Debt - An African Perspective

Debt - An African Perspective

-Africa Policy Information Center (APIC): June 6, 2001

Sub-Saharan Africa's massive external debt is the single biggest obstacle to the continent's development. The $300 billion which African countries owe to foreign creditors represents a crippling burden which fundamentally hampers progress in every sector. The All-African Conference of Churches has called this debt "a new form of slavery, as vicious as the slave trade". As such, it is both a cause and a symptom of the structural inequality in the international economic system.

At a basic level, the legitimacy of Africa's debts is highly questionable. Many of the loans which are being re-paid were made during the Cold War to repressive regimes and corrupt leaders, who used the money to strengthen their rule or to line their own pockets. Many more loans were made without attention to the viability of planned projects or to the capacity of the recipient country to make repayments. Very little of the money filtered its way down to make any real difference in the lives of the African people. Demanding that these people and their new governments now pay for the corruption and mismanagement practiced by previous regimes is simply unjust. These debts are illegitimate, and should be canceled outright.

Africa's debt burden and the zealous pursuit of repayments by international creditors have had severe repercussions in terms of the continent's human development. Forced cutbacks in basic social services have weakened health and education systems and undermined efforts to cope with the AIDS pandemic. Africa's children are suffering from malnutrition and are being denied the right to education by creditors who are determined to bleed Africa's economies dry. Meanwhile, the world's rich countries continue to ignore the huge debt that they owe to Africa, and to the global South more broadly, for centuries of plundering its human and natural resources. Who really owes whom?

There is a growing call from organizations in both the North and South for the complete cancellation of Africa's illegitimate debt, without conditionality imposed by creditors. Past and present initiatives at international debt relief are increasingly acknowledged to be inadequate and flawed. The Enhanced HIPC Initiative, and the Cologne Agreement by the leaders of the G-7 countries, are modest advances, but such measures are too little, too late, and too encumbered with inappropriate conditionalities.

Last year, in his speech to representatives from 46 African countries at the "Conference on U.S-Africa Partnership for the 21st Century," President Clinton highlighted new initiatives to provide deeper and faster debt reduction. Again this year, at the National Summit on Africa, President Clinton repeated the emphasis on debt in his speech . His focus on this issue is welcome, but the current frameworks for debt relief are insufficient.

It is past time for Africa's illegitimate debts to be written off. The cancellation of these debts is prerequisite to the continent's development to its full potential in the 21st century.

"Debt cancellation, simple as it sounds, holds the key to Africa's future. All efforts to find out why stabilization or adjustment has not worked, why investment has not resumed, and why the state capacity has been further eroded will fail unless this single but dominant issue -- debt overhang -- is addressed." -Thandika Mkandawire and Charles C. Soludo, authors of "Our Continent, Our Future: African Perspectives on Structural Adjustment." CODESRIA, IDRC, Africa World Press, 1999.