ACTSA calls for adoption of the Debt Relief (Developing Countries) Bill

ACTSA has signed on to a briefing for UK Parliamentarians about the Debt Relief (Developing Countries) Bill, along with 17 other organisations.

The worldwide debt crisis is at its worst for 30 years – due to the covid crisis, rising extreme weather like droughts and floods, and regional conflicts. A report last year found that than 32 African countries spend more on external debt payments than on healthcare. This is a crisis rooted in colonialism, and the resulting economic dominance by Europe and Northern America which prevents Southern Africa and Global South countries worldwide from being able to invest in public services and infrastructure to build economic prosperity and lift their citizens out of poverty.

The UK is uniquely well-placed to make a difference, as 90% of debt owed to private creditors by the world’s poorest countries is governed by English law and transacted through the City of London.

ACTSA strongly supports this legislation. The bill would incentivise private creditors to take part in debt relief and introduce mechanisms stopping private predictors from holding out for more than government creditors will receive through a Common Framework or other multilateral debt restructuring.

Research by the Universities of St Andrews and Leicester has found that debt relief could lead to 17 million people gaining access to clean drinking water, 5 million more children attending school, and over 59,000 children and mothers’ lives being saved in lower-income countries. At no cost to the UK taxpayer, this bill would remove one barrier to addressing the global inequality and poverty in Southern Africa that is such a pernicious legacy of colonialism.

Read the full briefing here.

The situation in Southern Africa:

• Zambia has been negotiating debt relief for the last four years, and still hasn’t reached an agreement with all its creditors. Governments such as China agreed to debt relief in July 2023, and some types of private creditors, known as bondholders, in May 2024. But other Western banks have still not agreed to a debt relief deal. Even after debt relief, Zambia will still be paying over 14% of government revenue on external debt payments, putting the country at risk of needing to negotiate debt relief again in the future. Zambia has one of the highest levels of poverty and inequality in the world.  
• According to Debt Justice, in Angola – the country with the highest debt payments – spending on social services including health and education has fallen by more than 55% since 2015.
• The Mozambique government has indicated it may need to ask for debt relief, after government funding shortfalls following the disputed elections. Mozambique is still making payments on debts arising from the hidden debt scandal, where two banks in London lent $2 billion, much of it in secret. The loans were a front to steal money on behalf of bankers, the private company involved in the deal and government officials. Extreme poverty has been rising in Mozambique in the past decade.
• Malawi is still trying to negotiate debt relief with commercial lenders. The government had to take on short-term high interest debt during the Covid pandemic, which it is unable to pay. However, the two main creditors, Afreximbank and Trade Development Bank, have been refusing to agree debt relief because they claim they are exempt because they are part owned by African governments. However, the two banks charge high interest, do write-off debts owed by private companies, and make large annual profits. Malawi remains one of the poorest countries in the world. 
• South Africa has made tackling the debt crisis across the global South one of the priorities for its presidency of the G20 in 2025.