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Africa private creditors form group to assist African nations negotiate debt relief

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AFRICA private creditors have formed a working group that will assist African countries and other debt providers to cushion the economic impact of the COVID-19 pandemic on the continent,  Bloomberg has reported.

This would be carried out by negotiating debt relief for African nations, the group said in a statement Friday.

Private creditors representing more than $9 trillion of assets warned on the risks of a blanket approach to the process.

The private creditors include private bondholders, private banks, other private financial institutions, and manufacturers, exporters, and other suppliers of goods that have a financial claim.

The group, coordinating the view of more than 25 of the world’s foremost asset managers and financial institutions, has established a number of core principles of engagement.

Chief among those is that a one-size-fits-all solution will be counter-productive for the continent, it said.

African countries are asking official and private creditors to temporarily suspend payments in order to channel resources to contain the pandemic.

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The virus threatens to overwhelm the health system of a continent that is home to two-thirds of the world’s poor.

“Future generations of Africans will need to access private capital to invest in hospitals, roads, education, healthcare systems and other infrastructure critical for economic and societal development,” it said.
“A rushed, blanket approach developed during a time of crisis will put that crucial long-term access to capital at risk.”
The UN Economic Commission for Africa (UNECA) has also estimated that the continent may lose half of its Gross Domestic Product (GDP) growth from 3.2 per cent to 1.8 per cent, particularly due to supply chain disruptions, shrinking investment and lower remittances.
According to the African Union, it is projected that exports and imports of African countries will reduce by at least 35 per cent from the level reached in 2019, which is a loss estimated at around $270 billion.
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