How to deal with debtors in Africa in COVID times? A current moral question

Picture: Stiftung Solarenergie - Solar Energy Foundation

Almost 20 years ago, Bangladesh was hit by a devastating flood disaster. Several thousand people died, countless became homeless and lost their economic livelihood.

At that time, an astonished murmur went through the still young Social-Impact-Scene because some microcredit organisations in the country insisted on the repayment of the loans. Regardless of the catastrophic conditions, they thus caused additional hardship for many families.


Today, the situation among Africa’s PAYGO borrowers is quite comparable. Low-income households at the bottom of the economic pyramid (BOP) are the most vulnerable and therefore the most affected by the pandemic. Millions of households who bought a solar system on credit can no longer reliably pay their instalments because of the economic hardship triggered by Corona. The greatly reduced income is now needed to secure basic needs (food, medicine and personal protective equipment).

The situation in Africa is just getting worse these days: while people in Europe and the USA are starting to spend money on holidays again thanks to vaccination and widespread testing, the peak is still ahead for many African countries. Corona numbers are rising dramatically in 14 African countries. “The scale and speed of Africa’s third wave is unlike anything we have seen before,” says Matshidiso Moeti, head of the WHO’s Africa office.

The images are now often reminiscent of those from India a few weeks ago: Helplessness in front of the hospitals, overstretched clinics, too few intensive care beds, too little oxygen.


Many African PAYG clients have asked their solar companies to reschedule their loans. The insolvency of their customers in turn has consequences for the companies because they cannot pay back the loans of the (mostly) foreign lenders on time.

The reaction of international lenders to this situation varies. Many are willing to adjust their payment conditions to the current crisis situation. Either through (partial) debt waivers or deferrals.

Others, however, remain tough – which seems particularly strange in the case of those who speak loudly of their social commitment in their publications. If one asks why the harshness is necessary, responsibility is often shifted: They say that they are not an aid organisation and that they are obliged by law to protect the capital of their own investors by all means. This is true, but a cheap excuse. Because no law and no company law prescribes that the protection of capital must be carried out at all costs, with all means and regardless of losses.


Of course, investors are entitled to the full repayment of their capital. In the current crisis situation of unprecedented dimensions, it is not a legal question but a moral one that investors are facing.

Unlike their clients, only very few investors will have their personal livelihoods threatened if they waive or defer part of their loan repayments. This is because they live in countries where they have access to state benefits during the Corona pandemic, where they have access to modern health care and above all: where they have sufficient opportunity for vaccination and other Corona protection measures.

It is the choice of investors whether to destroy jobs and turn out the lights in rural households. Or whether they give up some of their claims in this crisis caused by Corona. It is a question of their moral compass.


A company is not a charity. That is true. But every company is also obliged to act in a socially just manner.