President William Ruto has proposed a 10-20-year moratorium on interest payments on foreign debt for Kenya and other third-world countries.
Ruto made the proposal in an opinion piece he wrote for the New York Times where he posed that the country is being crippled by exorbitant interest rates imposed by global lending institutions.
President Ruto co-wrote the New York Times piece with Akinwumi Adesina, the President of the African Development Bank, Moussa Faki the Chairperson of the African Union Commission, and Patrick Verkooijen the Chief Executive Officer of The Rotterdam-based Global Center on Adaptation.
According to the four, Africa will need $60 billion (Ksh8.9 trillion) to service foreign debts in 2023.
The 36th Ordinary Session of the Assembly of African Heads of State held at Addis Ababa, Ethiopia on February 18, 2023.
At the same time, the African leaders revealed that the continent will use another $50 billion (Ksh7.4 trillion) to mitigate the adverse effects of climate change.
“Africa urgently needs a pause in debt repayments so that it can prepare for a world of ever-greater climate extremes,” the leaders said while justifying their calls for a moratorium.
In the opinion piece, Ruto questioned why the West is vocal in calling for Africa to invest in climate resilience projects at a time when the continent is struggling to service its foreign debt.
The leaders further observed that Africa’s debt has grown by a massive scale from 2020 during the global pandemic when most poor countries borrowed heavily to sustain their economies.
“We cannot fix the climate issue unless we fix the debt issue,” the piece co-authored by Ruto read in part.
Borrowing from Wildlife Conservation Trust Fund Regulations 2023, Ruto further proposed a debt-for-nature swap model as a way of reducing foreign debt.
This entails global lending institutions forgiving Kenya part of its debt and in exchange, the country upscaling its environmental conservation efforts.
Ruto urged the World Bank and the International Monetary Fund (IMF) to consider the proposals outlined in the opinion piece.
However, the opinion piece did not mention China, despite Kenya being heavily indebted to the country.
Among African nations, Kenya ranks third in terms of debt owed to China, standing at Ksh1 trillion as of June 2023. Angola holds the top position with Ksh3.7 trillion in debt, followed by Ethiopia at Ksh1.08 trillion.
President William Ruto meets Liu Yuxi, Beijing’s special representative on African affairs, in Nairobi on Monday, September 12, 2022.
South China Morning Post