African Debt

[macalimuu]

from DATA.ORG

 

-------

 

Every year Sub-Saharan Africa, the poorest region of the world, spends $14.5 billion dollars repaying debts to the world’s rich countries and international institutions such as the World Bank and International Monetary Fund. Many countries in Africa spend more each year on debt than on health care or education. Why? Decades worth of loans have been given without much thought to how countries could pay them back. Some of the loans went to prop up bad governments or military regimes that are now long gone. Some of the loans were wasted by the governments that received them. Some were given by rich countries in ways that served their own self-interest.

 

Whatever the reason, today the poorest countries are saddled with debts they have to pay back at the expense of their own people. Many democratically elected governments are stuck with the debts racked up by the dictators that ruled before them. Skyrocketing interest rates and bad economic policies have multiplied these old debts over and over again. Nigeria, for example, originally borrowed $5 billion worth of debt from foreign governments and institutions; it has already paid back $16 billion and still owes $32 billion.

 

Over the past few years, thanks to the efforts of those who contributed to the international Jubilee 2000 movement for debt relief, politicians have begun to respond to the debt crisis. In 1999, the richest countries promised to make sure that $100 billion of poor countries debt would be written off through the World Bank and International Monetary Fund’s Highly Indebted Poor Countries (HIPC) program. So far, 23 African countries have qualified for some relief and have received approximately $25 billion in long term debt relief. As a result, these countries paid almost $1 billion less on debt in 2002 than they did in 1998.

 

The money is being put to good use. For example, Uganda — the first country to benefit from debt relief — used money freed up by debt cancellation to double primary school enrollment and invest in their national HIV/AIDS plan which has contributed to Uganda’s successful reversal of HIV infection rates. Mozambique’s debt relief has enabled the government to immunize a half million children. Tanzania eliminated fees for grade school, and Benin eliminated school fees in rural areas, allowing thousands of children to attend classes for the first time.

 

Nevertheless, huge debts remain and Africa still owes rich countries almost $300 billion. Debt relief so far has resulted in the amounts African countries pay on their debt each year being cut on average by just one third. This is partly because some countries, including the US, UK, France and Germany, are canceling all the debt owed by these countries, but other nations and creditors like the World Bank and International Monetary Fund are not.

 

WHAT MUST HAPPEN

 

 

Africa’s poorest nations need much deeper debt cancellation, starting with those which have already pledged to use the money to fight poverty. Canceling all their debts would cost each citizen of the richest countries approximately $1.70 per person per year.

 

 

We need to ensure that no impoverished African country is spending more on old debts to the richest nations than on the health, education and welfare of its people.