Speaking at the G20 Finance Track meetings, former South African Finance Minister and Chairperson of the Africa Expert Panel, Trevor Manuel, issued a clear warning regarding the escalating debt crisis afflicting African nations. According to Manuel, the increasingly unsustainable cost of debt servicing across the continent is actively suppressing vital developmental spending, especially in sectors such as education and healthcare.
Manuel emphasised that many African countries are not necessarily increasing the volume of their borrowing, but rather are being weighed down by sharply rising interest costs. He noted that these dynamics are frequently driven by external economic conditions beyond the control of borrowing states. “Debt squeezes out development. It impoverishes countries, actually. It’s the only thing that is really shared by people,” he stated, stressing the immediate implications of financial misalignments for citizens across the continent.
As Chairperson of the Africa Expert Panel, Manuel underscored that the body had issued 11 specific recommendations to help countries address and manage debt more effectively. He pointed out that improving understanding of the cost of capital—both in absolute terms and in terms of its structural determinants—would be essential for establishing long-term financial stability across the continent.
A central concern raised by Manuel was the vulnerability created by foreign currency-denominated debt. With many African states borrowing in US dollars or euros, the depreciation of domestic currencies places an increasing burden on repayment costs. “When their own currencies depreciate against those hard currencies, then the interest rate burden becomes unsustainable,” he noted.
In light of this, Manuel called for the development of robust domestic capital markets, arguing that enabling countries to borrow in their local currencies could mitigate foreign exchange risk and reduce their dependence on external finance markets. “If countries could borrow in their own currencies, then they don’t carry the exchange rate burden,” he added.
Manuel also drew attention to the broader geopolitical landscape and its effects on regional economies. Using Lesotho as a case study, he described how external tariffs and policy decisions are severely impacting its export-driven economy, particularly in mining labour and apparel manufacturing. “Suddenly, Lesotho’s exports are slapped with very high tariffs. The consequences on the general economy are significant, including the unemployment burden, the inability to collect taxes, and the fact that USAID has been shut down,” he remarked.
He stressed that such shocks are not confined within national borders. The economic integration of Southern Africa, particularly through the Southern African Customs Union, means that setbacks in one country can ripple across the region. “When something happens to any of our neighbours, it will have a massive impact on outflows from South Africa, impoverishing us further,” said Manuel.
In response to these challenges, the Africa Expert Panel is seeking to introduce norms and standards to promote sustainable debt practices. Manuel stressed the importance of fostering accountability among wealthier nations and institutions, warning against capricious policy shifts. “You shut down USAID just as a capricious act. The consequences in the lives of people… it’s not as though there’s been any war and there’s no notice period,” he lamented.
South Africa’s Finance Minister Enoch Godongwana also addressed the G20 gathering, emphasising the collaborative nature of the forum. He noted that the platform enables multilateral institutions to explore pathways for global economic recovery, job creation, long-term investment, and tourism development.
As the G20 deliberations continue, African voices like Manuel’s are pressing for deeper structural reform in the global financial architecture—one that accounts for the continent’s vulnerabilities while enabling sustainable and inclusive growth.
