YAOUNDÉ, Cameroon – Nigerian Bishop Mathew Hassan Kukah of Sokoto says the global financial system is outdated and failing people,” particularly in Africa.

The bishop’s comments to Crux came in the wake of the Jubilee Report published recently by the Vatican.

The report presented by the Pontifical Academy of Social Sciences, argues that the current system is inherently biased, forcing developing nations, particularly in Africa, into a cycle of debt that prioritizes creditors over the well-being of citizens.

Commissioned by the late Pope Francis and co-chaired by Nobel laureate Joseph Stiglitz and economist Martín Guzmán, the report contends this flawed mechanism is actively harming progress and demands urgent reforms, including stopping net debt payments from struggling economies and creating a global climate fund.

Kukah agrees that “the global financial system is out of date and failing people.”

“The system is riddled with biases and inefficiencies, ranging from excessive borrowing costs for developing nations to a lack of investment in global catastrophes like pandemics and climate change,” the bishop told Crux.

The Nigerian prelate said the system has given rise to “a story of two worlds”- where the wealth and access to a safe future of the ‘haves and have-nots’ mainly in Africa, are diverging, and poor nations ,already saddled by poverty, have to make the rather difficult choice of either resettling their debts or investing in their nations’ peoples.

“Rich nations may print money to boost their economies, but developing nations are struggling with high borrowing rates and are unable to do the same,” Kukah said.

“Many leaders must make the painful decision to either pay off their debt or provide for their constituents. With dire repercussions for many generations, many African nations now spend more on debt repayment than on healthcare,” he told Crux.

Africa’s debt burden has been rising over the past two decades. According to the World Bank’s International Debt Statistics, the continent’s external debt stood at $220 billion in 2009. By 2023, it had skyrocketed to $685 billion.

The data further indicate that 20 low-income countries in Africa are in, or at risk of, debt distress (57 percent of assessed countries), and the continent will use $88.7 billion in external debt service in 2025. External debt owed by African countries is equivalent to 24.5 percent of their combined GDP in 2023, the data noted.

Kukah argues that access to international finance has been skewed against Africa, with European citizens receiving more money from the International Monetary Fund (IMF) than African citizens. He urged reforms to the international financial architecture that should allow Africans easier access to global finance.

“In a world where geopolitics is a factor in fragmentation, a financial architecture that does not reflect the modern reality runs the risk of causing its own fragmentation. Without significant reforms that take into account our varied socio-political and economic realities, there won’t be a viable way to resolve this situation,” the bishop told Crux.

It’s an issue that has frequently been voiced by African nations, through various blocs like the African Union (AU), the African Development Bank (AfDB), and individual governments, which have been increasingly vocal about the need for reform of the international financial architecture (IFA).

The current IFA, largely established after World War II (e.g., Bretton Woods institutions like the IMF and World Bank), is seen by many African leaders and economists as outdated, unrepresentative, and not adequately addressing the specific challenges and needs of developing economies, particularly those in Africa.

“Due to a number of factors that exacerbate the problems, the debt situation in African nations has reached a crisis stage,” Kukah told Crux.

He said existing capital concentration practices are made worse by the regulations governing the global banking system, which increases inequality in access to financial resources and impedes fair development.

In addition, multilateral institutions’ primary emphasis on reducing poverty has unintentionally ignored the urgent liquidity needs of African countries, and a third dynamic according to the Bishop of Sokoto is that credit rating companies’ innate bias distorts risk perceptions, unfairly penalizing African nations and making it more difficult for them to draw in investment on favorable terms.

“The debt burden in Africa has been further exacerbated by recent global events, including the COVID-19 pandemic and the conflict between Russia and Ukraine. The high global interest rates have significantly increased the costs of servicing external debt,” he told Crux.

Kukah complained that the current global debt restructuring architecture is ineffective; and that means many African countries lose access to the international capital markets. And this worsens if countries default from their debt. He said this has real consequences for development.

“The mounting crisis, which is marked by a drop in industrial production, subpar export results, and worsening social indices, institutions, and the environment, has been exacerbated by Africa’s external debt load. Countries like Zambia, Mali, Mozambique and Kenya have defaulted on their debts in recent times, with dire consequences, socially and economically,” the bishop said.

The prelate echoed the principles of the Harare Declaration that emphasizes the fundamental right of the public to understand how their governments borrow and manage debt. Kukah advocated for inclusive decision-making processes that clearly outline the pros and cons of such actions. He identified the current international financial architecture, characterized by a neoliberal focus on private profit and foreign investment often sidelining domestic needs, as a significant contributor to Africa’s complex and multifaceted debt burden.

Kukah pointed to systemic issues like commodity price volatility and trade imbalances as further exacerbating the problem.

While acknowledging the necessity of borrowing for development, he stressed that achieving meaningful returns requires resolving underlying structural problems and integrating debt management effectively into broader economic and development planning, supported by strong institutions and favorable conditions.

Ultimately, Kukah called for greater global transparency, accountability, and cooperation, warning that ambitious reforms to update the global financial system for the twenty-first century are running out of time to address these systemic debt challenges and promote sustainable development in Africa.