Dalaya Ashenafi Esayiyas[1]

As global elites gather in Spain for the Fourth International Conference on Financing for Development (FFD4) starting from tomorrow 30 June, their exists no indication that this forum will not once again peddle the same old myths: that more loans, ‘sustainable’ debt frameworks, and technocratic tinkering can ‘fix’ Africa’s financial crisis, characterised by cyclical heavy indebtedness. But after decades of empty promises, the trend is clear: the current system is not broken, it is working exactly as designed. From Zambia’s vulture fund lawsuits to Ghana’s IMF-mandated hunger riots, the models of Africa’s access to ‘development finance’ remain a neocolonial project of extraction, enforced through spreadsheets and austerity. If FFD4 refuses to confront this reality, it will be just another stage for the financial empire’s theatre of hypocrisy.

The Illusion of Reform, Restructuring and ‘Development Finance’

On 20 June 2025, a distinguished commission of global experts convened by the Pontifical Academy of Social Sciences and Columbia University’s Initiative for Policy Dialogue issued a damning indictment of the global financial system. Their report’s bold recommendations, designed to unshackle developing nations from debt traps and fast-track equitable development, would be ideal for a system that had lost its way and sought reform through dialogue. Another similarly groundbreaking report of the World Inequality Database, released on 9 June 2025, proposed structural reforms of the international monetary and exchange system, focusing, among others, on a centralised system of credits/debts with a common borrowing rate.

But the global financial system operates exactly as intended: as a rigged game that extracts wealth from the Global South while offering false solutions. The two reports’ urgent call for systemic change only underscores how profoundly the current architecture serves creditors, based exclusively on a profit logic, over people, inducing recurrent ‘crises’ and turning ‘crisis management’ into permanent control.

In 2023, Zambia spent more on debt payments to creditors, including British bankers, than on healthcare for its 20 million citizens. Take, as another example, the pressure exerted on Zambia and Ghana to default on loans from the African Export-Import Bank (Afreximbank) and the Trade and Development Bank (TDB) by insisting that these banks should not enjoy preferred creditor status of multilateral financial institutions and undermining the banks’ credit ratings and increase their borrowing costs with dire consequences for African states.

These are not anomalies; they show the neocolonial financial order working exactly as designed.  For all the talk of ‘development finance’ and ‘debt relief,’ the brutal truth remains: Africa is caught in a debt trap engineered by the same powers that once colonised it through armies and now do so through spreadsheets.

African nations borrow not for development but to service old debts, stabilise currencies looted by capital flight, and pay for imports made necessary by trade imbalances enforced by the inequitable global financial and trading system.  In 2023, Ghana took $3B IMF bailout to stabilise its economy. The reality was that the bailout came with painful cuts. VAT hikes on electricity, fuel subsidy cuts (sparking 54% inflation), and deepening trade Imbalance. The outcome has been citizens paying exponentially more for basic goods while gold revenues (controlled by Newmont Mining) bypass state coffers.

As the global financial system operates like a rigged casino benefiting the powerful, the odds are stacked against the Global South. Despite decades of promises, debt ‘relief’ initiatives, and technocratic tinkering, Africa is never relieved. It remains trapped in a neocolonial cycle of extraction, austerity, and dependency. The latest proposals, debt sustainability analyses (DSAs), Special Drawing Rights (SDR) recycling, and local currency lending, are presented as solutions, but they are little more than band-aids on a bullet wound.

This is not a crisis of bad policy; it is the logical outcome of a financial empire designed to enable those who designed it to develop, while keeping parts of the world like Africa at the bottom of the development pyramid. From the IMF’s structural adjustment programs (SAPs) of the 1980s to today’s ‘debt transparency’ frameworks, the game remains the same: extract wealth, enforce obedience, and maintain control while offering ‘solutions’ for making the symptom of the illness tolerable.

The IMF’s Austerity Trap

Debt Sustainability Assessments (DSAs) often tend to be little connected to the economic realities. Like an outdated map, they often fail to account for the actual terrain of a country’s fiscal challenges and growth potential. The IMF claims DSAs will prevent ‘unsustainable’ borrowing, but who defines what is ‘sustainable’? The same institution that forced Ghana to slash fuel subsidies in 2023, sparking riots?

The IMF’s austerity conditionality constitutes structural violence through fiscal policy, undermining the pledges made under the United Nations’ Sustainable Development Goals (SDGs). By mandating wage cuts, healthcare privatisation, and labour deregulation in debtor nations, these programs institutionalise poverty, divert the little resources of poor countries away from meeting the survival needs of citizens to servicing debt.

This is directly associated with the outdated power dispensation that structured the design and operation of the IMF and the World Bank. First, we have voting shares at the World Bank that still reflect 1945 power dynamics, whereby nearly 95% of African states hold less than 5% while the countries that designed the system, like the US, hold more than three times more. Second, local currency lending is a distraction when the system is hardwired for dollar dependency, and Africa loses more to illicit financial flows, capital flight ($88.6B/year, UNECA) than it receives in aid. Third, private creditors who hold a significant amount of the south’s debt and vulture funds operate to entrench extractivism. After defaulting on its debt, Zambia was sued by British Virgin Islands-based vulture funds demanding 300% returns.  The IMF’s ‘restructuring’ deal protected bondholders while Zambians faced fuel queues and medicine shortages.

Despite its years of demand for reform, the reality is that Africa, left with no other choice, continues to engage. Highlighting its unwillingness to relinquish its dominance willingly, the financial empire persists to deflect responsibility and block necessary changes. If Seville is to mark a break from the continuation of the status quo, it must allow the replacement of the system, as the WID report and many others argued, by ‘a more inclusive and mutually beneficial trade and monetary system.’

The Missing Alternatives

There are development advancing alternatives ranging from the cancellation of Illegitimate debts to pegged exchange rates closer to purchasing power parities and/or a common currency and a centralised system of credits/debts with a common borrowing rate.

Most African debt is odious, often borrowed on extortionist terms, including via IMF conditionalities. African countries can demand an independent audit (like Ecuador did in 2007) and repudiate predatory loans.

Also missing is ‘a credible, comprehensive mechanism for sovereign debt relief,’ which is also called for by the Vatican-Columbia University sponsored Commission.

Additionally, there will be no meaningful benefit to be gained from making concessions on the African Group’s position for the FfD4 calling for the establishment of a time-bound global sovereign debt authority, echoing the Report of the Namibia-Amani Africa High-Level Panel of Experts on Africa and the Reform of the Multilateral System.

Africa also needs to be serious about continental financial and monetary integration to ensure financial sovereignty. It is time to think about regional currencies and implement the pan-African payment and settlement platform. Capital controls need to be implemented to fight illicit financial flows.

Unless Seville marks a complete break from the past and ushers in firm commitment on the overhaling of the global financial architecture, there is little prospect that the tinkering on the margins and committing to future reform of the international financial institutions would be enough to ending the cycle of heavy indebtedness and extortionist terms of access to development finance and to meet the development needs, including the realisation of the SDGs.

 

[1] Dalaya Ashenafi is  an Ethiopian political economist and strategist whose work critically engages with structural inequality, state power, and emancipatory development alternatives. She can be reached at [email protected]