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Historical Debt Forgiveness by the USA Cancelling $1.1bn of Somalia’s Debt
The USA has taken the unprecedented step to forgive Somalia’s debt of over 1.1 billion dollars, which, according to Somalia’s president, Hassan Sheikh Mohamud, the country had been “suffocating under the huge weight of unsustainable debt”.
(Here is my behind the paywall link.)
Somalia’s debt was caused by the nation’s military rule under Mohamed Siad Barre from October 1969 to January 1991.
With this historical debt forgiven, it could mark a turning point for Sub-Saharan Africa.
It would allow starting afresh without the issuers of paying debts, and that money could be focused on economic development and turning Africa into a new workshop for the world.
Sub-Saharan Africa could be the next Asian Tigers or what China was 20 years ago, an economic and industrial powerhouse that pulled over 800,000 million Chinese out of poverty over the last 40 years.
In Sub-Africa, The Bank Group estimates that Africa’s total external debt, which stood at $1.12 trillion in 2022, had risen to $1.152 trillion by the end of 2023.
The cost of servicing this debt keeps increasing in developing countries in sub-Saharan Africa, which paid about US$84 billion in debt servicing in 2021, with countries in the Middle East and North Africa paying a further US$45 billion.
With the sure size of the debts, the interest along is strangely the Economy in Sub-Saharan Africa.
This debt forgiveness by the USA could mean the opening of a door for other nations to forgive African debt and chart a road to a brighter future for that subcontinent.
