By Mubarak Aliyu

The pursuit of justice and equity is at the heart of the African Union’s (AU) political agenda, particularly in the wake of growing calls for reparations for historical injustices.

However, achieving these lofty goals is contingent on addressing the structural economic challenges that continue to undermine the continent’s development.

One of the most pressing issues facing African countries is the unsustainable finance model characterised by high borrowing costs, expensive debt repayments, and stringent loan conditionalities.

Without tackling these financial obstacles, the AU’s vision of justice and equity will remain out of reach.

The recent AU summit in Addis Ababa, held under the theme “Justice for Africans and People of African Descent Through Reparations,” highlighted the urgency of redressing historical injustices.

However, discussions on reparations must be accompanied by a broader interrogation of economic sovereignty and the persistent inequalities that hamper Africa’s development.

The economic structures that perpetuate Africa’s financial dependency are themselves a form of injustice, requiring as much attention as the historical wrongs the summit sought to address.

The economic toll of high borrowing costs

Africa is the continent with the highest external public debt servicing cost relative to total revenue.

A reduced fiscal space is one of the immediate impacts of high borrowing costs, as governments divert substantial portions of their revenues towards debt repayments, leaving little room for developmental investments. 

A recent report by the Mo Ibrahim Foundation shows that 25 African countries spent more public resources on external public debt servicing than on health between 2019 and 2021.

This diversion of resources perpetuates the underfunding of social sectors, particularly education, healthcare, and social protection—key areas for addressing poverty and inequality.

Moreover, high borrowing costs contribute to a vicious cycle of debt accumulation. Many African countries face low credit ratings, which further increases their borrowing costs and exacerbates liquidity challenges.

This cycle often results in debt distress, where countries struggle to meet their debt obligations without resorting to further borrowing.

According to the World Bank, more than half of low-income countries in Africa are currently either in or at high risk of debt distress—a situation worsened by global economic volatility and weak governance structures.

The social and developmental impacts of this debt burden are stark. Diverting resources towards debt repayments limits investments in long-term growth-enhancing sectors, constraining economic growth and exacerbating social vulnerabilities.

This is particularly damaging in a continent where poverty rates remain high and where the majority of the population relies on public services for their basic needs.

Stringent aid conditions and ‘choiceless’ democracy

International financial institutions such as the International Monetary Fund (IMF) and the World Bank often impose market-driven reforms as conditionalities for aid to the global south, including Africa.

These reforms typically include austerity measures, privatisation mandates, and deregulation policies as preconditions for financial assistance.

Free-market policies have been widely criticised for their negative social impacts, including rising poverty levels, job losses, and weak public services.

Research has also linked the neoliberal agenda to the recent reversal of democratic gains in Africa, as many citizens feel excluded from the dividends of democracy.

Development economist Thandika Mkandawire aptly described this phenomenon as “choiceless democracies,” where African governments seeking financing are compelled to accept the technocratic dictates of external financial institutions, offering little economic alternatives for the electorate.

In such contexts, the democratic process becomes hollow, as key economic decisions are made by unelected technocrats rather than by governments accountable to their citizens. This not only undermines political legitimacy but also exacerbates social inequalities.

For the AU’s pursuit of justice and equity to be meaningful, the question of sustainable finance must be placed at the centre of the agenda.

Economic marginalisation, after all, constitutes a grave form of injustice that perpetuates the very inequalities the AU seeks to eradicate.

A two-pronged approach to justice

If African leaders are to achieve the goal of justice through reparations, they must adopt a two-pronged approach—one that simultaneously addresses the injustices of the past while confronting the economic injustices of the present.

Reparations for historical wrongs will have little transformative impact if African countries remain trapped in cycles of debt and economic dependency.

Central to this approach is the need for a new model of sustainable finance that prioritises economic sovereignty and reduces the continent’s vulnerability to external shocks.

This model must involve more favourable lending terms, debt relief mechanisms, and increased access to concessional financing.

African countries must also explore innovative financing mechanisms, such as regional development funds and diaspora bonds, to diversify their sources of finance and reduce dependency on external creditors.

Additionally, African governments must prioritise domestic resource mobilisation through progressive taxation, anti-corruption measures, and the formalisation of the informal economy.

Strengthening public financial management and enhancing transparency in debt contracting processes will also be crucial in ensuring that borrowed funds are channelled towards development objectives rather than lost to corruption or mismanagement.

A new approach to sustainable finance—one that prioritises debt relief, economic sovereignty, and social investment—will be essential in advancing the AU’s vision of justice and equity.

Without addressing the financial constraints that undermine the continent’s development, the promise of justice will remain elusive, and the cycle of inequality will persist.

The fight for reparations must be accompanied by a parallel struggle for economic self-determination—one that places the needs and aspirations of African citizens at the heart of the continent’s development agenda.  

Mubarak Aliyu is a political analyst and writer covering West Africa and the Sahel regions. His topics of interest include governance and inclusive development.

Disclaimer: The views expressed by the author do not necessarily reflect the opinions, viewpoints and editorial policies of TRT Afrika.