Global Policy Forum

Debt the Illegitimate Legacy of Africa's Dictators


By Joyce Mulama

Inter Press Service
January 26, 2007

As the World Social Forum (WSF) draws to a close in the Kenyan capital Thursday, calls on international finance institutions to cancel debts owed to them by poor countries have grown ever louder. Anti-debt campaigners attending the massive civil society forum are demanding 100 percent debt cancellation, stating that the burden not only continues to hurt the economies of the world's poor countries, but most of the debts are "illegitimate".

Even Nobel Peace laureate Wangari Maathai, a WSF guest, added her voice to the campaign. "It is no secret that a number of the loans were given to many dictatorial, unaccountable and irresponsible leaders in Africa and elsewhere, and the money never benefited those that it was meant for," she said, receiving a standing ovation.

"How can you punish the poor citizens, who were never consulted about the loans, which were used to oppress them, strengthen the ruling and cooperating elites, and exploit resources at the expense of the health, environment and welfare of the people? These debts were not only poorly transacted but are illegitimate."

Of great concern is the fact that the debt burden in many poor countries has continued to increase over the years under successive regimes, for example in the Philippines. Joel Virado, a Filipino member of the House of Representatives who was present at the WSF, said his country's debt had increased from 599 million dollars in 1965 to 60.1 billion dollars at present. The current debt is 48 percent of the gross domestic product (GDP).

Debt management, experts say, has shrunk budgets of developing countries. There is not enough money for governments to pay for basic services including education and health. For millions of people in sub-Saharan Africa, home to 64 percent of the world's population with HIV/AIDS, life-prolonging antiretroviral medications are priced way beyond their reach. Debt cancellation has been perceived as key to steering Africa's development, and meeting the eight Millennium Development Goals (MDGs).

According to Moussa Demba, coordinator of the African chapter of Jubilee South, a global alliance of anti-debt movements, sub-Saharan Africa's total debt burden stands at about 210 billion dollars, which is 85 percent of its GDP. He told IPS: "If debts are cancelled, Africa and other poor nations will have more sovereignty to determine their own ways of development, given that conditions that have previously been tied to loans have kept poor nations at the mercy of rich nations." Such conditions have included privatisation, which has devastated national economies.

"Thousands of workers have been retrenched and profit-making and cost recovery has led to hundreds of thousands of people being excluded from services. In addition, expected inflows of foreign direct investment and access to new technology have not materialised," write the authors of a new book, "The State, Privatisation and the Public Sector in South Africa", that was launched at the forum.

Jubilee South estimates that over 60 countries will fail to realise the anti-poverty MDGs by 2015 if their debts are not fully cancelled. Last year, the G8, the group of eight rich nations (United States, Russia, Germany, France, Japan, Britain, Italy and Canada), wrote off the debts of 18 countries, 14 in Africa. The G8 controls the International Monetary Fund and the World Bank. However, global anti-debt campaigns have asserted that this is not enough, demanding that the debt cancellation exercise must cover all poor nations of the world, with a particular focus on illegitimate debt.

"Illegitimate debt is not only about dealing with irresponsible lending of the past, but equally important it is about ensuring more responsible lending in future," noted Nobel laureate Maathai.

This demands a dialogue between rich and poor governments as well as the international finance institutions "to hold themselves against their own proclaimed standards of fairness and justice and see how illegitimate the burden of debt is to the poor," she said.

In Kenya, an initiative to hold the government accountable for irresponsible lending is underway. The Kenya Debt Relief Network (KENDREN), an umbrella body, is attempting to get hold of debt records for scrutiny by a team of experts who will verify how the money was used. The team will also calculate what percentage of the loan has been repaid. According to its coordinator Njuki Githethwa, the campaign also includes a public awareness programme to raise consciousness about the implications of debt. In addition, people will build up pressure through their legislators for a new law calling for the suspension of repayment of Kenya's illegitimate debt.

"It is important to involve the public because they pay the price when it comes to repayment of money that they have not benefited from," Githethwa told IPS. Kenya's total debt burden is about 10 billion dollars. Debt servicing costs about 22 percent of the country's budget. If enacted, the new law will ensure greater transparency in the future. Henceforth, all requests for loans will have to be vetted by parliament.




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