DEVELOPMENT-AFRICA: Unchain Africa, Debt Campaigners Say

By IPS Correspondents Reprint | | Print |

Dipankar De Sarkar

LONDON, May 11 1998 (IPS) - Imagine an Africa freed of its debt bondage.

“In Mozambique, it would mean that the 20 percent of gross domestic product that it pays on repaying its debt every year could be ploughed back into health and education,” says Adrian Lovett, Deputy Director of the Jubilee 2000 Coalition, which campaigns on debt issues.

At present, the southern African country is able to spend only eight percent of GDP on education and three percent on health.

And then imagine if the international donor community had displayed even a fraction of the political will and alacrity to deal with African debt as they had done in helping east Asian nations tackle their current financial crisis.

According to the United Nations Development Programme (UNDP), if the external debt of the 20 poorest countries of the world, many of them African, was written off today, it could save the lives of 21 million children before the year 2000.

Read the other way around, this figure means uncancelled debt could be responsible for the deaths of 130,000 children a week till 2000.

“If debt is written off, it could free up the potential of African children, and save lives through low cost health interventions,” says Oxfam’s Ian Bray. “It is the children’s right.”

“The benefits of debt relief could be channelled to support education, health care, credit and pro-poor rural development,” says UNDP.

Their comments underscored the message from a Jubilee 2000 report this month that showed Africa paid out 1.31 dollars in debt service for every one dollar it received in aid grants in 1996.

“And Africa is the least well placed of all developing regions to sustain such a transfer, with real GDP per capita at less than half that of all developing countries and less than one-tenth of the industrialised countries,” the report, titled Chains Around Africa, said.

What is more, says the report, the gap between grants and debt service is increasing. The 1.31 dollars figure is the highest since 1989.

The figures calculated by Jubilee 2000 are shocking: the total debt owed by Africa in 1996 was 227.2 billion dollars — 379 dollars for every man, woman and child in the continent. Africa shoulders 11 percent of the developing world’s debt, with only five percent of the developing world’s income.

In 1997, the International Monetary Fund (IMF) expects to have put in 500 million dollars and taken out 1.1 billion dollars. This does not include significant interest charges. It amounts to “a net gain to the IMF from the world’s poorest continent of at least 600 million dollars in a single year,” the report says.

“Debt is millstone around the necks of Sub-Saharan African and other least developed countries,” says the UNDP in its Human Development report for 1997.

Worldwide, the debt of the 41 highly indebted poor countries now totals 215 billion dollars, up from 183 billion dollars in 1990 and 55 billion in 1980.

Though a recent multilateral move, called the Highly Indebted Poor Countries (HIPC) initiative to provide debt relief to those countries has been welcomed by the UNDP, “the relief will be selective – and often take three to six years to have effect,” it says.

What is desperately needed, it says, is “more action, not more proposals.”

Blunting Africa’s opportunities for rapid advance is its lack of access to agricultural markets in the industrial countries. Fairer access for Africa’s experts, especially its agricultural products, is seen by many as a test of the international commitment to poverty reduction in the region.

But the Jubilee 2000 report quotes World Bank figures as showing that the prices of exports from Africa fell by 1.2 percent on average each year from 1990 to 1996.

“The fluctuating and ultimately declining prices of Africa’s core exports has affected the capability of countries to pay debt service and further pushed them towards taking on new loans.

“If exports from Africa had remained at the values they held in 1980, Africa would not have needed to incur a penny of debt,” the report says.

When the east Asian countries fell serially to the financial crisis last year, the IMF and the Group of Eight (G-8) countries responded remarkably swiftly with a bailout package of some 100 billion dollars.

“Yet, when it comes to dealing with Africa’s debt problems, petty squabbles between creditors, outright obstructionism and an apparently unbreakable attachment to the most arcane rules are the order of the day,” says Oxfam’s senior policy adviser Kevin Watkins.

“The debt-reduction initiative has been allowed to drift like a rudderless ship on to the rocks of creditor politics,” he adds.

A squabble broke out in November last year over who should shell out the final 60 million pounds needed to bail out Mozambique, stalling the HIPC initiative.

The HIPC initiative, administered by the World Bank, is criticised by Adrian Lovett as loaded in favour of donors.

“In practice the definition of what is a ‘sustainable’ debt for the debtor-country is decided by the donors. And they, quite understandably, have a vested interest in keeping the recovery going,” said Lovett, the author of the Jubilee 2000 report.

“What is needed is a neutral arbitrator — rather like a bank receiver who decides how much a debtor can pay back, and what the creditor can lose in order to wipe the slate clean.”

Lovett said Jubilee 2000 has been assured by the German finance minister Jurgen Stark that debt is at the “top of the agenda” at this week’s G-8 summit in Birmingham, Britain.

“Our worry is that it will be no more than nice words saying the HIPC initiative will go faster and include a few more countries.”

“We want them to cancel the debt by the year 2000, which is the only way to ensure a really new start to the world’s poorest people in the next millennium,” he added.