haile, Head of Project, FES African Union Cooperation Office at Amanuel.Desalegne(at)fes.de