Ablakwa Tells Commonwealth: High Borrowing Costs Are Strangling Africa's Development

African countries pay more than eight times the borrowing costs faced by nations in the Global North, Foreign Affairs Minister Samuel Okudzeto Ablakwa has told a Commonwealth gathering, calling for urgent reform of a global financial architecture he described as structurally biased against the developing world.

Speaking at the Commonwealth Foreign Ministers' Roundtable in St John's, Antigua and Barbuda, on Wednesday, Mr Ablakwa said the disparity deepens the continent's debt burden and limits its ability to finance critical development needs. He urged Commonwealth member countries to push for reforms that address the inequalities making borrowing more expensive for developing countries, particularly those in the Global South.

A System Stacked Against the South

Mr Ablakwa argued that the current global financial architecture places developing economies at a disadvantage, with sovereign credit ratings and high-risk premiums driving up borrowing costs and restricting Africa's access to investment. The result is a cycle in which countries pay more to borrow, leaving less fiscal space for infrastructure, education, healthcare and industrialisation—and creating jobs for a population whose median age is just 19.

"Comprehensive reforms are needed to help African countries access affordable financing for critical sectors," he said, stressing the urgency of expanding economic opportunities for young people.

The Minister also questioned the sustainability of existing debt relief arrangements, citing the Highly Indebted Poor Countries Initiative introduced in 2000. Despite the debt relief secured under HIPC, he noted, several African countries had returned to similar debt challenges barely two decades later—a pattern he suggested demonstrates the inadequacy of piecemeal interventions.

The Bridgetown Push

Mr Ablakwa reaffirmed Ghana's support for the Bridgetown Initiative, the reform agenda championed by Barbados Prime Minister Mia Mottley, and urged Commonwealth countries to prioritise its proposals for overhauling the international financial system and improving access to development financing.

The Bridgetown Initiative, first proposed in 2022, calls for a rethink of how the global financial system supports developing countries facing overlapping crises—from climate vulnerability to debt distress. It has gained traction among developing nations and multilateral institutions, though its more ambitious elements, including a global climate mitigation trust and automatic liquidity support during crises, remain contested.

Background: A Persistent Premium

The eight-fold borrowing cost gap Mr Ablakwa cites is not new, but it has become more acute. African sovereigns typically borrow at interest rates several percentage points higher than their European or North American counterparts, even when their debt levels are comparable. Credit rating agencies, which have faced sustained criticism for perceived bias against African economies, play a central role in setting those premiums.

Ghana's own experience illustrates the problem. The country's 2022 debt crisis forced it into a US$3 billion IMF programme and a painful domestic debt restructuring. Since then, it has rebuilt reserves, brought inflation down to 5.5 per cent, and achieved a primary surplus ahead of target. But the cost of borrowing on international markets remains elevated, limiting the government's ability to finance the infrastructure and job creation it has promised.

The Minister's intervention in Antigua comes as Commonwealth leaders concluded their summit with commitments including half a billion US dollars in new funding for renewable energy and skills development. Whether that translates into meaningful reform of the financial system—or remains another communiqué—is the question Mr Ablakwa's call implicitly poses.