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Ex-African heads of state, financial experts convene in Cape Town, South Africa, to sign Cape Town Declaration
(MENAFN) In February 2025, former African heads of state and financial experts convened in Cape Town, South Africa, to sign the Cape Town Declaration, calling for comprehensive debt relief for African nations. Spearheaded by the African Leaders Debt Relief Initiative (ALDRI), the effort highlights the growing crisis where governments are forced to prioritize foreign debt repayments over essential services like education, healthcare, and infrastructure.
Africa’s debt burden has reached alarming levels. By 2021, the continent's external debt had surged to $824 billion, with some nations spending over 60% of their GDP on loan repayments. In 2025 alone, $74 billion is projected to be spent on debt servicing—funds that could otherwise fuel development. However, this crisis is not merely the result of poor financial management; it is rooted in a long history of economic subjugation dating back to colonial rule and perpetuated by institutions like the International Monetary Fund (IMF) and the World Bank.
Africa’s financial struggles stem from its colonial past, when European powers extracted immense wealth while failing to invest in the continent’s industrialization. When African nations gained independence, they inherited crippling debts imposed by former colonial rulers, ensuring their continued economic dependency.
A striking example is the Democratic Republic of the Congo (DRC). Upon gaining independence from Belgium in 1960, the country was left with a devastated economy and no national wealth. When Patrice Lumumba, the DRC’s first prime minister, attempted to nationalize resources for the benefit of his people, he was overthrown and assassinated in a CIA-backed coup. His successor, Mobutu Sese Seko, amassed enormous debts while plundering national wealth—a burden that Congolese citizens are still paying for today.
During the 1980s and 1990s, institutions like the IMF and World Bank imposed Structural Adjustment Programs (SAPs) on African countries, forcing them to cut public spending, privatize state assets, and open markets to foreign corporations. These policies, sold as “economic reforms,” led to widespread unemployment, weakened public services, and the destruction of local industries, all while Western businesses profited immensely.
In 2025, Africa remains entangled in an economic system that favors Western financial institutions, multinational corporations, and private creditors. The African Development Bank (AfDB) reports that nearly 49% of Africa’s debt is held by private lenders, a figure expected to rise to 54%. Unlike concessional loans from the World Bank or AfDB, private loans come with interest rates five times higher than those charged to Western nations.
Adding to this injustice is the “Africa premium”, where African nations face higher borrowing costs despite having lower default rates than many Western economies. AfDB President Akinwumi Adesina has denounced this practice as “financial racism,” arguing that there is no economic justification for why African nations are forced to pay such inflated interest rates.
Africa’s debt burden has reached alarming levels. By 2021, the continent's external debt had surged to $824 billion, with some nations spending over 60% of their GDP on loan repayments. In 2025 alone, $74 billion is projected to be spent on debt servicing—funds that could otherwise fuel development. However, this crisis is not merely the result of poor financial management; it is rooted in a long history of economic subjugation dating back to colonial rule and perpetuated by institutions like the International Monetary Fund (IMF) and the World Bank.
Africa’s financial struggles stem from its colonial past, when European powers extracted immense wealth while failing to invest in the continent’s industrialization. When African nations gained independence, they inherited crippling debts imposed by former colonial rulers, ensuring their continued economic dependency.
A striking example is the Democratic Republic of the Congo (DRC). Upon gaining independence from Belgium in 1960, the country was left with a devastated economy and no national wealth. When Patrice Lumumba, the DRC’s first prime minister, attempted to nationalize resources for the benefit of his people, he was overthrown and assassinated in a CIA-backed coup. His successor, Mobutu Sese Seko, amassed enormous debts while plundering national wealth—a burden that Congolese citizens are still paying for today.
During the 1980s and 1990s, institutions like the IMF and World Bank imposed Structural Adjustment Programs (SAPs) on African countries, forcing them to cut public spending, privatize state assets, and open markets to foreign corporations. These policies, sold as “economic reforms,” led to widespread unemployment, weakened public services, and the destruction of local industries, all while Western businesses profited immensely.
In 2025, Africa remains entangled in an economic system that favors Western financial institutions, multinational corporations, and private creditors. The African Development Bank (AfDB) reports that nearly 49% of Africa’s debt is held by private lenders, a figure expected to rise to 54%. Unlike concessional loans from the World Bank or AfDB, private loans come with interest rates five times higher than those charged to Western nations.
Adding to this injustice is the “Africa premium”, where African nations face higher borrowing costs despite having lower default rates than many Western economies. AfDB President Akinwumi Adesina has denounced this practice as “financial racism,” arguing that there is no economic justification for why African nations are forced to pay such inflated interest rates.
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