Saudi Arabia dangles debt relief offers as it hunts African vote

Saudi Arabia said on Friday it was preparing a financial portfolio worth $10 billion in exports and another $5 billion in development financing for African countries as it seeks to cement what it calls "historic" ties with the continent.

This will include a $1 billion fund for water projects to be established by 2033, as well as security programmes and clean energy projects targeting at least 750 million people in Africa.

Saudi Crown Prince Mohammed bin Salman told a gathering of African leaders in Riyadh that he wanted to support "innovative solutions" to African debt and improve cash flows in African countries.

The project is expected to run until 2030, the year the world is expected to have achieved the Sustainable Development Goals (SDGs).

“The Kingdom of Saudi Arabia supports sustainable development and recognises every country’s right to utilise their resources and capacities,” he said at the inaugural Saudi-Africa Summit, which brought together representatives from 50 countries across the continent, including all the leaders of the Horn of Africa.

“The Kingdom is keen to support innovative solutions to address African debt, as it sought during its presidency of the G20 in 2020 to launch initiatives to suspend debt service payments during the pandemic for low-income countries, and the Common Framework for Debt Treatment initiative in many African countries,” he added.

Saudi Arabia, one of the members of the G20, had come to the defence of poor countries in Africa in 2020, arguing for deferred repayments on their loans, debt relief or the suspension of interest.

But the International Monetary Fund's (IMF) 2020 programme was conditional. Known as the Common Framework, it requires individual indebted countries to sign a memorandum of understanding with one lender, which then seeks similar favours from other lenders.

Debtor’s capacity

“The Common Framework is intended to deal with insolvency and protracted liquidity problems, along with the implementation of an IMF-supported reform programme,” the IMF said at the time.

The G20 creditors had agreed to coordinate to provide debt relief “consistent with the debtor’s capacity to pay and maintain essential spending needs.”

It was unclear whether individual countries had secured any money. But Ghana and Kenya were among those seeking money to inject immediate cash into their economies.

On Thursday, Saudi Arabia's Finance ministry said it would disburse about $533 million in development financing to Africa, but it didn't name the countries that would benefit.

Typically, the Saudis lend either directly through the Saudi Fund for Development or through the IMF.

Since 1974, about 600 loans and grants have gone to Africa through the Saudi Fund, worth about $14 billion and spread across 54 countries, according to a bulletin from the Fund. The Fund says it plans to spend another $800 million on projects, loans and grants by 2030.

In Riyadh, Saudi Arabia said it was keen to develop "cooperation, partnership and trade ties" and launched the King Salman Development Initiative in Africa.

“We also look forward to launching new Saudi investments worth over $25 billion in various fields," the King said.

Ailing economies

The King Salman Humanitarian Aid and Relief Centre has provided some $450 million in aid to 46 African countries. But Africa's immediate need is to revive its economies, especially in countries that now appear stable, such as Kenya, Tanzania and Rwanda.

Leaders such as Kenya's President William Ruto and Ethiopia's Prime Minister Abiy Ahmed were in attendance, both looking for funds to inject into their ailing economies.

“There is great complementarity in our development aspirations as adopted continentally in the AU’s Agenda 2063, the UN’s Sustainable Development Goals and Saudi’s Vision 2030,” said Dr Abiy.

“We must look into deepening cooperation and placing development financing high on the agenda of Saudi-Africa cooperation, so as to seize the opportunities presented in these visions for economic advancement.”

Eritrea's President Isaias Afwerki, South Sudan's Salva Kiir, Tanzania's Samia Suluhu Hassan and Rwanda's Paul Kagame were present.

African Union Chairperson and Comorian President Azali Assoumani and Nigerian President Bola Tinubu were also present, as was Sudanese junta leader Abdel Fattah al-Burhan, who made his first trip to Riyadh since war broke out in Khartoum in April between his Sudanese Armed Forces and the Rapid Support Forces.

Nigerien Prime Minister Ali Mahamane Lamine Zeine also made his first trip abroad since being appointed to head a junta-led government in August. Mauritius' President Prithvirajsing Roopun and Malawi's Lazarus Chakwera were also present.

The Saudis had touted the meeting as part of efforts to improve political coordination, address regional security threats and promote economic transformation. But they have recently turned to Africa to compete with Middle Eastern rivals such as the United Arab Emirates and Qatar, as well as Turkey, which have all increased their diplomatic presence on the continent.

Diplomatic relations

The kingdom currently has diplomatic relations with 54 African countries, with 31 resident embassies. By 2027, officials say, Saudi Arabia will increase this to 42.

But the Saudi offer isn't a free lunch. In the midst of all this, Saudi Arabia is vying for the right to host the World Expo in Riyadh in 2030.

“We aim to host Expo 2030 in Riyadh, to present an unprecedented version in the history of this exhibition that may contribute to projecting a better future for humanity,” the Crown Prince said.

“We look forward to your participation in highlighting the important role of Africa, its human and natural resources, growth opportunities and future potential.”

Riyadh is competing with Busan in South Korea for the hosting rights, which will be announced by November 28 this year. All invited countries have one vote each.

The Saudis also want to rally Africa against what they see as Israeli excesses in its response in Gaza to last month's attack by Hamas militants.

The crown prince condemned what he called the "Israeli occupation authorities' violation of international law in Gaza".