July 24, 2025 • 16 mins
African development banks are locked in a dispute with African nations like Ghana and Zambia over deals to restructure their debts. As the countries finalize debt relief agreements with foreign lenders under the G20’s Common Framework, banks like Afreximbank and TDB are pushing back against deals forcing them to take losses saying it puts the future of African investment at risk.
Bloomberg Reporter Matthew Hill joins Jennifer Zabasajja to explain what’s behind the dispute, what the bank’s leaders have been saying and whether a deal will eventually be done
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Speaker 1 (00:02):
Bloomberg Audio Studios, podcasts, radio news.
Speaker 2 (00:09):
Africa's development banks remain locked in a dispute over plans
to restructure debt from countries such as Ghana, Zombia and Malawi.
Speaker 3 (00:17):
That's stump that we used to carry on the back
of our shirts. Zambia as a devoter, Zambias a devoter,
Zambia's devoter. Therefore, don't go into investigator devoting country. That
stump is getting washed off.
Speaker 2 (00:33):
While the countries do deals with foreign governments. The African
banks worn being forced to take losses sets a dangerous
precedent for the continent.
Speaker 4 (00:41):
We Africans are now muscling in on teletreyaders to be
held by others. That's right, you know they were the
all is coming around to save Africa. Now Africans are
saving themselves. I'm drinking much better job. This is the
syndrome of the thread. These are the last kicks off.
Speaker 2 (01:00):
On this week's Next Africa podcast, we look at why
African lenders are being asked to take big losses and
whether the whole process of debt restructuring could end up
making the situation worse for African investment. I'm Jennifer's abasajab
and this is the Next Africa Podcast, bringing you one
(01:21):
story each week from the continent driving the future of
global growth with the context only Bloomberg can provide. Joining
me to discuss this today is Bloomberg reporter Matthew Hill,
who has been following the story very closely. Matthew, thank
you so much for joining us. This is a topic
that you and I frequently speak about. The newsroom is
(01:44):
talking about, and it's really on the minds of many
leaders across the continent when it comes to debt and
a lot of these countries handling the debt loads that
they have had. Before we get into the heart of
the current dispute, maybe you can explain to us what
countries like Ghana, Zambia and most recently Malawi are needing
(02:05):
to do about their unsustainable debt levels.
Speaker 5 (02:10):
So let's dial it back to twenty twenty. Right after
the pandemic. We had a number of African countries that
had already built up pretty high debt levels that some
were struggling to repay, and then the pandemic came along
and knocked out big chunks of their government revenues and
made it even more difficult. So we had the Group
(02:32):
of twenty or the G twenty coming up with a
plan to help poor countries deal with unsustainable debts. It's
called the Common Framework. So in February twenty twenty one,
Zambia applied to its creditors for what's known as a
debt treatment basically debt relief, using the Common Framework. Ghana
(02:53):
followed in December twenty twenty two, and Malawi also is
having to restraint its debts, although it's not following the
Common Framework process. We saw this just this week how
big its problem is. Where the International Monetary Fund pointed
(03:13):
out that if you strip out the money that it
needs to pay creditors and other aspects, Malawi is essentially
sitting with this year negative international reserves, negative net international
reserves of about two billion dollars, and if you compare
(03:38):
that to the size of its economy, which is only
about eleven billion dollars, it just shows the scale of
the problem that it's facing. Two.
Speaker 1 (03:46):
You've been following this very closely for years.
Speaker 2 (03:49):
You mentioned dating back to Zambia and the foreign investors
that we know of the Paris Club, right, but now
there's a lot more talk about African development banks and
the raw that they're playing in this restructuring. It's a
topic of heart debate right now. Can you talk about
where a frection bank and TDB fit into this picture?
Speaker 5 (04:11):
This is really the crux of where we are at
at the moment. There is a massive amount of controversy,
a lot of tension, and emotions are already running quite
high because, as you point out, we've got lenders like
the Africa Export Import Bank that has provided money to
(04:33):
countries like Ghana and Zambia, and of course the Trade
and Development Bank too, And while pretty much all the
other creditors to these countries have agreed to restructure their debts,
a FRECSM Bank and to an extent, Trade and Development
Bank or TDB have not. And this has now turned
(04:56):
into a really really big point of contention. Just to
give a very broad overview of the situation at the moment,
AFRECSM Bank, which has the African sovereigns African States among
its shareholders, it also has private creditors too, and that
bank is arguing that it is a multilateral development bank,
(05:20):
it's providing money to help these countries to help its
members develop, and it says it's often lending money to
these countries where others won't. On the other hand, we've
got the other side of the equation where creditors, including
the Paris Club and others are saying AFFRECSM Bank isn't
(05:45):
a pure multilateral development bank because it's not lending money
the same way that the International Monetary Fund does or
the World Bank does at concessional rates. It's lending money
at commercial rates mostly and often these are pretty high.
So we've now got a situation where countries like Ghana
(06:07):
and Zambia have at the request of their other creditors,
really told Afresen Bank and TDB that they need to
restructure their loans to these countries and offer what's known
as comparability of treatment. So essentially, at once Affrecsen Bank
and TDB to provide as much debt relief as the
(06:30):
bilateral creditors have. Those are the ones from the Paris Club,
plus of course China, India, Saudi Arabia and the bondholders.
The eurobondholders have also agreed to provide significant debt relief,
and they are also saying that AFFRESM Bank must come
to the table likewise.
Speaker 2 (06:49):
And matt I recently spoke with Amasu Today say. He's
the president and managing director of TDB, which you're speaking about.
They're one of the banks that are involved in the negotiations.
He told me he's unhappy about the current situation right now.
Speaker 1 (07:03):
Let's take a listen really quick.
Speaker 6 (07:05):
I think the one thing that that's very problematic is
is the way that some of these processes have been handled.
And I think the reason it's been messy and it's
been generating a lot of noise is because you know,
the global financial process has not taken adequate consideration of
African lenders in the process, and some of these restructurings
(07:28):
happen and we're not consulted, We're not in the picture,
and it happens as an afterthought. Assumptions are made and
those assumptions are wrong.
Speaker 2 (07:37):
So, Matt, what did you make of what mister today
Say had to say. Why is it that the African
Development Banks are so opposed to taking losses on some
of these loans compared to some of the other bigger
creditors out there.
Speaker 5 (07:55):
I mean, that really hits the nail on the head
where we are at the moment. I mean, TADESA has
complained that they are only being brought into the process
kind of as an afterthought. And to be clear, TDB
has been more constructive and shown that it is willing
(08:15):
to engage. It is willing to talk about restructuring its debts,
whereas Affresen Bank has pretty much said that it won't.
That it has something that's known as preferred creditor status
built into its establishment treaty when it was founded back
in the nineties and that precludes it from restructuring any
(08:39):
of its debt. Now, these banks, TDB, Affrecsen Bank and
others have formed what they are calling or referring to
the Africa Club. That's a group of African development banks
that they've set up to basically protect their rights and
make sure that their voices are being heard that they
do get a set at the table.
Speaker 2 (09:00):
Hold that thought, Matthew, We're going to take a quick
break and when we come back, we'll talk about what's
at stake in these negotiations and what they could mean
for future investment on the continent.
Speaker 1 (09:10):
We'll be right back. Welcome back.
Speaker 2 (09:15):
Today we're talking about the ongoing dispute between Africa's development
banks and African governments looking to restructure their debt Matthew
Hill is joining us and has been following the story
very closely. So, Matt you were talking before the break
about these African development banks wanting to have a seat
at the table, wanting to be treated similarly to other
(09:39):
creditors out there.
Speaker 1 (09:40):
Maybe we take a look at some of the other.
Speaker 2 (09:42):
Creditors like the IMF and the Paris Club here, how
do these banks differ from the role that these international
institutions are playing for these countries, going back to.
Speaker 5 (09:55):
The G twenty's Common Framework that was created with significant
input from the International Monetary Fund, And of course when
we're talking about sovereign debt restructurings, it's very difficult to
avoid mentioning or talking about the Paris Club, which is
an informal group set up to help bring debt relief
(10:20):
to countries that can't afford to pay their debts. They
have played a very very central role in the creditor committees,
the official creditor committees of all of these countries that
are using the Common Framework to try sort out their debts,
and the International Monetary Fund has too. They provide the
(10:43):
economic statistics and the estimates of exactly how much debt
relief countries like Garner and Zambia require to reach a
sustainable path and that's where the club comes into play
again too. This has been formed after the Common Framework
(11:05):
was set up and the debt restructuring processes of Ghana
and Zambia and others began to kind of retrospectively make
sure that their voices are being heard.
Speaker 2 (11:19):
What would taking losses for these banks mean, Matt and
therefore many people if they haven't seen your reporting, we've
seen some of these banks actually get raided by ratings
agencies and taken a hit recently, just given some of
these negotiations around debt restructuring. Would a loss mean lower
(11:41):
credit ratings and potentially affecting Africa's development down the road?
Speaker 1 (11:47):
Is that sort of how we can shape all of
this up.
Speaker 5 (11:50):
That's also a very tough question that African lender's like
Afrexent Bank are grappling with right now. As you point out,
we've already seen Pitch cut its assessment of affrecs and
Bank to one level above what's known as junk. If
it does make another cut, that would mean that many
(12:15):
investors would be forced to sell the bonds of affrecs
and Bank, and I mean economics one oh one. When
you've got more sellers than buyers, that means the price
is going to go down. And it also means that
affrecs and banks own borrowing, so the money that it
raises from international investors will become more expensive. And then
(12:37):
you can say, if it's financing is becoming more expensive,
it's going to have to charge more when it lends
that money on to African countries, African governments and to
African development. So the outcome of this, if it does
get cut again by the railings agencies, Yeah, it means
(12:59):
more expensive financing for Africa, which is already grappling with
lending costs that have gone up quite significantly in recent years.
And also just like the places where African governments can
access financing from full stop is becoming smaller and smaller too,
(13:20):
so it's a real problem.
Speaker 1 (13:23):
Yeah.
Speaker 2 (13:24):
And even you know, some of these governments spend more
on debt servicing than you know, taking care of their constituents,
and so it really has become to the forest, so
much so that South African President Zerro Ramaposa has made
debt sustainability something that he has prioritized during the G
twenty presidency as of course, you know, matt how does
(13:44):
this play out going forward? Do you see some of
these African banks getting their way?
Speaker 5 (13:49):
Well, I mean Fitch themselves have said that it's more
likely than not, for example, that Frexim Bank will have
to restructure its debt with Ghana, and if it does so,
that could have implications for its credit rating. Afrexim Bank
has definitely made it clear that it's not going to
(14:12):
take this line down. What kind of recourse they would
have we don't yet know, and they haven't yet said
what kind of approach they will take if they are
compelled to restructure the debts. We have seen them sue
South su Done in a court in the UK and
(14:33):
they actually won what's known as a summary judgment in
May this year, where the judge said that South Sudan
has to pay the hundreds of millions of dollars that
it owes Afrexim Bank. Whether this will ultimately end up
in a UK court when it comes to the case
with Ghane or Zambia, we'll have to wait and see.
Speaker 2 (14:57):
And Matthew Hill, thanks again so much for your and
for joining us this week, and you can read all
of our coverage on African debt across Bloomberg platforms. Now
here's some of the other stories in the region that
we've been following. French broadcaster Canal Plus received South African
Anti Trust approval to buy Multi Choice Group, which clears
(15:21):
the way to making it the largest PayTV and streaming
business on the continent. The deal got the go ahead
from the Anti Trust watchdog this week, enabling a transaction
that values Multi Choice at about three billion dollars. And
Nigeria's Central Bank said about a third of lenders have
met its new capital requirements threshold ahead of a March deadline.
(15:45):
The Abuja based Central Bank of Nigeria last year increased
the minimum capital requirement for lenders tenfold to strengthen the
industry against risks from high inflation, a week economy and
a steep Nayrad evaluation. Can follow these stories across Bloomberg,
including the Next African Newsletter.
Speaker 1 (16:04):
Will put a link to that in the show notes.
Speaker 2 (16:09):
This program was produced by Adrian Bradley and tiwa Adebayo.
Don't forget to follow and review this show wherever you
usually get your podcasts, But for now I'm Jennifer's Abasaja.
Speaker 1 (16:19):
Thanks as always for listening,
Bloomberg Audio Studios, podcasts, radio news.
Speaker 2 (00:09):
Africa's development banks remain locked in a dispute over plans
to restructure debt from countries such as Ghana, Zombia and Malawi.
Speaker 3 (00:17):
That's stump that we used to carry on the back
of our shirts. Zambia as a devoter, Zambias a devoter,
Zambia's devoter. Therefore, don't go into investigator devoting country. That
stump is getting washed off.
Speaker 2 (00:33):
While the countries do deals with foreign governments. The African
banks worn being forced to take losses sets a dangerous
precedent for the continent.
Speaker 4 (00:41):
We Africans are now muscling in on teletreyaders to be
held by others. That's right, you know they were the
all is coming around to save Africa. Now Africans are
saving themselves. I'm drinking much better job. This is the
syndrome of the thread. These are the last kicks off.
Speaker 2 (01:00):
On this week's Next Africa podcast, we look at why
African lenders are being asked to take big losses and
whether the whole process of debt restructuring could end up
making the situation worse for African investment. I'm Jennifer's abasajab
and this is the Next Africa Podcast, bringing you one
(01:21):
story each week from the continent driving the future of
global growth with the context only Bloomberg can provide. Joining
me to discuss this today is Bloomberg reporter Matthew Hill,
who has been following the story very closely. Matthew, thank
you so much for joining us. This is a topic
that you and I frequently speak about. The newsroom is
(01:44):
talking about, and it's really on the minds of many
leaders across the continent when it comes to debt and
a lot of these countries handling the debt loads that
they have had. Before we get into the heart of
the current dispute, maybe you can explain to us what
countries like Ghana, Zambia and most recently Malawi are needing
(02:05):
to do about their unsustainable debt levels.
Speaker 5 (02:10):
So let's dial it back to twenty twenty. Right after
the pandemic. We had a number of African countries that
had already built up pretty high debt levels that some
were struggling to repay, and then the pandemic came along
and knocked out big chunks of their government revenues and
made it even more difficult. So we had the Group
(02:32):
of twenty or the G twenty coming up with a
plan to help poor countries deal with unsustainable debts. It's
called the Common Framework. So in February twenty twenty one,
Zambia applied to its creditors for what's known as a
debt treatment basically debt relief, using the Common Framework. Ghana
(02:53):
followed in December twenty twenty two, and Malawi also is
having to restraint its debts, although it's not following the
Common Framework process. We saw this just this week how
big its problem is. Where the International Monetary Fund pointed
(03:13):
out that if you strip out the money that it
needs to pay creditors and other aspects, Malawi is essentially
sitting with this year negative international reserves, negative net international
reserves of about two billion dollars, and if you compare
(03:38):
that to the size of its economy, which is only
about eleven billion dollars, it just shows the scale of
the problem that it's facing. Two.
Speaker 1 (03:46):
You've been following this very closely for years.
Speaker 2 (03:49):
You mentioned dating back to Zambia and the foreign investors
that we know of the Paris Club, right, but now
there's a lot more talk about African development banks and
the raw that they're playing in this restructuring. It's a
topic of heart debate right now. Can you talk about
where a frection bank and TDB fit into this picture?
Speaker 5 (04:11):
This is really the crux of where we are at
at the moment. There is a massive amount of controversy,
a lot of tension, and emotions are already running quite
high because, as you point out, we've got lenders like
the Africa Export Import Bank that has provided money to
(04:33):
countries like Ghana and Zambia, and of course the Trade
and Development Bank too, And while pretty much all the
other creditors to these countries have agreed to restructure their debts,
a FRECSM Bank and to an extent, Trade and Development
Bank or TDB have not. And this has now turned
(04:56):
into a really really big point of contention. Just to
give a very broad overview of the situation at the moment,
AFRECSM Bank, which has the African sovereigns African States among
its shareholders, it also has private creditors too, and that
bank is arguing that it is a multilateral development bank,
(05:20):
it's providing money to help these countries to help its
members develop, and it says it's often lending money to
these countries where others won't. On the other hand, we've
got the other side of the equation where creditors, including
the Paris Club and others are saying AFFRECSM Bank isn't
(05:45):
a pure multilateral development bank because it's not lending money
the same way that the International Monetary Fund does or
the World Bank does at concessional rates. It's lending money
at commercial rates mostly and often these are pretty high.
So we've now got a situation where countries like Ghana
(06:07):
and Zambia have at the request of their other creditors,
really told Afresen Bank and TDB that they need to
restructure their loans to these countries and offer what's known
as comparability of treatment. So essentially, at once Affrecsen Bank
and TDB to provide as much debt relief as the
(06:30):
bilateral creditors have. Those are the ones from the Paris Club,
plus of course China, India, Saudi Arabia and the bondholders.
The eurobondholders have also agreed to provide significant debt relief,
and they are also saying that AFFRESM Bank must come
to the table likewise.
Speaker 2 (06:49):
And matt I recently spoke with Amasu Today say. He's
the president and managing director of TDB, which you're speaking about.
They're one of the banks that are involved in the negotiations.
He told me he's unhappy about the current situation right now.
Speaker 1 (07:03):
Let's take a listen really quick.
Speaker 6 (07:05):
I think the one thing that that's very problematic is
is the way that some of these processes have been handled.
And I think the reason it's been messy and it's
been generating a lot of noise is because you know,
the global financial process has not taken adequate consideration of
African lenders in the process, and some of these restructurings
(07:28):
happen and we're not consulted, We're not in the picture,
and it happens as an afterthought. Assumptions are made and
those assumptions are wrong.
Speaker 2 (07:37):
So, Matt, what did you make of what mister today
Say had to say. Why is it that the African
Development Banks are so opposed to taking losses on some
of these loans compared to some of the other bigger
creditors out there.
Speaker 5 (07:55):
I mean, that really hits the nail on the head
where we are at the moment. I mean, TADESA has
complained that they are only being brought into the process
kind of as an afterthought. And to be clear, TDB
has been more constructive and shown that it is willing
(08:15):
to engage. It is willing to talk about restructuring its debts,
whereas Affresen Bank has pretty much said that it won't.
That it has something that's known as preferred creditor status
built into its establishment treaty when it was founded back
in the nineties and that precludes it from restructuring any
(08:39):
of its debt. Now, these banks, TDB, Affrecsen Bank and
others have formed what they are calling or referring to
the Africa Club. That's a group of African development banks
that they've set up to basically protect their rights and
make sure that their voices are being heard that they
do get a set at the table.
Speaker 2 (09:00):
Hold that thought, Matthew, We're going to take a quick
break and when we come back, we'll talk about what's
at stake in these negotiations and what they could mean
for future investment on the continent.
Speaker 1 (09:10):
We'll be right back. Welcome back.
Speaker 2 (09:15):
Today we're talking about the ongoing dispute between Africa's development
banks and African governments looking to restructure their debt Matthew
Hill is joining us and has been following the story
very closely. So, Matt you were talking before the break
about these African development banks wanting to have a seat
at the table, wanting to be treated similarly to other
(09:39):
creditors out there.
Speaker 1 (09:40):
Maybe we take a look at some of the other.
Speaker 2 (09:42):
Creditors like the IMF and the Paris Club here, how
do these banks differ from the role that these international
institutions are playing for these countries, going back to.
Speaker 5 (09:55):
The G twenty's Common Framework that was created with significant
input from the International Monetary Fund, And of course when
we're talking about sovereign debt restructurings, it's very difficult to
avoid mentioning or talking about the Paris Club, which is
an informal group set up to help bring debt relief
(10:20):
to countries that can't afford to pay their debts. They
have played a very very central role in the creditor committees,
the official creditor committees of all of these countries that
are using the Common Framework to try sort out their debts,
and the International Monetary Fund has too. They provide the
(10:43):
economic statistics and the estimates of exactly how much debt
relief countries like Garner and Zambia require to reach a
sustainable path and that's where the club comes into play
again too. This has been formed after the Common Framework
(11:05):
was set up and the debt restructuring processes of Ghana
and Zambia and others began to kind of retrospectively make
sure that their voices are being heard.
Speaker 2 (11:19):
What would taking losses for these banks mean, Matt and
therefore many people if they haven't seen your reporting, we've
seen some of these banks actually get raided by ratings
agencies and taken a hit recently, just given some of
these negotiations around debt restructuring. Would a loss mean lower
(11:41):
credit ratings and potentially affecting Africa's development down the road?
Speaker 1 (11:47):
Is that sort of how we can shape all of
this up.
Speaker 5 (11:50):
That's also a very tough question that African lender's like
Afrexent Bank are grappling with right now. As you point out,
we've already seen Pitch cut its assessment of affrecs and
Bank to one level above what's known as junk. If
it does make another cut, that would mean that many
(12:15):
investors would be forced to sell the bonds of affrecs
and Bank, and I mean economics one oh one. When
you've got more sellers than buyers, that means the price
is going to go down. And it also means that
affrecs and banks own borrowing, so the money that it
raises from international investors will become more expensive. And then
(12:37):
you can say, if it's financing is becoming more expensive,
it's going to have to charge more when it lends
that money on to African countries, African governments and to
African development. So the outcome of this, if it does
get cut again by the railings agencies, Yeah, it means
(12:59):
more expensive financing for Africa, which is already grappling with
lending costs that have gone up quite significantly in recent years.
And also just like the places where African governments can
access financing from full stop is becoming smaller and smaller too,
(13:20):
so it's a real problem.
Speaker 1 (13:23):
Yeah.
Speaker 2 (13:24):
And even you know, some of these governments spend more
on debt servicing than you know, taking care of their constituents,
and so it really has become to the forest, so
much so that South African President Zerro Ramaposa has made
debt sustainability something that he has prioritized during the G
twenty presidency as of course, you know, matt how does
(13:44):
this play out going forward? Do you see some of
these African banks getting their way?
Speaker 5 (13:49):
Well, I mean Fitch themselves have said that it's more
likely than not, for example, that Frexim Bank will have
to restructure its debt with Ghana, and if it does so,
that could have implications for its credit rating. Afrexim Bank
has definitely made it clear that it's not going to
(14:12):
take this line down. What kind of recourse they would
have we don't yet know, and they haven't yet said
what kind of approach they will take if they are
compelled to restructure the debts. We have seen them sue
South su Done in a court in the UK and
(14:33):
they actually won what's known as a summary judgment in
May this year, where the judge said that South Sudan
has to pay the hundreds of millions of dollars that
it owes Afrexim Bank. Whether this will ultimately end up
in a UK court when it comes to the case
with Ghane or Zambia, we'll have to wait and see.
Speaker 2 (14:57):
And Matthew Hill, thanks again so much for your and
for joining us this week, and you can read all
of our coverage on African debt across Bloomberg platforms. Now
here's some of the other stories in the region that
we've been following. French broadcaster Canal Plus received South African
Anti Trust approval to buy Multi Choice Group, which clears
(15:21):
the way to making it the largest PayTV and streaming
business on the continent. The deal got the go ahead
from the Anti Trust watchdog this week, enabling a transaction
that values Multi Choice at about three billion dollars. And
Nigeria's Central Bank said about a third of lenders have
met its new capital requirements threshold ahead of a March deadline.
(15:45):
The Abuja based Central Bank of Nigeria last year increased
the minimum capital requirement for lenders tenfold to strengthen the
industry against risks from high inflation, a week economy and
a steep Nayrad evaluation. Can follow these stories across Bloomberg,
including the Next African Newsletter.
Speaker 1 (16:04):
Will put a link to that in the show notes.
Speaker 2 (16:09):
This program was produced by Adrian Bradley and tiwa Adebayo.
Don't forget to follow and review this show wherever you
usually get your podcasts, But for now I'm Jennifer's Abasaja.
Speaker 1 (16:19):
Thanks as always for listening,
Host
Jennifer Zabasajja
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