Those campaigning against Third World Debt have long argued that crippling levels of debt have been a severe block to the development of African countries, causing widespread poverty and hardship. Six years ago, over 70,000 Jubilee 2000 supporters formed a human chain in Birmingham to call for the cancellation of the debts of some of the world's poorest nations. To mark this occasion, World Debt Day on May 16 is intended to call attention to the ongoing debt crisis, provide a global rallying point for all those who continue to care about the suffering being caused by debt and encourage campaigners by providing an opportunity for action and advocacy. Pambazuka News emailed a list of questions to Demba Moussa Dembele, Director of the Forum for African Alternatives in Senegal, to gauge where Africa stands in the debt stakes.

PAMBAZUKA : Why should people care about World Debt Day?

DEMBELE: The day commemorates one of the largest gatherings ever held to call world attention to the impact of the Debt Crisis. It was on May 16, 1998, during the G7 Summit in Birmingham, (GB) that the call on Western and Japanese leaders to cancel poor countries' debt went out. That day was a turning point in the Jubilee 2000 Campaign and helped put the debt issue on centre stage.

PAMBAZUKA : Briefly, what is the impact of the current levels of debt on the development of African countries?

DEMBELE :

* Sub-Saharan Africa's debt accounts for 71% of its GDP;
* The debt represents more than 180% of exports;
* Debt service absorbs 12-13% of exports receipts on average;
* Accumulated arrears (debt service that could not be paid) represents more than 30% of current debt levels;
* Since 1988, Sub Saharan Africa (SSA) is getting very little in terms of new loans. A greater part of some of the loans we hear about is used to service old debts;
* Unsustainable debt deters foreign direct investments.

PAMBAZUKA : If the negative effects of unsustainable debt are so well documented, why are the debt-collecting institutions and countries so reluctant to intervene in an area of such obvious importance?

DEMBELE :

* The debt bondage is the new face of colonialism or even slavery;
* Debt is used as an instrument of domination: it is at the heart of the unequal power relations between the North and the South. It is also an instrument used to plunder and exploit indebted countries' resources;
* Debt is an instrument of resource transfer from the South to the North. In 2002, according to the UN, net transfers from the South to the North were estimated at $200 billion. During the four previous years, net transfers from the South amounted $120 billion a year;
* The IMF & the World Bank use debt as a tool to impose their disastrous policies. Without that tool they would have a very limited or no influence in Africa or elsewhere.

PAMBAZUKA : Many people point to the Highly Indebted Poor Countries Initiative (HIPC) as evidence that something is being done to resolve the debt crisis. Others argue that the HIPC is a sham and has not led to significantly improved levels of debt relief. In your opinion, what progress has been made and what more needs to be done?

DEMBELE :

* So far 11 countries, including 9 in SSA, have achieved the completion point. But almost all of these countries did not have "sustainable" debt levels as the World Bank predicted in its Debt Sustainability Analysis (DSA);
* The amount of debt "cancelled" for these countries is minimal compared to their overall debt. It is less than 20%;
* At this pace, it would take a quarter century to see all eligible countries achieve the completion point;
* The only solution to the debt crisis is total debt cancellation. Nothing less.

PAMBAZUKA : Many have claimed that much of the debt owed by African countries (for example, the apartheid debt owed by South Africa) is illegitimate and that in actual fact, Western countries owe Africa for centuries of exploitation. Is this view gaining ground?

DEMBELE: Since the World Conference on Racism in Durban (South Africa) in 2001, the issue of reparations has been accepted by world public opinion. Of course, some European countries and the United States have shunned the Conference for fear of being exposed. However, the idea is gaining ground every day. In Africa, more and more voices -intellectuals, policy makers, activists, etc.- use every opportunity to remind the world, especially the West, that it is Africa that is owed an immeasurable debt. In addition, the work of Jubilee South - the international debt network - and other national or regional networks has helped promote the idea of reparations in various forms.

PAMBAZUKA : What's stopping African countries from simply defaulting on their debt and channelling the resources into health and education?

DEMBELE :

* Many African leaders are beholden to the West. They are afraid of standing up to them;
* In addition, these leaders are afraid of challenging the World Bank and the IMF. Some of them are even afraid of supporting the call for debt cancellation. I remember a former Tanzanian Finance Minister saying in Washington, DC, that his country does not support the idea of multilateral debt cancellation because this would "kill the goose that lays the golden eggs".
* Collective debt repudiation is a political decision. At this juncture, it is not easy to see a unified political position that would support debt repudiation. But civil society organisations are working on it. We think that by exposing the hypocrisy and bad faith of bilateral and multilateral creditors and showing the disastrous impact of debt on Africa's human development indicators it will be possible some day to convince an enlightened leadership to move toward that decision.

PAMBAZUKA : Recently there has been talk of debt swaps. What are debt swaps and are they an effective method of alleviating the debt crisis?

DEMBELE: Debt swaps are a mechanism by which part of a country's debt is sold by one or several of its creditors (private creditors) to another entity that invests the proceed in the same country. For instance, a commercial bank that seeks to get rid of its loan to a country like Senegal, will sell that loan - generally at a deep discount to an investor, a corporation, -which entity will use the face value of the debt to invest in a publicly-owned company in Senegal. There are several kinds of swaps, such as debt-equity swaps, whereby, a corporation that bought part of Senegal's debt uses it to buy shares in an existing State-owned company. This mechanism has been extensively used in Latin America and in a few cases in Sub-Saharan Africa. Another type of swap is debt-for nature swap, a case in which an environmental group buys a country's debt and uses the proceeds for environmental protection.

Since swaps involve only private debt, it cannot be an effective mechanism for debt alleviation given the fact that almost 90 percent of poor African countries' debt is public. And swaps are a mechanism for transferring public assets to foreign hands. For this reason, it is not a good solution for those countries that have a substantial commercial debt, like Nigeria.

PAMBAZUKA: If the current levels of debt and debt repayment burdens continue, what is the prognosis for African countries over the next ten years?

DEMBELE: Right now, many African countries are not servicing their debt. Or they do so by incurring new debts. Therefore, if the current levels of debt burden continue, over the next ten years:

* Many African countries may be totally stripped of their sovereignty;
* The levels of poverty will worsen and millions of lives will be at risk;
* There will be a total collapse of the State and other public institutions;
* The Millennium Development Goals will not be achieved.

PAMBAZUKA: Who do people need to target if they are concerned about the debt issue
and want to make an impact? Who are the stakeholders?

DEMBELE: The targets are:

* G 8 leaders (major bilateral creditors and masters of the IFIs);
* IMF and the World Bank (multilateral debt has overtaken bilateral debt in many cases);
* The Western credit agencies (that guarantee private debts);
* The Parliaments of Western countries;
* The United Nations system (to take a clear stand on debt cancellation);
* The African governments (to form a united front and eventually move toward debt repudiation).

* Please send comments to [email protected]

* Our thanks to Demba Moussa Dembele for answering these questions in between a busy schedule that included a 36-hour holdover at Jomo Kenyatta Airport.

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