How do we achieve a just climate transition? Often overseen but critically important is the role of debt, specifically the huge debts many periphery countries have. This debt impedes a just climate transition. As the scholar Sylvia Federici has stated very clearly, without cancelling odious debt, the transition has acted as a neocolonial debt trap over countries that are i) not responsible for overshooting planetary boundaries and ii) most vulnerable to ecological breakdown.
The looming debt crisis is the product of a long tale of captivity to international capital. Western states, along with their supra-national institutions, have forced periphery countries into austerity and neoliberal policies in order to repay their debt. Financialization of basic services and major cuts in public spending have deepened inequalities and worsened the cost-of-living crisis. Austerity politics seem to be making a comeback for the minorities of the world, while deepening for the global majority. Today, more and more, we must remind ourselves that an economic system that impedes nations’ to meet their citizens’ basic needs is completely irrational.
How do we achieve a state of affairs where sovereign countries can democratically address the provision of basic necessities for their populations? How is debt intertwined with a growth-based economy? What is the postgrowth perspective on this? These are some of the questions we will be addressing in the blog series on Debt in a Postgrowth World by our postgrowth researcher Alba Garcia.
Alba is interested in monetary transformations to mobilise a socially and ecologically sustainable and just future. In this blog series, titled Debt in a Postgrowth World, she will report on strategies for achieving economic sovereignty in periphery economies.
Co-readers: Julien-François Gerber and Charles Stevenson
Debt Dictionary
Debt – Refers to something (often money) that is owed from one entity to another, it is a promise or obligation to repay. The anthropologist David Graeber, expands this definition towards a (historical) moral debt. In this blog series, I explore the debt that periphery countries owe to creditors outside their country, specifically from their independence to the present day. However, Gaugo and Cavallero argue that we cannot understand debt by solely looking at nation-level debt. For that reason, I will also refer to private debt where indebtedness is treated as an individual problem, trapping whole classes into vicious cycles of poverty. This definition has been partly taken from the report ‘The colonial Roots of global South debt’ by DebtJustice.
Core-periphery – The World-Systems Theory, as defined by Wallerstein, stipulates that the world economic system is divided in three types of countries: core, periphery, semi-periphery. Rich core capitalist societies are only so, because they exploit cheap labour and resources from periphery countries. Semi-peripheral countries have characteristics of the two types, being under pressure to advance to the core while not falling back on periphery status. It is important to note that the model is not perfect; it can create flawed narratives where countries are seen as uniform and largely undifferentiated. Nevertheless, this model is useful to refer to global economic dynamics, such as trade.
The west – Refers to countries primarily in the regions of Australasia, Europe, and the Americas. At points, I use it interchangeably with the term ‘core countries’ to designate countries associated with the west that have relative power and wealth in the global economy, including the UK, US, France, Germany, Canada and Australia. This definition has been taken from the report ‘The colonial Roots of global South debt’ by DebtJustice.
Colonisation – In her book Colonialism/Postcolonialism, Ania Loomba refers to colonisation as: the takeover of territory, appropriation of material resources, exploitation of labour, and interference with political and cultural structures of another territory or nation.
Imperialism – In her book Colonialism/Postcolonialism, Ania Loomba refers to imperialism as the global system of colonisation.
Neo-colonialism – According to former Ghanaian President and revolutionary Kwame Nkrumah, neo-colonialism refers to the continued economic and political control over formerly colonised countries which, despite achieving formal independence, remain exploited by former colonial powers and emerging global powers. In a postcolonial context, powerful governments exercise and secure their power in multifaceted ways, such as economic and monetary policies. In this blog series, I specifically focus on neo-colonial forms of imperialism through the lens of debt, whilst recognising that periphery countries’ debt is inevitably affected by other, ever-changing, forms of imperial power too. This definition has been taken from the report ‘The colonial Roots of global South debt’ by DebtJustice.
Economic sovereignty – It is a spectrum that reflects the degree to which states can exercise the sovereign rights over money and finance. This includes, for instance, their ability to determine their own financial and monetary policies that put the needs of their citizens first. This is different but closely related to monetary sovereignty, which refers to several rights of the state such as the creation of money, the regulation of how currency is used within a territory, the operation of the exchange rate, etc. Significantly, governments with a high degree of monetary sovereignty can tax their population in its own currency, avoids issuing debt and bonds denominated in foreign currencies (external debt), and follows a floating exchange rate regime.
“He who feeds you, controls you” ― Thomas Sankara, Pan-Africanist Revolutionary
Breaking the chains of debt colonialism is intrinsically linked to economic sovereignty. In order to repay their debts, governments must redirect their economic strategy to earn as much as they can every year. They must sacrifice access to basic services, such as education and healthcare. At the same time, they follow mainstream development policies such as investment in tourism, foreign direct investment, and export-oriented growth.
According to economist Fadhel Kaboub, these traditional policy solutions are a trap; they attract speculators, prioritise the needs of foreign investors and multinational corporations, and keep countries bound to producing low-value-added commodities. The profits made from these industries are largely repatriated to the elite minority and do not help periphery economies reclaim their economic sovereignty for the citizen majority. Moreover, these strategies emerge from external debt obligations, which pressure periphery economies to borrow in foreign currency.
As laid out in the previous blog in this blog series, that is why we must continue to call for unconditional debt cancellation within a wider framework of reparations, but what other strategies exist? In this blog, Alba reports on strategies made for and by the periphery towards economic sovereignty that actors in core economies must support. With contributions from Almas Mohamed from Debt for Climate Kenya, Alba discusses how domestic resource mobilisation (with a focus on food sovereignty) can combat economic deficiencies in African countries, and more specifically in Kenya.
Structural deficiencies: zooming on to African economies
Since the debt crisis of the 1980s, the debt in African economies persisted and accumulated. And today, 30 African countries spend more on repaying their debt than on healthcare. African indebtedness is particular; countries have to pay back more money than they actually borrow. This is because most African countries increasingly borrow from private sector creditors, which impose high interest-rates and servicing costs. This is specially the case after the Covid-19 crisis as the African continent ran into a deeper looming crisis. This is why increasing economic sovereignty in African countries is urgent.
Looming debt crisis in various African countries
Although most African countries gained political independence during the 50s and early 60s, structural economic dependency on their former European colonists still persists today. In the contemporary globalised system of finance, most African countries continue to depend on exporting primary products, such as crops and minerals. This dependence makes the continent economically fragile and uncertain because of its dependency on external economic conditions (including the price of commodities, financial flows, and infrastructure investments).
Because of this structural and historic context, African countries suffer from three major economic deficiencies: a lack of food sovereignty, a lack of energy sovereignty (including countries that export oil and gas), and low value added commodities of exports relative to imports. The latter causes a trade deficit, where more goods are imported than exported. This is significant: constant pressure in the form of trade deficits depreciates African currencies, increasing their unsustainable external debt accumulation. At the local level, this hurts citizens as imports of basic necessities (such as food, medicine, energy) become more expensive and inaccessible. Tackling these deficiencies are crucial to address the lack of economic sovereignty in the African periphery.
The mismatch between imports and exports creates a structural trade deficit in African economies
Resistance to economic violence: 2024 finance bill in Kenya
Over the month of June, Kenyans rejected the 2024 Finance Bill which aimed to raise $2.7 billion in tax revenue in order to pay off the government’s huge debts to mostly private creditors (including China, the World Bank, and the IMF). Since Kenya’s president, William Ruto, came into power, his regime has implemented an array of austerity measures; this has included privatising healthcare, and raising taxes on essential commodities. This neoliberal course is linked to strict IMF conditions, which Kenya is obliged to follow to repay its debts. According to Almas, “the bill was reflecting a logic of austerity by our governmental institutions. And the IMF was being put on the spot. So it was just an ongoing system of extracting wealth from developing countries for debt repayments.”
Kenyan protestors denounce the IMF and the World Bank in their complicity in financial colonialism © Gerald Anderson/Anadolu/Getty Images
This June the Finance Bill was presented to Parliament, proposing tax hikes on sanitary pads and basic food commodities. This is only worsening public-health conditions in the country as Kenya spent more on repaying public debt than on healthcare even before the Covid-19 pandemic. At the same time, this reform would weaken the tax burden on private businesses and the rich – for example, by exempting aircraft parts from Value Added Tax (VAT). Kenyan youth organised mass demonstrations in Nairobi, Mombasa, Homa Bay, and Kisumu which led to the withdrawal of the bill. This was only possible after the death of at least 39 Kenyan citizens who were exercising their right to protest but were met with disproportionate and excessive police force. Despite the deaths and massive protests, the IMF will not back down from the economic conditions it has imposed on Kenya; according to Almas “their main interest is to make sure that [Kenya remains] credit wealthy, in order to keep on accumulating debts. Their policies do not care about our wealthfare”. That is why Debt for Climate Kenya demands that the IMF exits the country.
This bill has exposed deep cracks in Kenya’s financial system, which is largely pitted against the common mwananchi – citizen in Swahili. The country already suffers from severe inequality and a rise in the cost of living since the Covid-19 pandemic. This is largely due to debts incurred by the government. In the words of Almas, “a rising debt burden has really led to an increase in taxation, which is our biggest problem as citizens, because the government seeks revenue to service these loans.” Instead of being able to serve their citizens, the Kenyan government must repay IMF and Chinese loans (which often come with very different conditions). This is why the Kenya Debt Abolition Network (KDAN) demands the abolition of Kenyan illegal, illegitimate and odious debts through a citizen debt audit. But the demands of Kenyan citizens go further than that. Today, they continue to protest against financial colonialism by the IMF, neoliberalism by elite African classes, and to show their resentment toward a state that is “still not independent,”
Tackling structural deficiencies: modern monetary theory as an alternative vision
Modern Monetary Theory focuses on the root causes (structural deficiencies) of external debt. Contrary to mainstream economic theory, MMT recognises the governments’ power to shape their own economies and control wealth distribution and ecological management. Where conventional thinking of government spending is limited by taxing and borrowing capacity, MMT views a larger fiscal policy space where the limit is set by the risk of inflation. In this way, MMT “emphasises the ability of governments to fund essential services without really relying on external borrowing” says Almas.
To tackle the root causes of external debt, MMT argues for reducing dependence on foreign currency by reducing dependence on imports. Meaning, it argues to use industrial, fiscal, and monetary policies to build sovereign industrial capacity. In this way, periphery countries are enabled to put the needs of their citizens first. This means that domestic resources can be mobilised into local rather than external financing, so that it benefits the majority of the population. This is not a utopian vision; “there is enough human, cultural, and material wealth potential in the African continent to make it happen.”
The idea that domestic resources and labour should be mobilised to meet domestic needs is what the anti-colonial movement was organised around. We can see this central idea in the works of Franz Fanon and Thomas Sankara. But economic sovereignty in the periphery cannot occur solely from mobilising their domestic resources. Capital accumulation in the core is enabled by cheap labour, energy, and resources from the periphery. Meaning that the dissenting voices in the economic core have a duty to stand in solidarity with movements in the periphery. This is one of the demands that a coalition of periphery movements put forward in the 2010 People’s Agreement of Cochabamba.
For an alternative vision of development in the African continent, Pan-Africanist analyses of finance are key. Ndongo Samba Sylla and Fadhel Khaboub, among others, have made key contributions to this field. Their work, building on the work of revolutionaries and dependency theorists, has contributed to the call for a larger mobilisation of domestic resources for African countries. This means 1) investing in food sovereignty across all levels, 2) investing in domestic renewable energy production, 3) designing a Pan-African industrial strategy that moves industrial capacity to high value content. This strategy moves away from prioritising the elite minority, and redirecting countries’ policies, to refocus the needs of the majority.
From export-oriented growth to local value chains
Today, Africa is the most food-import-dependent region in the world. This historical dependency manifests in low prices of primary goods, reliance on technology for farming, and ecologically unequal exchange (namely the net appropriation of labour, energy, and resources from poor to rich countries). The periphery has largely suffered from an excess of agricultural imports, compared to exports, this trade asymmetry can be turned around in order to achieve economic sovereignty. Widening a home market, with food prices that are based on social needs and goals could lead to economic sovereignty.
In the post-independence period, African countries were pressured to maintain colonial agrarian export structures. They also increased cereal production for domestic consumption. North Africa, however, remained stuck with commodity crop exports such as olive oil, dates, fruits and vegetables. These exports also included cotton, coffee, and cacao in many other African countries. Although countries were more or less sufficient during the post-independence period, imports began to rise in approximately 1970. This is due to a legacy of colonial market structures, where former colonies produced primary or agricultural goods while colonising countries produced industrialised commodities. Even after independence, countries were forced to become outward-oriented; or in other words, they were increasingly “structured to complement the core rather than cater to their popular classes”.
Increasing food sovereignty
Achieving food sovereignty is a step towards economic sovereignty. According to Max Ajl, associated researcher at the Tunisian Observatory for Food Sovereignty and the Environment, it is possible for the African continent to reduce or eliminate food and agricultural imports. It can do this by, firstly, building self-reliant systems that are non-import dependent. In this manner, peripheral countries no longer need to spend hard currency on basic goods. Secondly, they must internally articulate their agricultural systems. Meaning, materials such as organic fertilisers and tractors should be procured nationally, for minimal reliance on international markets and prices. And lastly, African countries can benefit from agroecological practices which reduce the need for off farm capital inputs.
This way, they are less likely to suffer from unpayable debt. In Alma’s words: “a lack of food sovereignty means that we are vulnerable to global price shocks, and are affected by geopolitical events. This only increases our need to borrow finance to meet our many other development goals. We cannot be proud of our GDP growth because it’s just debt-financed growth. Much of the borrowed money has just been going to projects that don’t necessarily enhance our economic sovereignty”.
Countries that are able to feed themselves have more freedom to refuse trade deals that do not benefit them. By increasing their food sovereignty, African countries cut off an “avenue for external pressures over political decisions“. Every seed that is sown in making agriculture more sovereign also works against the underpricing of commodities produced in periphery economies as well as unequal exchange. According to Gorden Moyo, this is how imperial value transfers and social control can be redeemed.
Food sovereignty in Kenya: down with the chemical pesticides!
Kenya faces several challenges to food sovereignty. One of these challenges is the increased dependence on chemical pesticides from the EU and UK. The imports of banned chemical pesticides (banned in EU since 2017) and herbicides from the EU, such as the deadly Paraquat, have grown approximately 30% in 2019. These cause serious health issues, soil deterioration, and river contamination in Kenya; specially Paraquat which is sold widely across the country, and reaches the most isolated rural communities.
The need for safe, local, and ecological alternatives to synthetic pesticides is urgent. In 2020, Kenya faced two waves of locust invasions as well as the Covid-19 economic and health crises. Although crises fundamentally unsettle societies and reinforce inequalities, they enable alternative seeds to grow. In 2020, the seedlings of safe and locally produced alternatives to synthetic pesticides were emerging. However, the Kenyan government, with support from the World Bank, announced an increased use in agrotoxins and looser pesticide regulations. This is in line with Ruto’s neoliberal policies; these only exposed small-holder farmers to an increased use of harmful chemicals amidst an agricultural emergency.
Visualisation from Route to Food, “Pesticides in Kenya: What’s at Stake?”
The neo-colonial financial architecture puts the growth of companies in the core first while the health and social standards of Kenyan citizens second. The Swiss company Syngenta, which is a major importer of Paraquat, faces multiple lawsuits from farmers claiming the herbicide caused their Parkinson’s disease. The health risks are so concerning that human rights experts demanded the EU to end banned pesticide imports in 2020. That is why civil society in Kenya is raising the question: why is the same chemical that causes serious health problems, banned in the EU and UK, not banned in Kenya?
Although Kenya faces serious challenges to food sovereignty, its citizens are taking action. The Kenyan Peasants League (KPL) is a social movement of Kenyan peasant farmers, fishers, pastoralists and consumers whose main aim is to promote peasant agroecology for food sovereignty. KPL focuses on building alternative solutions to the import of chemical pesticides. To do so, they ran a national campaign asking the UK and European Union to ban the import of agrotoxins. Since 2020, they are also working to create alternative, affordable, and safe solutions for farmers across the country.
Members of Kenyan Peasants League, protesting in Nairobi during the COP26 climate summit, Kenya. ©Kenyan Peasants League
Global colonialism and meaningful solidarity
Structural deficiencies in the African periphery persist as their economies are structured to benefit their former colonisers. Its people bear the cost of these deficiencies, as their elite classes impose high taxes on essential services. For this reason, there is a need to promote economic models that do not impose austerity on citizens but rather value local value chains. Here, Modern Monetary Theory becomes significant as it enables governments to reduce countries’ dependency on imports and take steps towards mobilising domestic resources for the wider goal of economic sovereignty.
African countries have both the agency and resource capacity to become more economically sovereign. This has become clear in the case of Kenya as youth have resisted a violent finance bill this July as well as KPL’s actions towards food sovereignty. However, we cannot forget that Africa’s economy is integrated into a global economy where interests of core countries and emerging peripheral economies tend to affect its trajectory. According to anti-colonial theorists and activists such as Achille Mbembe and Sabelo Gatsheni Ndlovu, this is a major challenge to an alternative developmental future in Africa. Since colonialism, Western powers have been undermining domestic resource mobilisation in Africa. Indeed, the West’s’ support of trade liberalisation, neoliberalism, and orthodox market policies has affected Africa’s sovereignty. Domestic resource mobilisation cannot occur if we turn a blind eye to global colonialism.
In order to support the periphery, such as Kenya and other African countries, in its ongoing fight for full decolonisation, we need strong movements in the core that can act in solidarity with those leading the challenge to the imperial world order. Political actors, more specifically activists, civil society, and government officials, in the imperial core must first and foremost understand our position within an asymmetric world system; we must understand economic sovereignty as a necessary step towards the emancipation of the periphery; we must centre debt-abolition and reparative justice in our demands; and we must continue to call for domestic resource mobilisation in the periphery.