Dorothy-Grace Guerrero and Firoze Manji (ed) (2008) China’s New Role in Africa and the South: A search for a new perspective. 
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Pambazuka News 197: Special Issue on Debt and Africa
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Highlights from this issue
Pambazuka News Special Issue on Debt and Africa
2005-03-10
Debt is one of the central issues facing Africa and its future development. In a year when the future of Africa is being discussed at a number of international meetings and as the Commission for Africa prepares to release its final report on the continent’s development challenges, this special issue of Pambazuka News focuses attention on the issue of debt and the impact it has had on generations of Africans.
Its publication coincides with the publication this week of ‘African Voices on Development and Social Justice: Editorials from Pambazuka News 2004’, published by Mkuki na Nyota Publishers, Tanzania. The book is a collection of the 2004 editorials of Pambazuka News. The book’s 46 contributors include such distinguished African intellectuals and activists as Demba Moussa Dembele, Mahmood Mamdani, Adebayo Olukoshi, Kewsi Kwaa Prah, Brian Raftopoulos, Pierre Sané and Ernest Wamba dia Wamba. We will be sending out more information about the book next week.
Patrick Burnett and Firoze Manji, Pambazuka News editors
CONTENTS:
A. Toronto, Naples, Lyon, Cologne and London: G7 leaders and the debt trip to nowhere
The rallying cry must be debt cancellation and reparations for Africa's people, states DEMBA MOUSSA DEMBELE, who calls for a World Commission on Debt, an end to conditions imposed by international financial institutions and indefinite postponement of Economic Partnership Agreements being negotiated by the EU. Development will not come from external forces but from African people themselves, he concludes.
B.On Debt, Blair and the Future of Africa
The cancellation of $20 billion dollars of Iraqi debt following the fall of Saddam Hussein shows that political will can result in a solution to the debt crisis. But will UK Prime Minister Tony Blair's Commission on Africa rise to the challenge and take seriously the view from the ground on debt? That, writes KAYODE FAYEMI, is unlikely.
C. The era of debt write off?
EZRA LIMIRI MBOGORI makes a plea for the planet's future generations, saying they are owed a sustainable future. "For me, nothing could speak more eloquently to the need to write off the debts of all indebted countries, than the sense of responsibility that we should be feeling for the damage that has been done already." The time has come to write off all the debts, he says.
D. The Debt crisis and its effect on African women and children
Women and children are the invisible victims of the debt trap facing African countries, documents H.O. KAYA. The burden of debt repayments translates into poor healthcare and high rates of illiteracy for women while the continent's children suffer malnutrition. Debt must be cancelled and countries must be allowed to build up their local economies in order to change the situation.
E. International Women’s Day – Can we dare celebrate?
International Women's day was on March 08. CAROLINE AGENG’O charts progress in the struggle for women's rights from the 1917 food riots in Leningrad through to the hopes for gender equality on the African continent. She concludes by adding her voice to calls by Nobel Prize winner Wangari Muta Maathai for debt cancellation.
F. Trade as aid?
It would be wrong to assume that the problem inherent in the in-egalitarian structures of the world economy would be solved only by debt cancellation. Fairer trade would offer the opportunity of a lasting sustainable alternative, says HENNING MELBER as he examines the New Partnership for Africa's Development (NEPAD), the Africa Growth and Opportunity Act and Economic Partnership Agreements (EPAs) in the context of regional integration.
G. Debt: The questions and the answers
Where did the debt crisis originate? Why should it be cancelled? What is the human cost? Find out all you need to know about debt in this question and answer article compiled by PAMBAZUKA NEWS.
H. Zambia: A debt case study
After years of escalating debt levels, Structural Adjustment Programmes, Poverty Reduction Strategy Papers and being part of the Highly Indebted Poor Countries Initiative, Zambia stands on the cusp of a possible $3.8billion debt write off - after which it will still owe billions. This PAMBAZUKA NEWS country profile takes a look at Zambia’s experience with debt.
I. A review of 'Debt Relief Initiatives and Poverty Alleviation: Lessons from Africa', edited by Munyae Mulinge And Pempelani Mufune, in the Books and Arts section.
>>>>>PAMBAZUKA NEWS TURNS 200! On March 31, Pambazuka News will release its 200th edition.
The milestone represents a journey from an e-newsletter with a few hundred subscribers to one with over 15 000 subscribers; from an e-newsletter that nobody knew about to one that is widely distributed on the African continent.
We invite subscribers to celebrate with us and send us a birthday greeting. Tell us about your experience with the newsletter and how you find it of use. Please send comments to editor@pambazuka.org
Features
A. Toronto, Naples, Lyon, Cologne and London: G7 leaders and the debt trip to nowhere
Demba Moussa Dembele
2005-03-10
The statement on debt issued on February 5, 2005 by G 7 Finance Ministers after their meeting in London dashed hopes and expectations raised by an impassioned plea made by Nelson Mandela to the same Ministers the day before. Yet, Mr. Gordon Brown, the British Chancellor of the Exchequer, hailed the statement as “a breakthrough” and said that “it is the richest countries hearing the voices of the poor.”
However, when one reads carefully between the lines, one finds nothing new in the London statement. Indeed, it repeated the same platitudes heard many times before: promises of “debt relief”, but on a case per case basis and with strings attached in the form of the usual conditionalities. For instance, the statement says that to qualify, a country must have “sound, accountable and transparent institutions.” We all know what this means: a State and public institutions able to implement neoliberal policies. This is more explicit in the statement’s insistence on fighting corruption described as a “significant barrier to growth, private sector development, investment and poverty reduction”. The reference to “poverty reduction” is a window dressing meant to mask the real objective pursued by those policies.
In the end, the London statement clearly demonstrated that the “creditors” are not yet ready to unconditionally cancel an odious, illegitimate and immoral debt that has been transformed into an instrument of domination, control and plunder of indebted countries’ resources, especially in Africa. Otherwise, one cannot understand why the G 7 countries refuse to cancel a debt which actually has been paid many times over, and which will not cost them a dime, just a few weeks after the same countries had agreed to cancel a significant portion of the Iraqi debt. Once again, the London meeting turned out to be a missed opportunity by the richest nations to write off the debt burden of the poorest nations in the world in the name of justice.
A long list of failed “debt relief” plans
The London statement is likely to be one more item on the already long list of empty promises and failed “debt relief” plans. Indeed, as far as Africa is concerned, the approach to its debt crisis has always followed a pattern of cynicism and broken pledges, including the Heavily Indebted Poor Countries (HIPC) Initiative.
Bilateral Initiatives
In the late 1970s and early 1980s, a large part of African countries’ debt was owed to bilateral creditors. That debt mostly served the economic, political and strategic interests of Western countries, especially during the Cold War period. The early treatment of the bilateral debt crisis was through debt rescheduling within the Paris Club. However, this “debt relief” mechanism contributed to worsening the crisis because it only postponed debt payments while adding to the debt burden with penalties on the rescheduled portion. As a result, the debt of most African countries continued to pile up, with a growing part in the form of accumulated arrears, which averaged 10% of exports in the 1980s and 27% in the 1990s, compared to 1.5% in the 1970s.
These arrears were an illustration of the growing inability of African countries to service their debt. It is that realization, combined with the worsening economic and social crisis brought about by structural adjustment programs, that led bilateral creditors to contemplate some kind of debt write off, beginning with the Toronto Plan, proposed in 1988 during the G 7 Summit in Canada. Ever since, African countries have seen a string of proposals, plans and initiatives, all aimed at “solving” its debt crisis. Indeed, since the Toronto Summit, each G 7 Summit has been punctuated by statements on “debt relief” but they all turned out to be broken promises and failed plans. From Toronto (1998) to the latest London statement by G7 Finance Ministers (February 5, 2005), several other proposals have been put forward by industrialized countries. Among these are the London or “enhanced” Toronto Terms (1991), the Naples Terms (1994), the Lyon Terms (1996) and the Cologne Terms (1999). But none of these Plans provided a real solution to the debt crisis.
The HIPC Initiative.
The failure of the bilateral initiatives to solve the crisis was due in part to their exclusive focus on bilateral debt, up until 1996. The shift began with the Lyon Terms, which brought into the picture multilateral debt. This shift stemmed from the realization that multilateral debt had risen dramatically as a result of the worsening economic and social crisis during the peak of structural adjustment programs, from the mid-1980s onward. During that period, the share of the World Bank in Sub-Saharan Africa’s debt increased from 5% in 1980 to 25% in 1990 and to nearly 40% in 2000. For many countries, especially, the “poorest” ones, which bore the brunt of SAPs, the Bank has become the largest “creditor”. It is in light of this change in the structure of Africa’s debt and in response to growing and intense pressure from debt campaigners in the Jubilee movement that the Heavily Indebted Poor Countries (HIPC) Initiative was launched in September 1996.
After the first three years of implementation, there was a realization that the Initiative was going nowhere. Accordingly, it was “enhanced” in September 1999, by introducing more flexibility in the eligibility criteria, which allowed it to admit more countries. However, a new conditionality was introduced by the IMF and World Bank in the form of the Poverty Reduction Strategy Paper (PRSP), which each country should submit before being accepted. To give an air of seriousness, the IMF’s Enhanced Structural Adjustment Facility (ESAF) was renamed “Poverty Reduction and Growth Facility” (PRGF), but with the same macroeconomic framework that underpinned the notorious structural adjustment policies.
But now, it is widely acknowledged that the Initiative has failed to deliver. The proposals put forward by the United Kingdom and the United States are an implicit recognition of that failure, which stems from the Initiatives major flaws. First, to be eligible, a country has to have a track record of “successful implementation” of IMF/World Bank-sponsored policies. That is, in the same failed and discredited policies responsible for the abject poverty affecting African countries. Second, using debt ratios, which have little to do with indebted countries’ development needs and ability to service their debts, the Bank and Fund have excluded many countries, much deserving of “debt relief”. In Africa, the Nigerian case is the most blatant example, as President Obasanjo himself has repeatedly indicated. For instance, in 2004, Nigeria’s debt service was estimated at $1.4 billion, more than the combined spending on education and health!
Third, the Initiative aims to bring debt to a level deemed “sustainable” by the Fund and the Bank. This “sustainability” is based on future export revenues, themselves depending on the behavior of commodity prices, which constitute the bulk of African countries’ exports. But as it turned out, the Bank’s “debt sustainability analysis” was so flawed that most of its projections fell flat, leading creditors to scramble for additional funding for “Completion Point” countries (topping-up).
Finally, reaching the “Completion Point” is contingent upon implementing structural reforms, such as trade and investment liberalization, deregulation, a further erosion of national sovereignty and privatization of public assets. The difficulty in fulfilling these reforms has often led several countries to fall “off-track”, that is, the suspension of their programs, by the IMF and the World Bank. But even more damaging to these institutions, these reforms tend to aggravate poverty and negate the stated objective of the PRSP: “poverty reduction”. Two examples illustrate this.
In Mali, the Bank forced the government to let producers and the management of the cotton-processing company (CMDT) “freely” negotiate the producer price of cotton. After they had reached an agreement to fix the price at CFA 210, which was below the actual cost of production, the Bank said it was “too high” and that the price had to be renegotiated! It imposed a price in the range of CFA 60-175 for the next three years, to the dismay of producers, who felt let down by their own government. Many producers say that the future of cotton production, which occupies more than three million people, is bleak. How can this contribute to “poverty reduction” in Mali?
The second example is the forced privatization of the Senegalese peanut-processing company SONACOS, last year. This privatization was one of what the Bank calls “completion point triggers”, that is, the conditions to be fulfilled by Senegal before reaching the “Completion Point”. Even the Chairman of the Committee in charge of the privatization admitted during a press conference that the Bank had pressured them to reach a deal with the bidder, at any cost. However, feeling that this is a very controversial and bad deal, the government said that it was a “provisional” deal, which could eventually be reversed if the bidder did not meet some of the conditions it has put forward. In any event, Senegalese peanut producers and SONACOS employees have all stated that the deal was against their interests. In an interview to a local newspaper, on February 15, 2005, Mamadou Cissokho, the leader of the leading peasant organization, CNCR, said that “the privatization of SONACOS is a declaration of war against the interest of the Senegalese peasants.” How can this privatization contribute to “poverty reduction” in Senegal?
Similar examples can be found in other African countries. They belie the objectives of the PRSP, which in reality stands for “public relations strategy paper”, according to many critics! This explains, inter alia, why five years on, the “enhanced” HIPC Initiative has not delivered. The debt crisis lingers on and even keeps worsening. As indicated above, the HIPC Initiative has nothing to do with achieving a lasting solution to the debt crisis, but with extracting as much as possible from indebted countries while increasing the IMF and World Bank meddling in those countries’ affairs via the crippling economic, financial and now political conditionalities, known as “good governance”.
For instance, according to UNCTAD, between 1997 and 2001, several African countries that had programs with the Fund and the Bank had each been imposed an average of 114 conditionalities, 75% of which were “good governance”-related! The new crusade at the World Bank seems to be the fight against “corruption” as if it had just “discovered” corruption. The fact of the matter is that the emphasis on “good governance” and especially on “corruption” tends to mislead world public opinion and put the responsibility for the failure of structural adjustment programs and their disastrous effects on the shoulders of “corrupt”, “inefficient”, “predatory” States. This is consistent with their attempts to mask their overwhelming responsibility in the abject poverty affecting most of the developing world, in particular the so-called “HIPCs”. In conclusion, the HIPC Initiative will never solve the debt crisis, nor will the PRSPs “reduce” poverty.
African civil society analysis of the debt issue
The reason lies in the fact that the Initiative, like all previous or current initiatives from “creditors, does not address the root causes of the debt crisis and the power imbalance between indebted countries and “creditors”. Long ago, African civil society organizations, engaged in the debt campaign, have said time and again that to find a just and lasting solution to the debt crisis, it is indispensable to examine its historical origins and analyze the structural factors behind its worsening.
It is a truism to say that debt is a legacy of colonization and imperialist domination. As an instrument of domination and plunder, debt has been used to promote Western countries’ economic, financial, political and strategic interests. This was done in many ways, in particular by using pro-Western dictatorial and corrupt regimes during the Cold War period, in the name of anti-communism. The loans given to these regimes were used for their own purposes and interests and for the repression and even murder of their own citizens, with the complicity of bilateral and multilateral creditors. Moreover, a greater part of that debt was looted by these dictators and kept in Western banks.
That debt is odious and illegitimate. This is the case of the overwhelming part of Africa’s debt, as well as of other Southern countries’ debt. Accordingly, the African people don’t owe that debt and so-called “creditors” have no right to claim it.
On the other hand, what Africa really “owed” has been paid many times over. This is best illustrated by the Nigerian example. President Obsanjo was recently quoted as saying:
“Nigeria’s original debt stock of about $10 billion had been paid twice over if one included the penalty for not paying and
penalty for the penalty. This is ridiculous
the debt that is being held against us [Nigeria] is unpayable and unsustainable if we really want to have an equitable world.”
How about the rest of Africa? According to the UNCTAD study, between 1970 and 2002, Africa as a whole had transferred $550 billion to pay back loans estimated at $540 billion. Yet, it continues to “owe” nearly 300 billion. Sub-Saharan Africa, for its part, had reimbursed $268 billion for loans estimated at $294 billion, but remains saddled with a debt of $210 billion. The authors of the study observed that “discounting interest and interest on arrears, further payment of outstanding debt would represent a reverse transfer of resources.” (page 9).
It is Western countries, their financial institutions, their multinational corporations and multilateral institutions that owe an immeasurable debt for the crimes of slavery, genocide, ecological destruction, colonization and structural adjustment. Therefore, it is the West that must pay reparations, even though no amount of money will ever pay for these crimes.
The way forward
From the above analysis, our fundamental demand is outright and unconditional cancellation of all Africa’s debt and reparations for its peoples. To achieve this fundamental objective, we propose the following measures:
1) Immediate and unconditional cancellation of HIPCs’ Debt
There is now a general consensus that the debt of the poorest countries must be canceled. And the sooner, the better. In light of this, we reiterate our call for the immediate and unconditional cancellation of all multilateral debts owed to the IMF and World Bank. Since the HIPC Initiative is not an adequate mechanism, we recommend that this cancellation by financed by these institutions’ own resources, which are more than enough to cover all costs associated with debt cancellation. If Western countries and multilateral institutions are serious about “debt relief” and “poverty reduction”, they have a golden opportunity to prove it by accepting this cancellation, which should release funds that will contribute to achieving at least some of the Millennium Development Goals.
2) Moratorium on debt service
On the other hand, these countries and institutions should accept a moratorium on debt payments for all African non-HIPCs, as they did for the tsunami-stricken countries. This will be the second step in the right direction. It goes without saying that the moratorium is without arrears, that is, during that period, indebted countries will use all the savings to their benefit.
3) World Commission on Debt
Once the moratorium is under way, the United Nations should set up an independent World Commission on Debt. This body, composed of eminent persons, trusted by both Western and indebted countries, should have as its mission to assess the development needs of indebted countries and whether these needs are compatible with further debt payments. Based on the conclusions and recommendations of that Commission, a determination will be made on whether to resume debt payments, at what conditions, or to cancel the debt altogether. The other task of the Commission should be to propose new lending mechanisms in order to avoid future debt crises.
4) Take example on the 1953 London Agreement on West German debt
The fourth step in the right direction is to take example on the West German example, more than 50 years ago. In February 1953, the then West Germany and its main creditors reached an agreement in London, whereby:
1) West Germany’s debt was reduced by half
2) The balance was rescheduled on a long-term basis and at fixed interest rates
3) The debt service was limited at 3.5% of annual export earnings
4) Debt service was levied only in case of a trade surplus
With that deal, the debt service was down to about 2% of export revenues three years later and by the early 1960s, West Germany had virtually paid back all of its debts. So, why not propose a similar deal to African non-HIPCs?
5) End all IMF and World Bank conditionalities
Another step in the right direction would be to end all IMF and World Bank conditionalities. As is widely acknowledged now, these policies have worsened Africa’s economic and social crisis and contributed to the debt overhang. Unless they are eliminated, they will more than offset any gains coming from the moratorium. The removal of these conditionalities is a prerequisite for effective poverty eradication through genuine people-centered development strategies.
6) Stop the EPAs
The Economic Partnership Agreements (EPAs) that the European Union (EU) wants to impose on African countries will be as devastating as the first generation of the now discredited and failed structural adjustment programs. Therefore, a lasting solution to Africa’s debt requires postponing indefinitely negotiations on the EPAs and their rejection by African countries. A further trade liberalization as contemplated by the EPAs will wipe out any remaining industrial infrastructure, worsen capital flight and aggravate capital shortage by spiriting away Africa’s own savings.
7) Cooperation in the repatriation of stolen wealth
Tony Blair and his counterparts can do a great service to the African people by sincerely cooperating with African governments and civil society organizations who are calling for the speedy repatriation of the stolen wealth kept in Western banks and the punishment of all those who collaborated in this loot. This operation, if successfully conducted, could provide hundreds of billions of dollars to be invested in Africa’s human development, thus greatly reducing the need for African governments to engage in a “race to the bottom” in order to “attract” foreign direct investments.
Conclusion
If Tony Blair and the other G 7 leaders are really serious about a “Marshall Plan for Africa” or want to “make poverty history” they need not look far: they should follow the above steps. Africa does not need charity and handouts, but justice and fairness. If the above measures were to be implemented, Africa would be able to finance its own development. African leaders should not have any illusions about Tony Blair’s “Marshall Plan” or about any other Plan concocted by other G7 leaders. No country or institution will ever “develop” Africa. If development has to come, it will not be from external forces, however well-intentioned, but from the African people.
* Demba Moussa Dembele is with the African Forum on Alternatives, Dakar, Senegal. (forumafricain@yahoo.fr; dembuss@hotmail.com)
* Please send comments to editor@pambazuka.org
B. On Debt, Blair and the Future of Africa
Kayode Fayemi
2005-03-10
As we await the formal release of UK Prime Minister Tony Blair’s Commission for Africa’s report, it is right that the question of Africa’s odious debt has assumed a central place in the debate with the Global Call for Action against Poverty. But what exactly do we have on the table to guarantee that the Blair Commission as well as a number of other initiatives takes seriously the views from the ground on debt?
It would appear that the Commission’s general thrust on debt is relief, not cancellation. Britain’s Chancellor of the Exchequer, Gordon Brown, is touting the British proposal for developed countries to help finance 100% multilateral debt service cancellation for sub Saharan Africa, with the savings to be channelled into education and health projects. Gordon Brown is also promoting his plan for an International Finance Facility which if successful would result in an immediate doubling of aid from OECD countries, essential to the meeting of the Millennium Development Goal targets. The idea is that donors would make long-term pledges to the IFF extending over 15 years, and these payments would enable the IFF to issue bonds, turning the income into capital available for immediate disbursement.
Even though this has moved the debate closer to what African civil society activists have called for over the last two decades, it is still a far cry from outright cancellation of the continent’s odious debt. For this reason, one is still sceptical about anything short of outright debt cancellation for the continent. Resident in Nigeria, a country whose debt burden has hovered between $32 - $35 billion dollars in the last decade with a poverty profile of seventy percent of its population living below the poverty line and an eighth of its total earnings disappearing into the hole of debt repayments, there is very little that can help Nigeria in Gordon Brown’s proposals. Although it is commendable that the British government is moving beyond the enhanced Highly Indebted Poor Country Initiative (established by the World Bank and the IMF), which failed to provide a realistic and sustainable exit from debt, the current approach remains skewed, disjointed and uncoordinated with other key players and one wonders what is stopping Britain from going the whole way.
Apart from the practical problems arising directly from the continent’s debt trap, there is also a huge moral burden that the debt issue poses for the future of Africa. The bulk of the debt owed by most African countries, certainly by Nigeria, is a carry-over from their authoritarian past – when many of the governments were extensions of metropolitan powers totally unaccountable to their citizens.
Also, the debts were incurred in the heydays of tied aid and dubious loans, in the era of the discredited export credit guarantee schemes. Even if one were to argue that a debt is a debt and any cancellation would result in a loss to those who owe no debt, surely there is a moral responsibility here for the industrial world, given the manner innocent children, most of who were unborn at the time the debts were incurred, suffer untold hardship out of deprivation occasioned by the debt burden.
In any case, we already have a precedence that demonstrates a willingness to cancel debt if it is in the strategic interest of particular powerful countries. Iraq just had $20billion of its debt wiped off in the aftermath of Saddam Hussein’s removal from office. This shows that where there is political will, and citizens’ pressure of governments in the global North is central to this, we should not despair about the ultimate possibility of debt cancellation. In any case, this is increasingly becoming a case of “Can’t pay”, not really one of “Won’t pay” in several African countries. Clearly, poverty - as exemplified by the inequality arising out of unfair sharing of global opportunities - remains the greatest threat to security and democratic consolidation in Africa today and, at the broadest level, globalisation is resulting in deep polarisation between rich and poor throughout the continent.
One’s call for debt cancellation should however not be mistaken for indulgent endorsement of bad and undemocratic governance in Africa. The argument has often been put by some in the West that debt relief or even a Marshall Plan for Africa would not lead to transformational development, allegedly because all the monies would be stolen. This reverse logic is often an excuse for inaction by Western authorities that are themselves indulgent of bad governance in Africa. The story in Africa is clear in the past and even now. Bi-lateral and multilateral agencies continue to seize the momentum provided by the weak capacity of the state to impose received wisdom and new theories of development rather than align external assistance with local needs and efforts and yet turn around to blame the countries in questions for the eventual failure of such policies that they claim to be Africa owned - a claim that is often rejected by many Africans. Where state institutional capacity is weak, an immense burden of responsibility is placed on development partners in which real dialogue with the people and wide consultations (not cosmetic ones a la PRSP) ought to underscore whatever actions are taken.
Ultimately African governments have not performed well over the past decades. The citizens in several African countries are however challenging bad governance in all its ramifications and it is also true to acknowledge that some governments are changing. The problem for them is that there is a limit to how best governments can manage poverty and this is why we need a clean slate on the continent. Only after this would our moral armour be strengthened against bad and unaccountable governance on the continent. Unfortunately, the Blair Commission is likely to fail this test.
* Kayode Fayemi is Director, Centre for Democracy & Development, a research, training and advocacy organisation in West Africa based in Abuja, Nigeria.
* Please send comments to editor@pambazuka.org
C. The era of debt write off?
Ezra Limiri Mbogori
2005-03-10
I am not an economist and have often steered clear of the subject for fear of exposing my ignorance, so will often look and simply smile when confronted with a mountain of facts and figures that are meant to make a strong economic argument one way or the other. I usually try to get the flow of the argument and react accordingly, with the measure of politeness that befits an African. If the truth be told though, I do have a tough time extending any measure of trust to economists. Their constant speculation around cause and effect and the vulnerability of economies to all manner of stimuli invariably leaves many ordinary people like me worried about how much in the way of decisions should really be left to economists. The sad fact though, is that most vital decisions globally have been left to economists and our task now, is to persuade them that we have reached the ‘era’ for total debt cancellation/write-off, if the sustainability of the planet is to be assured. Or would anyone argue with the need to achieve sustainability? I know many in the global north will worry about having to reduce their consumption, but would this not be better than ‘pre-maturely’ terminating your existence – or that of your children?
Why do I call this the ‘era’ for total debt cancellation?
From where I sit I can think of five distinct, descriptive words or phrases that describe particular experiences of citizens in relation to their lives over the past five decades. While I do not want to equate each ‘era’ to a decade there is a prevalent thought that to me appears to have dominated at each of these periods. The first, for me, was the era of independence during the late fifties and sixties and the promise of prosperity. In each newly independent country, the basic promise of politicians was that of prosperity, so long as everyone was prepared to do their share for development.
Then came the economic turbulence of the seventies which was marked by such factors as the oil shock resulting from the emergence of the oil cartel and the attendant instability it caused to the global economy. Hot on the heels of this experience by developing countries were the prescriptions of the International Financial Institutions – structural adjustment programmes (SAPs) which offered support to countries that were willing to go this route. Political leaders at this point spoke of the need for each citizen to make sacrifices now, for a better life in the future. So the prosperity promise was deferred for a while, as attempts were made to re-structure most economies. For most citizens, SAPs became the reason for their inability to afford their children a decent education, health care and basic services. The hope all along was that this would not be for too long. (I cannot resist observing here, that Africans have been suckers for promises like these – accept a little suffering now for a better life later)
References have been made to the eighties as a lost decade for Africa. Commodity prices for most products coming out of Africa were in steady decline and imported goods were, in contrast, getting increasingly expensive. Aside of the mainly resource based conflicts breaking out in most regions on the continent, it was becoming clear that the ‘one-size-fits-all’ prescription of the IFI’s was not working. Yet, countries were continuing to draw on the loans of the IFIs for lack of alternatives. The notion of helplessness and hopelessness may well have been the thought on the minds of many ‘Africa watchers’ at the time, even though few dared articulate it in these terms. It was not until after 2000 that a global publication suggested that Africa was a hopeless continent. But we all know that it is actually not so. It is simply a continent in shackles.
Rather than get easier as the politicians had promised when they embraced SAPs, the situation got increasingly harder in the nineties. Conditionalities got even stricter and analysts spoke of the total indebtedness of citizens in most countries as being in orders that would keep countries enslaved by debt well into the new millennium. It now became clear that generations were taking loans that their children and grand children would have to pay. The question of the sustainability for this kind of arrangement became more urgent than had been imagined previously and soon enough, the notion of atonement (drawn from our faith based colleagues) picked up a new meaning. Why should anyone pay the debt of another who lived before them particularly when the financing did not achieve the intended results? At the time of the Jubilee movement in the late nineties, the feeling was clearly that time had come for the cleaning of the slate and establishment of the basis for a fresh start. I could not help but identify with the calls at the time of the jubilee campaign that ‘we cannot pay, we should not pay, will not pay!’
I dare suggest that the era we are now in is characterized mostly by fears around terrorism. Those who felt helpless and hopeless have had their backs against the wall for a long time. Perhaps the terrorism is a reaction to the feeling of helplessness. There have to be ways to affirm your humanity. If these are not immediately visible, the human mind is richly endowed and will undoubtedly generate some ideas. But beyond this, we have to come to terms with the reality that we also owe the future generations of this planet a future that is sustainable. For me, nothing could speak more eloquently to the need to write off the debts of all indebted countries, than the sense of responsibility that we should be feeling for the damage that has been done already. It is time to right the wrongs that have been committed over and over again. It is finally time to write off all the debts and put the past to valuable experience during which important lessons have been learned. Let this act be one that will kindle a fresh enthusiasm for life and an appreciation of humanity and the fact that our destinies are in the end, intertwined. The write-off could well create the miracle that we need, to change the face of the planet, for the better. Are our political leaders thinking about this, or are we going to get more empty promises? The era for writing off the debts is finally upon us. Now we wait to hear the verdict of those who hold the power to do this.
If we can anticipate the write-off for even a short moment, I would like to think that civil society is ready and willing to think creatively about how to tap from the dividends arising from this action. It will be time to work again, with a spirit akin to that of the independence era. The possibilities are simply mind boggling – but first, the debt has to be written off!
* Ezra Limiri Mbogori is director of MWENGO, a network of African civil society organisations.
* Please send comments to editor@pambazuka.org
D. The Debt Crisis and Its Effect on African Women and Children
H.O. Kaya
2005-03-10
The Progress of Nations Report (2000) published by the United Nations Children's Fund (UNICEF) states that the day will come when nations will be judged not by their military or economic strength, nor by the splendour of their capital cities and public buildings, but by the well-being of their peoples, i.e. by their levels of health, nutrition and education; by their opportunities to earn a fair reward for their labours; by their ability to participate in decisions that affect their lives; by the respect that is shown for their civil and political liberties; by the provision that is made for those who are vulnerable and disadvantaged; and by the protection that is afforded to the women and growing minds and bodies of their children.
This is emphasized by Roberts (2000) who notes that as the 21st century begins, the overwhelming majority of the people in the world who live in poverty are children and women. They are also the masses of civilians who are killed and maimed in conflicts and the most vulnerable to HIV/AIDS infection. Their rights, as set forth in the Convention on the Rights of the Child and the Convention on the Elimination of All Forms of Discrimination against Women, are violated every day in numbers of such magnitude as to defy counting. He further reveals that the debt trap in the developing countries, especially in the sub-Saharan African countries, is one of the major causes of the suffering of masses of rural women and children who form the majority of the populations in these countries.
The international debt crisis has continued to worsen since it erupted in the early 1980s. The latter is the result of unprecedented borrowing, rising interest rates, falling commodity prices, inadequate investment of borrowed funds, and the domestic and international management of the resulting crisis (Adams, 1999). African countries are caught in a debt trap. The UNICEF Report (2002) points out that as African governments are diverting resources away from health, education and other social services to repay foreign debt created by prior rulers put in power by western powers to suit their interests, the most affected are poor rural women and children including their environment.
The Debt Crisis: Different Explanations
There are various explanations with regard to the causes of the debt crisis in developing countries including Africa. Some of them attribute the crisis to mismanaged lending and spending. For instance, George (1996) states that the causes of the debt crisis are a result of mismanaged spending and lending, which began in the 1960s, and 70s. The 1960s saw the USA spend more that it had, resulting in the printing of more dollars. Oil-producing countries, pegged to the dollar, were affected as the value of the dollar decreased. In 1973, the oil-producing countries hiked their oil prices, and, as a result, earned a great deal of money, which they put into Western banks. Interest rates started to plummet, leading into more lending by western banks to try to prevent a crisis. A lot of borrowed money went into Western-backed dictators, resulting in little or no investment or benefit for disadvantaged sectors such as the rural poor, i.e. women and children (As summarized by Anup Shah at http://www.globalissues.org)
According to Bello (1994) the debt crisis began in the mid-1970s when many of the member nations of the Organizations of Petroleum Exporting Countries (OPEC) amassed great wealth. Banks were eager to lend billions of dollars to OPEC nations as well as other developing countries. These countries borrowed large sums of money at low, but floating interest rates. As a result of the irresponsibility of both creditor and debtor governments including corruption and private projects benefiting only the rich, these countries did not use the money for productive investment; rather, they spent the money on immediate consumption. Consequently, these governments amassed a lot of debt and some refused to repay their loans.
The adjustable interest loans skyrocketed in the early 1980s when the United States under Ronald Reagan attempted to reduce inflation by enforcing stringent monetary policies. The Reagan administration did all of this while also cutting US income tax rates. Around the globe, raw material prices fell sharply, meaning that poor countries had even less money to repay their debts. Many developing countries, particularly in Africa, were left in great debt, and, as a result, could no longer get loans. With nowhere else to turn, these countries have relied heavily on the World Bank or the International Monetary Fund (IMF). The IMF required structural adjustment programs to be implemented by borrowing countries. Debtor governments had to agree to impose very strict economic programs on their countries in order to reschedule the debts or borrow more money. Put simply, countries had to cut spending to decrease their debt and stabilize their currency. The governments limited their costs by slashing social spending (e.g., education, health, social services, etc.), devaluing national currencies, creating strict limits on food subsidies, cutting workers' jobs and wages (especially workers in government industries and services), taking over small subsistence farms for large-scale export crop farming and promoting the privatization of public industries.
The IMF and World Bank-prescribed structural adjustment policies mean that poor countries are lent money on condition that they cut social expenditure (which is vital for economic growth and development) in order to repay the loans. Many are forced to open up their economies and being primarily commodity exporters, which, for poorer countries leads to a spiraling race to the bottom as each country must compete against others to provide lower standards, reduced wages and cheaper resources to corporations and richer nations. This further increases poverty and dependency for most people, especially the most vulnerable sections of society. Adams (1999) emphasizes that the effects of the SAP conditions, the debt crisis and globalization of poverty have often manifested themselves in wars, which are mainly trade and resource-related. These mercantile practices still happen today. The main victims of these wars are women and children. Poverty is therefore not just an economic issue; it is an issue of political economics (As summarized by Anup Shah at http://www.globalissues.org)
The Debt Crisis and The Human Development Factor
Dely (2001) indicates that each year African countries pay the West nine times more in debt repayments than they receive in grants. Of the 32 countries classified as severely indebted low-income countries, 25 are in sub-Saharan Africa. Africa spends four times as much on debt repayment as she does on healthcare. Sub-Saharan Africa owes more than £140 billion (83 per cent of its total GNP). This enormous debt means that repayments to Western Creditors take priority and ordinary people suffer in poor health, restricted access to education, lack of employment and limited ability to trade and provide for themselves.
Portes (1992) argues that debt sustainability cannot be captured solely by reference to financial indicators. Basic human needs must also be taken into account, especially in the highly indebted poor countries (HIPCs) in Africa. For the HIPCs, the scale of unmet social need is too vast, and the rate of progress in human development too slow to leave any doubt about the need for increased budget resources for poverty reduction. Debt relief is one mechanism through which these resources could be provided. There are forty-one heavily indebted countries covered by the HIPC initiative, most of them in sub-Saharan Africa. They have some of the world’s worst human development indicators. These indicators are improving at an abysmally slow rate, leaving the majority of HIPCs well ‘off track’ for achieving the 2015 human development goals.
In several HIPCs in Southern Africa such as Zambia, Malawi and Mozambique over one third of the population is not expected to reach the age of forty. Almost 50% of the population in these countries lacks access to clean water and sanitation. Deep and pervasive poverty, allied to inadequate access to basic services, results in high child mortality rates. The under-five mortality rate is 156 deaths per 1000 live births. This translates into around 3.4 million deaths annually, most of them resulting from easily preventable infectious diseases.
Gor (2002) shows that the HIPCs account for most of the 5,500 deaths, which occur each day as a result of the HIV/AIDS virus. Health systems are being stretched to breaking point by rapid increases in the incidence of secondary diseases such tuberculosis, pneumonia and measles. But the effects are not restricted to the health sector. In Zambia, where one fifth of the population is now estimated to be HIV positive, over 10 per cent of children have lost one or both parents; and HIV/AIDS claims the lives of over 600 teachers a year - equivalent to half of the graduates from teaching colleges. Furthermore, new strains of drug-resistant malaria are increasing the levels of sickness and death among vulnerable populations in the Region. As with HIV/AIDS, the crisis in efforts to control malaria in Southern Africa is placing huge strains on households and on national budgets.
Loxely (1999) shows that spending on healthcare has fallen in many of the world's poorest countries since the 1980s. Roy (2000) shows that in Zambia, Tanzania and Malawi, less than US$ 8 per person is spent on healthcare, compared with US$ 24 per person on debt repayments. Riviero (2000) adds that some improvements in health gained over the 1960s and 70s have been turned back or stopped in many Southern African countries since the 1980s when the debt crisis broke. The number of children who die before the age of five, or before the age of one, has risen in most of the deeply indebted Southern African countries, including Zimbabwe, Zambia, Malawi and Lesotho, after decades of falling numbers. Diseases thought to be eradicated such as tuberculosis, yaws, and yellow fever are making a comeback in the Region as treatment and vaccination coverage declines.
Increasing rural and urban nutritional gaps in the Southern African countries have also been identified as partly due to the debt crisis. The prevalence of stunting or low height for age is consistently higher in rural areas than urban areas. Rates of stunting among rural children in these countries are 1.5 to 4.3 times more than urban rates. Stunting is a critical indicator of child malnutrition, and malnutrition plays a major role in more than half of all child deaths in Southern Africa. Studies in rural areas of Malawi, Zambia and South Africa, for example, show that children stunted before six months of age scored significantly lower on intelligence tests at 8 and 11 years of age than children who were not stunted. Stunting is also associated with diminished work capacity and increased risk of degenerative diseases in adulthood (Kelly, 2003). Dreze (1999) observed that women who are stunted are more likely to experience obstructed labour and face a greater risk of dying in childbirth.
UNICEF (2000) indicates that the picture is equally bleak in education. As schools are forced to charge fees, fewer people are able to send their children to school. Education is mainly available only to the better off. In Mozambique, one quarter of children who enter school drop out during the first two grades. Education quality in the HIPCs is typically of an abysmal standard, partly because of chronic shortages of teaching materials. Over half of the children in Zambia’s primary schools do not have a simple exercise book. The gender gap in enrollment is large (averaging over 10 per cent) and growing. The combination of low school enrollments, high drop out rates and poor quality education has restricted progress towards improved literacy. In HIPC countries such as Mozambique women’s literacy rates are below 25 per cent. This perpetuates further the economic and cultural neglect and limitation of educational opportunities for women and girls in most African societies.
With regard to universal primary education, the 2015 target for universal primary education is on the verge of becoming out-of-reach for a large number of HIPCs. Oxfam has projected forward to 2015 net enrollment rate data for the period 1990-1995. Taking into account the growth of the primary school age population, the projection indicates that 57 million children will be out of school by 2015. It should also be emphasized that this projection refers only to enrollment, the first step on the ladder to good quality universal primary education. It takes into account neither the rate of completion, nor the quality of education received by children who do attend school.
Barak (1995) reveals that the IMF lending conditions encourage hard-pressed governments to cut back spending and downsize government departments. This often means a rise in unemployment and a cut in wages. In most Southern African countries average wages have fallen by a third since 1980 and unemployment has risen to over 30 per cent of the working population. High levels of unemployment are counterproductive as there are fewer taxpayers to contribute to the public purse. So governments raise less income through taxation. This has a devastating effect on basic services delivery to the rural poor, most of them being women and children.
With regard to trade SAPs mean that African countries must increase their export crops - and as these countries are encouraged to grow the same crops, they cause a glut on the international market and prices fall. So the workers on plantations and farms get lower wages than ever. Small-scale farmers, most of them being women, also get less income from their agricultural produce and cannot support their households. Furthermore, concentration on export crops implies that small-scale farmers who used to grow their own indigenous staple food crops have to import this staple foodstuff from the industrialized countries. As a result of increasing unemployment and decreasing income from agriculture the majority of the rural households cannot afford to buy the imported foodstuff items.
The IMF conditions also made sure that any trade protection for the country's agricultural goods was lifted. So African export crops now compete with those from the western countries, which are highly subsidized and protected, using all available techniques to improve their quality. African countries become the losers, and the poor suffer. More than 30 per cent of Southern African has no cash income; more than 50 per cent make less than the minimum wage of less than US $2 a day. Sen (1995) adds that even non-emergency food aid, which seems a noble cause, is destructive, as it under-sells local farmers (mostly women) and can ultimately affect the entire economy of a poor country. If the poor African countries are not given the sufficient means to produce their own food and are not allowed to use the tools of production for themselves then poverty and dependency will continue.
The Deadly Combination of Debt and HIV/AIDS
AIDS is considered to be one of the major killer diseases in Southern Africa. Bennet (2001) emphasizes that in Southern Africa and Africa at large, the combination of AIDS, structural adjustment measures and debt is deadly. AIDS is an insidious cataclysm that the debt crisis intensifies to unimaginable proportions of human misery and despair. The disease has reversed hard won gains in life expectancy, infant mortality, and virtually every other measure of human development in Africa. In 1991, the average life expectancy in Zambia was 54 years; in 2002 it has plunged to 44 and continues to decline. Roxane (2000) indicates that by year 2010, life expectancy in some AIDS-stricken countries such as Malawi, Zambia, Zimbabwe and Mozambique will fall to around 30 years.
The debt crisis has systematically undermined the health and educational systems working to control the spread of the disease. There are 16, 000 new HIV infections every day, and 95% of the new infections have occurred in regions with the highest debt burdens, particularly in Southern Africa. In Zimbabwe, Malawi, Namibia, Mozambique and Swaziland, more than one in five adults is infected (Riviero, 2000).
In these poor countries it would normally fall to a child's relatives to step in to care for those who become orphans. But with infection rates so high, AIDS also strikes down many potential caregivers, mostly women. When relatives do take in orphans, the burden of care becomes great for families whose resources are already meager. According to UNICEF, children who have lost their mother or both parents are society's most vulnerable members. Socially isolated because of the stigma of AIDS, they are less likely to be immunized, more likely to be malnourished and illiterate, and more vulnerable to abuse and exploitation.
The tuberculosis pandemic is also debilitating the economically productive force in the Southern African region. Tuberculosis is now regarded as one of the biggest infectious killers of women and girls in the region, especially in countries such as Zambia, Zimbabwe and South Africa. Mubiana (1998) shows that women of reproductive age (14 to 44 years) in the region are more at risk to fall sick once they become infected with tuberculosis than men of the same age. Women of this age group are at great risk from HIV/AIDS, which results in young women with tuberculosis outnumbering young men with the disease. Bennet (2001) adds that the debt crisis and structural adjustment policies contribute to the spread of HIV/AIDS among women and children because the HIV/AIDS crisis thrives on poverty, social disruption and ignorance.
The Debt Crisis and the Environment
At first glance it may seem like they are separate issues, but environmental issues, poverty and the debt crisis are very much related. Wilson (1996) states that the more African countries stay in debt, the more they will feel that they need to milk the earth's resources for the hard cash they can bring in, and also cut back on social, health, environmental conservation, employment and other important programmes. She adds that there are many situations where the poor often have indigenous knowledge of their cultural and natural environment and are the best maintainers of it. But when poverty has been imposed on them and international trade agreements force them to abandon their indigenous ways of survival in this environment much is lost. Excessive debt burdens mean that it becomes harder to sustain the environment. Expensive aid and development programs from the West have been found to be destroying parts of the environment in developing countries and affecting local and indigenous people into further poverty and misery. This may be attributed, in part, to lack of consideration and communication with the people who are directly in the line of these development programmes.
Conclusions and Recommendations
Basic human needs in Southern Africa have been jeopardized by the debt crisis, especially with regard to women and children. In spite of the fact that the debt crisis is not the only factor responsible for poverty, HIV/AIDS escalation and environmental degradation in these countries, it is part of the problem. The following measures are recommended to alleviate the plight of children and women in these countries and the developing world at large:
- These countries should be free to pursue policies designed to emphasize building up of their local economies and maintaining the government's role in guaranteeing health care and other essential social services to women and children.
- Debt relief will be effective if it is integrated into comprehensive poverty reduction strategies. It should be geared towards the creation of conditions for broad-based economic growth and improved access to basic services. In this context, the HIPC reform process should be seen as one element in a broader development effort aimed at getting debtor countries back on track for the 2015 targets.
- The debt payment burden should be cancelled because it is draining much-needed foreign exchange in these countries that could otherwise be used for the provision of basic services to women and children.
- There is need to create a class-conscious approach to mobilize the civil society in the western countries that is based on feelings of solidarity with working people in the developing countries, especially in Africa (the poorest and most highly indebted continent) rather than pity. This would provide a basis for building a transnational coalition of working class forces.
- We need to interrupt the cycle of debt payments and new debt that links the interests of Western and developing countries' elites. This should involve imposing conditions on African countries' elites, such as the democratization and redistribution of wealth downward. Until now, conditionality has been a tool used by western governments to impose structural adjustment measures on African countries governments to ensure profitable access of global capital to the workers and natural resources of these countries. The building of a large transnational alliance of grassroots forces could force the governments to agree to a form of debt relief that would really address the problems at hand.
* Prof. H.O. Kaya is with the Department of Human and Social Sciences at the North West University (Mafikeng Campus), South Africa. E-mail: kayah@uniwest.ac.za
* Please send comments to editor@pambazuka.org
* For the Bibliography to this article, please click on the link below.
Bibliography
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Bello, W. (1994) Dark Victory: The US, Structural Adjustment and Global Poverty, London: Pluto Press
Bennet, K. (2001) The IMF and the Fight Against HIV/AIDS, Washington, D.C.: IMF
Camen, A. (1999) Political Dimensions of the International Debt Crisis, London: Macmillan.
Dely, L. (2001) Aiding and Abetting an Epidemic, in Sojo Network, Vol. 3 (1): pp.3-11.
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Mubiana, S. (1998) TB: The Biggest Killer for Women in Southern Africa, in HIV/AIDS in Zambia (June) pp. 3-15
Riviero, P. (2000) HIV/AIDS, Debt and Sector Expenditure in Selected Southern African Countries, in Trimestro Economico, No. 123: pp. 30-41.
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E. International Women’s Day – Can we dare celebrate?
Caroline Ageng’o
2005-03-10
The pioneers of the International Women’s Day (IWD) in the late 19th century and early 20th century were ordinary women seeking rights that are today viewed as ordinary. In March 1917, previously downtrodden women gathering strength and passion swept through what is now Leningrad over several days in food riots, political strikes and demonstrations in a labour dispute that marked the most memorable International Women’s Day.
International Women's Day has today assumed a new global dimension for women in developed and developing countries alike. However few of the pioneers would celebrate the slow progress made in the protection and promotion of the rights of women since 1917. Better working conditions, the right to vote and hold public office, the right to nondiscrimination and the fight against poverty remain of concern to women today - as they were then.
The growing international women's movement, which has been strengthened by four global United Nations women's conferences, has helped make the commemoration a rallying point for coordinated efforts to demand for women's rights and participation in the political and economic process. Increasingly, International Women's Day has become a time to reflect on progress made, to call for change and to celebrate acts of courage and determination by ordinary women who have played an extraordinary role in the history of women's rights.
It is interesting to note that International Women’s Day this year fell at a time when the world gathered in New York at the 49th Session of the United Nations Commission on the Status of Women (CSW) to review the progress made 10 years after the Fourth World Conference on Women held in Beijing China in 1995. This review, also known as the Beijing+10, presented an excellent basis for reflecting on the position of women even as we celebrated this noble day.
We recall that at the end of the Beijing Conference, as was the case with the preceding conferences in Mexico City in 1975, Copenhagen in 1980 and Nairobi in 1985, governments present produced a policy document known as the Beijing Declaration and Platform for Action (BPFA) which was a statement of problems and issues.
The Platform identified 12 critical areas of concern that needed to be addressed to enable women to fully enjoy their rights. The governments committed to take measures aimed at addressing these concerns with a view to empowering women and achieving equality, development and peace. The 12 critical areas of concern are women and poverty, women in education and training, women and health, women and violence, women and armed conflict, women and the economy, women in power and decision-making, institutional mechanisms for the advancement of women, human rights of women, women and the media, women and the environment and the girl child.
An audit of the performance of governments in removing the inadequacies raised in the BPFA reveals that very little, if anything at all, has been done due largely to a general lack of political will compounded by patriarchal overtones that make policy or legislative reform extremely difficult even in the rare cases where political will exists. This is rather unfortunate given that the principles of equality and nondiscrimination are enshrined in a majority of the world’s Constitutions.
The above situation is compounded further in the African context by retrogressive cultural practices and traditions, poverty and armed conflicts, the former two of which influence, amongst other things, the legislative processes and serve to accentuate the discrimination that is visited upon women. Examples of harmful traditional practices include virginity testing, widow inheritance, sexual slavery and female genital mutilation.
Patriarchy has been perfected over the years such that even where discriminatory laws and policies are removed, women are unable to immediately enjoy the benefits of such change due to societal pressures that demand that the woman remains in a position inferior to the man. Take the case of free primary education for instance. Several countries have made it possible for children to access free education at primary or elementary level without discrimination on the basis of sex. Yet many girls drop out after the first few years mainly due to overload of domestic chores such as fetching water and firewood in addition to other work. Unless therefore the government addresses the basic issues of poverty such as provision of shelter, potable water and security from a gender perspective the results of the costly legislative reform processes will not be felt in a long time.
The recently published stories of sexual abuse of women and children in the Democratic Republic of Congo by UN Peacekeepers speaks volumes not only of the vulnerability of women in conflict situations but in society in general. Those to whom they turned for protection instead turned on them for the simple reason that they were women. The plight of women in the DRC rekindles the memories of the hundreds of women in Liberia, Sierra Leone and Rwanda who suffered unspeakable sexual atrocities in conflicts that they neither understood the origins of nor played a part in.
Is there then any hope at all for the African woman? The various continental processes currently underway under the auspices of the African Union offer some amount of respite for the women of the continent. The African Charter on Human and People’s Rights provides for non-discrimination in Article 2 and equality in Article 3. At Article 18 the Charter calls on all states to ensure the elimination of discrimination against women and to ensure the protection of the rights of women and children in accordance with international standards.
The Protocol to the African Charter on Human and People’s Rights on the Rights of Women in Africa was adopted to supplement the Charter with regard to the rights of women. The Protocol remains by far one of the best initiatives undertaken by African leaders to bring an end to discriminatory and harmful practices against women. It addresses issues of non-discrimination as they relate to civil and political rights, economic, social and cultural rights as well as the right to development and peace.
This progressive Protocol is yet to come into force. Ten countries have ratified the Protocol to date, these being the Comoros, Libya, Rwanda, Namibia, Lesotho, South Africa, Senegal, Nigeria, Mali and Djibouti. Thirty-six other countries have signed, of which three are engaged in finalizing the ratification procedures at a national level. As we celebrate the IWD we continue to urge member states of the African Union to urgently ratify this Protocol to enable women to enjoy their rights. We also urge governments to repeal laws that discriminate against women so that these conform to their Constitutions.
And yes, we dare celebrate the ordinary women who on the day, as their counterparts did in 1917 and before, stand against the ordinary discriminatory practices so as to make nondiscrimination an ordinary way of life. In so doing they became extraordinary. We celebrate the African woman who, unlike the man, toils day and night amidst grinding poverty on the continent and faces up to harsh cultural, traditional and societal prejudices yet still manages to achieve much.
In the past year the most extraordinary of these ordinary African women that we must name as we celebrate is Professor Wangari Muta Maathai, the first African woman to win the Nobel Peace. At the ongoing CSW Professor Maathai dedicated her Nobel Peace Prize to all women and called on developing countries to cancel debts owed by Third World Countries, noting that servicing debts continued to impoverish the already poor countries. She further noted that this amounted to punishing poor countries and women. Reflecting on the slow progress made since the agenda on issues affecting women was set thirty years ago, the Nobel Laureate said that the burden of debt under which the continent was submerged made it impossible for governments to address pertinent issues of basic provision affecting women already highlighted in the foregoing. We can only add our voice to her call.
* Caroline Ageng’o is Programme Officer for Equality Now, Africa Regional Office, Nairobi
* Please send comments to editor@pambazuka.org
F. Trade as aid?
Henning Melber
2005-03-10
Conventional approaches might at first sight not link trade issues with debt cancellation. But trade relations happen to have a marked and direct impact on economies, their productivity, balance of payments, revenue income from duties and other related issues. Hence trade affects national budgets - and therefore the (dis) ability to honour debt services, to provide investment or to be credible. This is even more so if trade relations in the global setting of today are regulated to the smallest details by bi- and multilateral agreements and domestic as well as international laws, which have a direct impact on the volume and flow of trade.
Rules and regulations negotiated and finally fixed between states are aimed to secure interests first and foremost in terms of the economic interests represented by the negotiating parties, normally on behalf of their respective governments. They often result in price regulations, definition of qualities and quantities of specified commodities, preferential treatment or exclusion of goods. At stake is the financial volume not only for the producers but also the economies. As long as global trade is skewed and to the advantage of some (normally those who have the power of definition to set the rules), it remains at the disadvantage of (most) others. Concerning debt, trade matters.
Debt cancellation, as one of the demands put on the table, is one obvious way to solve the current unacceptable situation. But at the same time it bears the risk of being misleading. It would be wrong to assume that the problem inherent in the in-egalitarian structures of the world economy are solved by such a one-time relief offered. Fairer trade would in contrast offer opportunities for moving into the direction of a more lasting sustainable alternative. Current initiatives towards further uniformity in global trade tend to suggest that they might contribute to such a development. Let’s have a closer look.
Globalisation and regional integration
It is sometimes suggested that African countries should chose between regional integration and globalisation. This dichotomy is misleading. Apologists of a liberalisation of trade argue that both trends complement each other in a positive way. But the real question is whether, under the pressure of global market forces, regional strategies remain viable at all. Regional and bilateral Preferential Trade Agreements (PTAs) are booming. Within the last 15 years the number of PTAs proliferated and has more than quadrupled to about 230. It is estimated that some 60 further arrangements are currently negotiated. This means there are almost twice as many PTAs existing and negotiated than countries officially participating in the regulated world trade.
Under the regime of the World Trade Organisation (WTO), local and regional policies are increasingly determined by global factors. One example is the New Partnership for Africa’s Development (NEPAD), which serves as the socio-economic development blueprint for the African Union (AU). Similarly, bi- and multilateral trade relations between external actors and individual African states or regional blocs are becoming ever more decisive. This is true of the USA’s African Growth and Opportunity Act (AGOA), the EU Free Trade Agreement (FTA) with South Africa and more recently the Economic Partnership Agreements (EPAs) negotiated by the European Union. All these initiatives have a potentially detrimental impact on regional integration.
In the light of current evidence it is suggested that the trade policies of both the US and the EU are anything but helpful to consolidate regional integration – in contrast to the proclaimed priorities this should have within the developmental paradigm. The notion of coherence, meaning similar policies pursued and implemented in differing but complementing areas such as foreign and trade policy and development cooperation, is a relevant tool in this context to argue for a critical re-appraisal of currently established international regimes by initiatives of the OECD countries and in particular the G 7/8.
NEPAD
NEPAD claims that its agenda is “based on national and regional priorities and development plans”, which ought to be prepared “through participatory processes involving the people” (para. 49). So far, however, no visible signs indicate that the collective (multilateral) efforts aim at a united approach of the various regions in their relations with the outside world. Nor does NEPAD, so far, translate its noble aims into practical steps. The blueprint emphasises sub-regional and regional approaches under a separate sub-heading. It stresses “the need for African countries to pool their resources and enhance regional development and economic integration
to improve international competitiveness” (para. 94). The dilemma is that the emphasis on international competitiveness comes at the expense of strengthening local economies and people.
NEPAD also claims to enhance the provision of essential regional goods as well as to promote intra-African trade and investments, with a focus on “rationalising the institutional framework for economic integration” (para. 95). But again, such an approach neglects the local/internal in favour of the global/external orientation. In the meantime, NEPAD emerges as a type of mega-NGO channelling aid-funds to developmental projects. The claim that these are driven by a desire for closer regional collaboration is hardly more than lip service. Countries, not regional bodies, implement the programmes and policies. As Patrick Bond had already suggested in his annotated critique in 2002 (“Fanon’s Warning”), NEPAD seems more to undermine than to strengthen regional institutions.
Indeed, NEPAD defines the strengthening of African regional markets as a steppingstone towards greater integration into the global economy rather than as a goal in itself. Accordingly, its market access initiative advocates an external orientation. NEPAD identifies a need to negotiate for “more equitable terms of trade for African countries within the WTO multilateral framework” (article 188). This is deemed “an historic opportunity for the developed countries of the world to enter into a genuine partnership with Africa, based on mutual interest, shared commitments and binding agreements” (article 205). One wonders to what extent the NEPAD architects had lost their sense of reality when they drafted such obviously “wishful thinking”.
AGOA
Originally adopted as Title I of the Trade and Development Act of 2000 under the outgoing Clinton administration, AGOA was meant to apply the “trade not aid” paradigm. President Bush has extended its duration twice. As a US-law, AGOA was neither negotiated with its African beneficiaries nor based on any agreement with them. Its applicability is at the exclusive discretion of the US-administration. The current “AGOA Acceleration Act of 2004” had been enacted by the Senate and House of Representatives of the United States of America in Congress on 21 January 2004.
It should come as no surprise that US trade policy is not really geared to support Sub-Saharan economic development, but rather to provide access to potential markets. This would be fine if it only resulted in mutual benefits in the interest of all partners. But the bulk of African countries will not reap any such harvest. To a large extent, AGOA centres on oil and related commodities. African oil exports already amount to more than one fifth of the annual supply in the USA.
AGOA delivers benefits to countries according to their resources. Ironically, external capital (from mainly East Asian countries) has managed to exploit the opportunities created for supplying the US market with textiles from those African countries that rank as “Lesser Developed Beneficiary Sub-Saharan African Countries” in the AGOA context. These countries include those with a gross national product of less than US$ 1,500 in 1998 (as measured by the International Bank for Reconstruction and Development) plus Botswana and Namibia (which in itself represents an interesting indication of politically selective preferences dished out).
These AGOA recipients are granted preferential treatment (such as reduced import taxes). However, the mostly unqualified and underpaid workforce in African sweatshops is hardly reaping any benefits. Rather, people are being super-exploited. Nor do the governments of the countries affected register much additional revenue. After all, initial investments and even running costs tend to be heavily subsidised with public funds whereas profitable operations normally enjoy tax exemption.
This setting makes neighbouring countries compete for foreign investors rather than foster common growth strategies. Asian companies exert pressure on African governments in the pursuit of the most attractive investment opportunities under AGOA. Officials strive to offer foreign investors the best incentives for projects of an ultimately dubious nature. Often enough, existing legislation to offer minimum protection of the labour force and the natural environment is simply ignored or declared non-applicable to meet the interests of such investment. At the end, the praised enhanced local production and trade boils down to nothing more than mere elite pacts, in which local African administrations and Asian capital gain from providing US markets with cheap goods at the expense of workers who hardly earn enough to survive.
Empirically, AGOA has slim positive impacts in only a few of 37 eligible countries, among them Kenya, Lesotho, Madagascar, Mauritius, Swaziland and South Africa. This is mostly attributed to the textile and apparel sectors: Only in Kenya and South Africa, did exports from other sectors (primarily agriculture) rise substantially. After the Multi-Fibre Agreement (MFA) ran out early this year, the textile and apparel industries in China, India and other Asian countries will be able to compete much more freely with African products favoured by AGOA. The predictable result will be a decline – if not collapse – of the short-term industry seeking temporary gains.
Once the AGOA bonanza is over, internationally operating capital and a handful of local compradors will turn out to have been the only winners. The much hailed investment opportunities then turn out to have been those for the haves, with no lasting assets created for the national economies and the benefits of the majority of the people participating in them. What is left behind is more likely to be a more damaged environment, while the detrimental effects had even been subsidised from the local public purse, which on top will have to deal with limiting further damage.
EPAs and FTAs
The EU is currently negotiating EPAs with African, Caribbean and Pacific countries (ACP). The goal is to replace the Cotonou Agreement with separate sub-regional accords and to, thereby, make existing EU-ACP relations compatible with WTO rules. Observers accuse the EU of using EPAs to push through agreements on a number of sensitive matters (such as investment, procurement and competition policy) that were rejected by developing countries at the WTO ministerial meeting in Cancun in 2003. In any case, such agreements will reduce the policy space for African governments.
The EU is striving for separate deals with each region, and no country may negotiate in more than one block. For EPA purposes, the Southern African Development Community (SADC) is accordingly reduced to half of its actual member countries. What could make the inbuilt conflict between regionalism and global perspectives more obvious? As an outcome of current negotiations, developmental space is likely to shrink. Official discourse does not even deal with issues of internal and regional integration anymore. Even experts at the International Monetary Fund (IMF) seem reluctant to generally consider EPAs as beneficial. Their blessing is currently depending on a number of positive assumptions made, which are not implemented so far within the ongoing negotiations.
These negotiations on future EPAs cause serious implementation problems and a negative impact on regionalism within the ACP group in general and its African members in particular. Regional organisations will suffer from capacity problems in the process. The matter is further complicated by the fact that all regions involved are made up of LDCs and non-LDCs, to which, so far, different rules have applied. The preferential clauses existing to the benefit of LDCs are not honoured so far in a similar extent under the EPA negotiations.
The EU’s FTA negotiated with South Africa during the second half of the 1990s has already had a divisive effect on the Southern African region. The fact that a single country entered a preferential trade relationship exacerbated regional tensions that result from divergent economic interests. In many respects, South Africa, the monetary zone, the South African Customs Union (SACU) and SADC are already not in harmony.
The EU intervention adds to the friction. While the FTA might indeed have some beneficial effects for South Africa, that is no convincing argument in favour of more FTAs with other – less industrialised – countries. The current negotiations by the USA for a US-SACU-FTA seemingly try to win back what is perceived as a lost territory in comparison with the EU-SA-FTA. But it is as questionable to what extent this would strengthen the regional interests in contrast to the South African and US American ones.
South African interests are by no means identical with those of the region. While regional integration would (and should) certainly not be at the expense of the hegemonic power, it would include the interests of the junior partners in the neighbourhood. The political economy of such regionalism depends on constantly (re-)negotiated arrangements, with shifting boundaries and changing coalition of interests. The EPA configuration process, as much as the FTAs with the central role of the South African economy as the point of departure does not seem to strengthen such alternative routes.
Conclusion
Recent trends indicate a less rather than a more conducive international environment for regional cooperation and integration. This is so, at least in macro-economic terms, among the members of bodies as SADC. Ironically, as a recent Swedish study submitted by developmental economists to the government had pointed out: While the EU, through its enlargement, is collecting the European states into an increasingly strong unit, EU’s African policies may have the opposite effect.
This brings the demand for policy coherence on the top of the agenda as a priority for further discussions also among those EU member states, which try to offer more than mere lip service to improved relations with the South aiming at offering a fairer share. If regional integration and collaboration remains a cornerstone in the developmental paradigm, with the declared aim of supporting the efforts to reduce detrimental dependencies in the South from the global market and its structural discrimination, trade as aid would have to be more than a mere euphemism for continued exploitation and discriminatory practices. It would require embarking on a different set of strategies as those currently imposed.
As long as this is not the case, such trade reforms will also have no lasting positive impact on the chances for smaller or weaker economies to overcome the structural dependency. Instead, by seeking a pseudo-way out, they continue the avenue, which turns out to be a cul-de-sac. All too often, this results in fatal survival strategies based on credits instead of genuine gains from trade.
* This is a revised version of an article in “Development and Cooperation”, vol. 32/no. 2, March 2005. More analyses offers: Henning Melber (ed.), Trade, Development, Cooperation: What Future for Africa? Uppsala: The Nordic Africa Institute (Current African Issues, no. 29). The volume is accessible at the Institute’s web site (www.nai.uu.se) and can be downloaded free of charge. Dr. Henning Melber is Research Director at The Nordic Africa Institute in Uppsala, Sweden. From 1992 to 2000, he was Director of The Namibian Economic Policy Research Unit (NEPRU) in Windhoek. He is currently a Vice-President of the European Association of Development Research and Training Institutes (EADI).
* Please send comments to editor@pambazuka.org
G. Questions and Answers on Debt
2005-03-10
1. We’re always hearing about the debt crisis, but where did it originate?
The origins of the debt crisis are complex. The issue came to a head in 1982 when Mexico declared that it could not service its foreign debt. Twenty-five countries followed Mexico’s example or threatened to adopt the same stance. How did it get to that stage?
The price of oil was increased by OPEC producing countries in 1973-74, leading to a glut of money in commercial banks, who in turn offered it for loan at low interest rates. As a result, developing countries were courted to take loans to finance "development". Although the absolute size of debt of sub-Saharan African countries was relatively small in proportion to the external indebtedness of developing countries, the size of the debt (and the cost of servicing that debt) in relation to the resources and productive capacity of these African countries were significantly large.
But that glut was short-lived. Coinciding with the period of the emerging technological revolution in microcomputers and in gene technology that attracted capital to new fields where the rates of profit were likely to be substantial, the 1980s saw significant increases in the cost of borrowing. As interest rates rose, and debtor countries were suddenly faced with servicing the interest on loans that absorbed the ever-greater proportions of export earnings. Debt had now become the central issue of "concern" in development circles. This further provided the entry point for international financial institutions into African countries. The IFIs offered loans on condition of the adoption of a clutch of social and economic policies that came to be known as structural adjustment programmes. The social and political impact of these policies were to position the multilateral lending agencies (with the support of the bilateral aid agencies) where they could determine both the goals of development and the means for achieving them.
Another influence on the debt crisis was the Cold War, when donor countries were more concerned with their strategic interests than whether money they lent was spent on constructive activities. The most oft-cited example of this in Africa is Mobutu in Zaire, who was able to borrow huge amounts of money as long as he pledged his loyalty to the West. This is the reason why the argument is made that the debt crisis is not only about the responsibility of indebted countries, but also about the responsibility of creditor countries for creating the crisis in the first place.
2. Sure, but everyone knows that if you borrow money you have to pay it back. Why should the debt of African countries be cancelled?
Countries are trapped in an endless cycle of debt repayments created by an economic system which worked against their interests and by previous generations of leaders that were able to borrow money because they slotted into the geopolitical interests of the superpower of the day. But the problem was created by the fact that when they borrowed, the interest rates were low, but there after they grew and grew, with the result that nearly all the national wealth is used just to pay the interest – let alone the original amount that was borrowed.
People living in highly-indebted poor countries don’t and never have benefited from these loans. In actual fact, they have suffered as a result of money being diverted from spending on healthcare and education in order to service enormous debts. This means that any talk of development is the equivalent of a fools ranting until debt is cancelled. If African countries have to channel vast amounts of money into servicing their debt, how are they ever going to be engaged in meaningful development activities?
Besides, UN statistics show that indebted countries, although they have paid back three times more money than they originally borrowed, still owe more than they owed in 1980. It is in this context that campaigners have made a strong moral argument for the cancellation of debt, stressing that it is a key element used by rich countries to dominate smaller countries.
3. Who do indebted countries owe money to?
There are several different types of loans, all with their own particular history.
Bilateral State Loans have their origins in the Cold War, when scheming super powers were only to eager to dish out cash in order to secure the dependency of weaker states. Little was done in the way of a credit check as dictators lined up to access cash. Today, the populations of their countries are still paying the price.
Another type of loan was known as Export Credit Agency Corporate Loans. It goes without saying that corporate loans come at a far higher interest rate than bilateral loans. These loans increased from the 1980s onwards and were underwritten by so-called Export Credit Agencies. These are basically government agencies that fund or insure domestic corporations seeking to extend their business to high-risk areas. Again, it is the people of countries taking loans that face the burden of repayment.
Commercial Bank Loans took hold in the 1970s as petro bucks flooded banks, who looked around in glee for a way to make more profits. The answer: Lend it to the developing world and don’t worry that much about who you’re lending to or whether they can pay it back. It all went sour at the end of the 70s – interest rates rocketed, leaving indebted countries with a debt repayment headache that kept on getting worse.
Lastly, Multilateral Loans came about when the good old World Bank and International Monetary Fund came to the party, and offered rescue packages to make sure that indebted countries could at least pay the interest rates on the loans they had contracted. Later, The WB/IMF came up with the Brady Plan. The deal was that they would offer guarantees for the repayments of loans, while a portion of the debt was cancelled. The catch: Indebted countries had to open up markets and slash social expenditure. Again, you guessed it, the people took it on the back.
* This short description of the types of loans was compiled with assistance from an article on RISQ, an independent association of scholars, journalists, politicians, and activists who seek to render international political decision-making more inclusive, equitable, and responsible. For the full article, visit http://www.risq.org/article389.html
4. What is the total amount owed?
According to the Jubilee Debt Campaign, the original debt of the world's 52 poorest and most indebted countries is $375 billion. This translates into repayments of around GBP30 million every day. Zambia's debt repayments to the IMF alone cost $25 million, more than the country's education budget despite 40% of rural women being unable to read and write, according to Jubilee, which states that while Sub-Saharan Africa receives $10 billion in aid every year it has to pay back at least this amount in debt repayments.
5. Why cancellation? We already have the HIPC to take care of these concerns.
Following unprecedented pressure from debt campaigners, the Heavily In-debt Poor Countries (HIPC) initiative was set up in 1996 by the rich nations through the IMF and World Bank. It was intended for countries that had debt burdens of more than four times their annual export earnings and laid out certain conditions that had to be met by countries before they could be classified as having met a 'completion point', after which they would qualify for limited debt relief.
The conditionalities of the HIPC have been the subject of much criticism, as these prescriptions are regarded by many as contributing to poverty in highly indebted countries. Furthermore, there are questions as to whether the amounts of debt written off are sufficient. Many criticize the fundamental approach of the HIPC, which sets out to make debt sustainable rather than writing it off.
6. What is the human cost of the crisis?
Even for elite world leaders who have never stepped out of their comfort zones, it doesn’t take a huge leap of imagination to work out the massive human cost of procrastination on debt relief. In Zambia, for example, life expectancy is expected to plummet to an alarming 33 years as a result of HIV/AIDS. Over half a million children are out of school. One would have thought that this would be cause for massive investment in health care and education, but debt service, even after HIPC completion, chews up more cash than the combined spending on health and education.
A UNDP study estimates that for each additional one per cent of GDP spent on health and education, child mortality is reduced by 24 per cent. Therefore, taking 1999 as an example, when Zambia spent
$438.5 million (13 percent of GDP) on debt servicing, child mortality could have been reduced from 202 deaths per 1,000 live births to only 8 per 1000 live births.
How many lives is that over a ten-year period? There’s a frightening sum for leaders like Bush and Blair.
7. What is all this talk amongst the G7 about financing debt relief?
One of the major blocks to debt relief has been bickering amongst the G7 over how to fund any write-offs, the economic rationale being that the money has to come from somewhere.
At the recent G7 meetings in London, news reports indicated that most leaders favoured selling some of the International Monetary Fund’s gold reserves to finance debt relief. The IMF is the third largest holder of gold and this option would involve selling the gold to an interested party or revaluing the gold as a way of raising funds.
But it is never that simple: Gold producers are less than happy as they feel such a mass sale would disrupt gold markets. Lawmakers in the US, which has the world’s biggest gold stockpile, have opposed gold sales, saying it will harm the industry and cause job losses. Instead, the US favours a system where outstanding debts are cancelled and replaced with grants linked to human rights records.
Meanwhile, the world’s biggest gold producer, South Africa, has said through its finance minister Trevor Manuel that they support the use of IMF gold reserves to finance debt relief. Manuel’s comments may mask divisions within his own cabinet however. His cabinet colleague, Mineral and Energy Affairs Minister Phumzile Mlambo-Ngcuka, came out against the plan and put it on record that other African mining ministers were also concerned.
Some of the other ideas put forward for financing debt cancellation include increasing multilateral development bank charges for middle-income countries and the provision of new funds by creditor nations. It’s clear that there are no lack of options on how to finance debt cancellation, but what is lacking is the political agreement and will to get things underway. Given that the US has basically said that debt cancellation isn’t in the budget this year, maybe the disputes over the financing of debt cancellation are just a mask to cover a wider political inertia.
8. If there was debt cancellation tomorrow, would that development hit the fast track?
Some analysts are already pointing to the new dangers posed by trade agreements and foreign direct investment flows. The argument goes that an outflow of resources from African countries as a result of, for example, World Trade Organisation (WTO) agreements could lead to greater financial problems than those caused by the debt crisis.
For example, an article on the website of Third World Network-Africa, based on a paper by David Woodward, economist and consultant, warns that foreign direct investment (FDI) is not a risk-free answer to the capital problems of developing countries. It was “dangerously mistaken” to view FDI in the same way as foreign loans to developing countries were viewed up to the 1980s just before the debt crisis struck.
There are a number of reasons why FDI could be worse than debt. Firstly, there is no fixed schedule for the outflows in the form of the repatriation of profits. Secondly, the rate of profit on FDI is much higher than the interest rates even on commercial loans. For Sub-Saharan Africa, the rate is estimated at 24-30% per year.
The conclusion of the argument is that FDI is like contracting a foreign loan at an interest rate of 24 – 34% a year. Any country exposed to this rate of FDI is faced with a net outflow of foreign exchange and the only way to avoid this is to attract new investment to cover the profits on existing investment.
* To read the full article on which this short report is based, please visit http://www.twnafrica.org/news_detail.asp?twnid=380
* Sources used to compile this Q&A
http://finance.channels.netscape.ca/finance/article.adp?id=20050225073609990001
http://finance.channels.aol.ca/finance/article.adp?id=20050303220709990009
http://www.eldis.org/static/DOC13141.htm
http://story.news.yahoo.com/news?tmpl=story2&u=/nm/20050210/bs_nm/economy_imf_gold_dc
http://www.bicusa.org/bicusa/issues/spotlight/1877.php
http://www.twnside.org.sg/title/thomas-cn.htm
http://www.jubileedebtcampaign.org.uk/?lid=247
http://www.globalissues.org/TradeRelated/Debt/HIPC.asp
http://www.jubilee2000uk.org/databank/usefulstatistics/generalstats.htm
H. Zambia: A debt case study
2005-03-10
An International Monetary Fund (IMF) and World Bank team visited Zambia in February and declared that the country had reached the completion of its Heavily Indebted Poor Country (HIPC) initiative, which seeks to provide debt relief to poor nations that adhere to IMF conditions. The team declared that they would make a final decision within the next few months as to whether Zambia would qualify for about $3.8 billion of its $6.8 billion debt to be written off.
The IMF and Bank team declared: "IMF and World Bank staff have reviewed progress made in meeting the steps required for reaching the completion point under the HIPC initiative. Information received indicates that all triggers relating to poverty reduction and social sectors have been met.”
Zambia is one of the poorest countries in the world. Poverty rates are up, life expectancy is down, infant mortality has more than doubled since 1990 and malnutrition is common. Debt looms large as one of the reasons why the country has failed to escape the poverty trap. According to figures available from the website of the African Forum for Debt and Development (Afrodad), Zambia spends US$14 per capita on health compared to an average of US$2 500 for high income countries. Spending on debt servicing is 6.4 percent of GNP, more than on health and education combined.
In the essay ‘The Politics of Debt Relief and Poverty Alleviation in Zambia’, Bertha Osei-Hwedie states: “Allocation of the bulk of resources to debt service and government cuts in social expenditure have deprived the majority of the population of access to education, health facilities, clean water and housing, and employment opportunities, making their livelihood hard. Zambia spends 40 percent of new aid money on the repayment of multilateral loans, especially of the IMF and World Bank, instead of on poverty alleviation.” This is despite an HIV/AIDS epidemic, and high infant and maternal mortality.
According to a 2004 World Development Movement report, Zambia turned to the IMF and World Bank for loans in the 1970s after the oil crisis and commodity price collapse. After these external economic shocks in the early 1970s, says the WDM report, Zambia's total external debt rose from US$814 million to US$3,244 million by the end of the decade. The situation then further deteriorated with Zambia's external debt more than doubling to US$6,916 million by the end of the 1980s. “By the late 1990s the debt crisis in countries such as Zambia led to the creation of the much vaunted Heavily Indebted Poor Countries (HIPC) initiative.” By the start of 2003, Zambia had received only 5 per cent of the debt service reduction committed to it under HIPC, says the WDM.
In getting to the latest HIPC completion point where it can be considered for a $3.8 billion debt write-off, Zambia has had a rocky relationship with the IMF and World Bank. In order to qualify for HIPC write-offs she has had to adopt stringent conditions including tight controls on government spending, privatizing public utilities, removing subsidies, deregulating its markets and opening its doors to foreign imports.
Under the HIPC, Zambia has had to adopt a Poverty Reduction Strategy Paper (PRSP). The PRSP process has been compared by Jubilee Zambia with the earlier Structural Adjustment Programmes and criticized for its market-based growth at the expense of social and economic development of the more vulnerable groups within the country. Like SAPs, states Jubilee Zambia, the PRSP process had an over reliance on the trickle down effect; failed to recognise the cost of growth in terms of the reduction in the social capital and set targets that were heavily influenced by external funders and insufficiently influenced by the results of public participation.
After years of SAPs and PRSPs in 2004, says Make Poverty History, Zambia spent $377 million repaying its debt, an amount twice what it spends on education. If the country does indeed receive a $3.8billion write-off it would still have a debt of $3billion, an amount that would still consume 3-4% of its GDP in servicing, or roughly the same amount as that spent on education. Whether this will be enough to free the country from the chains of debt and whether the price paid was worth it remains to be seen.
SOURCES:
http://www.jctr.org.zm/downloads/prpscrtiq.pdf
http://www.makepovertyhistory.org/aim2.html
http://www.mg.co.za/articlepage.aspx?area=/breaking_news/breaking_news__business/&articleid=197252
http://www.irinnews.org/report.asp?ReportID=45518
http://www.afrodad.org/debt/zambia.htm
http://www.wdm.org.uk/campaigns/cambriefs/debt/zambia/zambia.pdf
Letters
Death of Prof. Guy Mhone
Adebayo Olukoshi
2005-03-10
It is with the deepest regret and a profound sense of loss that I write to inform you of the death in Johannesburg, South Africa, on 01 March 2005 of our colleague, teacher and friend, Professor Guy Mhone. Born of Malawian parents, he spent most of his professional life outside of his native country, mostly in Zimbabwe and South Africa. He was elected into the CODESRIA Executive Committee representing Southern Africa at the 10th General Assembly of the Council held in Kampala, Uganda, in December 2002. Those who knew him socially attest universally to the fact that he was a gentleman who had great humanitarian principles and a quiet sense of humour. For those of us who were privileged to work closely with him, we will remember him as one of the brightest economists produced by the African continent and with an abiding commitment to the progress of Africans.
Professor Mhone gave no hint of the imminence of his departure from us when the CODESRIA Executive Committee had its 61st meeting in Algiers in December 2004. Indeed, even at the meeting of the Sub-Committee on Governance held at the end of January 2005 to review the Council's Charter ahead of the 11th General Assembly scheduled for December 2005, he was full of cheer. Little did we realize that it was his way of telling us goodbye. His death has robbed the Executive Committee of a highly valued and perceptive member; for us in the Secretariat, and for the membership of the Council across Africa and the Diaspora in general, and in Southern Africa in particular, his untimely departure has robbed us of his wise counsel. And now, helpless, we can only scribble our lines of sorrow to convey our condolences to his family, praying that they will find the courage to bear the heavy loss which death has so cruelly and suddenly inflicted on them. Our thoughts go particularly to his wife and children. May the gentle soul of Professor Mhone should find eternal rest.
Colleagues wishing to send condolence messages to his family are strongly encouraged to do so using the following e-mail address: executive.secretary@codesria.sn
(Letter from CODESRIA to all members of CODESRIA and of the African Social Research Community)
Leaders have a case to answer
Audax Rukonge
2005-03-10
What a good observation Issa Shivji has made! It is high time to reflect on these issues, however, politics have always dominat