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Africa: Economy and Debt
Africa: Economy and Debt
Date distributed (ymd): 021119
Document reposted by Africa Action
Africa Policy Electronic Distribution List: an information
service provided by AFRICA ACTION (incorporating the Africa
Policy Information Center, The Africa Fund, and the American
Committee on Africa). Find more information for action for
Africa at http://www.africaaction.org
+++++++++++++++++++++Document Profile+++++++++++++++++++++
Region: Continent-Wide
Issue Areas: +economy/development+ +political/rights+
SUMMARY CONTENTS:
This posting contains two recent documents (1) a renewed and
unambiguous critique of the creditors' HIPC debt initiative, from
a meeting in Lusaka, Zambia of African groups working for debt
cancellation, and (2) a commentary from Third World Network (TWN)
Africa on recent meetings by African leaders on NEPAD (the New
Partnership for Africa's Development), and particularly on the
African Peer Review Mechanism (APRM). As the TWN-Africa commentary
indicates, the clarity of the widely shared NGO position on debt
contrasts with a complicated and ambiguous debate among African
leaders on the continental position on economic policy questions
and "donor" initiatives.
Previous critiques of the HIPC debt initiative can be found at
http://www.africaaction.org/action/debt.htm and, in particular,
Africa Action's statement of June 2002 at
http://www.africaaction.org/action/hipc0206.htm
See also
http://www.africafocus.org/docs02/hipc0209.php>
and
http://www.africafocus.org/docs02/dbt0209b.php>
The official statements referred to in the TWN commentary can be
found at:
Economic Commission for Africa
http://www.uneca.org/conferenceofministers
and
African Union / NEPAD
http://www.au2002.gov.za/docs/releases/nepadhsic5.html
+++++++++++++++++end profile++++++++++++++++++++++++++++++
Jubilee-Zambia
PRESS RELEASE
10 October 2002
HIPC HAS NOT DELIVERED
For further information, contact
Charity Musamba, Jubilee-Zambia, Lusaka
Phone: 260-1-290410; E-mail: [email protected];
Web:
http://www.jctr.org.zm/jubilee-zambia.htm
The IMF-WB sponsored Highly Indebted Poor Countries (HIPC)
initiative meant to provide debt relief to developing countries has
failed to deliver. Instead HIPC has left many developing countries
commiting scarce resources to debt servicing instead of meeting the
needs of their people, the majority of whom live in desperate
poverty.
This is the conclusion of 44 participants representing eight
African countries and several major Jubilee cooperating partners
from the North who gathered in Lusaka, Zambia, 8 and 9 October 2002
to address the question, "Will the Current Creditor Arrangements on
Debt Make a Difference?"
Our experience of the impact of HIPC answers that question with a
resounding NO! HIPC has failed to make a difference primarily
because its focus is on economic measures to assure continued debt
servicing rather than on social measures to meet the enormous needs
of the poor.
Other related reasons for HIPC's failure: debt sustainability
estimates are based on unrealistic estimates of economic growth
(e.g., increased trade); the conditionalities it imposes are
replays of the discredited elements of the Structural Adjustment
Programmes (SAP); it lacks an impact assessment of what is actually
happening through its implementation; and both the International
Financial Institutions (IFIs such as the World Bank and the IMF)
and our governments are not practising good accountability
regarding priority setting, management, expenditure practices, etc.
We are aware from the recent meetings of the Boards of the World
Bank and the IMF in Washington DC that these institutions are not
in fact interested in reform of HIPC but simply in increasing the
funds available for its implementation. This is not a realistic
approach to debt relief that is consistent with their stated
objective of meeting the Millennium Development Goals (MDG) of
cutting the levels of poverty in half by 2015.
While there are a few HIPC success stories (e.g., increased primary
school enrollment, better access to water resources), the fact is
that debt relief under HIPC is not benefiting the people as a
whole. This can be seen in the many examples we shared from our
experiences. We have learned that, contrary to Northern creditors'
claims, Uganda is not a "show case" of HIPCs' success, having
fallen three times into unsustainable debt levels and now paying
almost as much in debt servicing as before HIPC. Similarly,
Mozambique has found itself borrowing more since debt relief was
offered to it, and 60% of its national budget depends on external
credit. Under the HIPC arrangements, Zambia still spends more on
debt servicing than on health and education.
An additional major fault we noted in our deliberations was that
three heavily indebted African countries facing serious poverty
situations - Kenya, South Africa and Zimbabwe - are not included in
the HIPC arrangements.
What do we say, then, must be the way forward? We make the
following demands:
To the IFIs and creditor countries:
- Be responsible and honest enough to admit that HIPC in its
present form is not meeting the objectives for which it was
established, namely, to achieve "a robust exit from unsustainable
debt."N
- Be ready to move to alternative approaches that tie the
sustainability of debt to the ability of governments to meet the
Millennium Development Goals (MDG) endorsed by the international
community
- Recognise that debt cancellation is in fact the fastest and most
effective way of financing poverty eradication programmes.
To our Debt Campaign partners in the North:
- Do not let your governments and your citizenry get distracted
from the goal of debt cancellation, since the debt problem has not
been solved and is still the major block to sustainable development
that enables poverty eradication.
- Push your governments to push the World Bank and IMF on whose
Boards they sit to deliver debt cancellation that focuses on debt
sustainability based on the achievement of the MDGs.
- Advocate for an independent, fair and transparent arbitration
system that ensures just debt solutions that must be accepted by
all creditors and debtors.
- Keep close contact with Jubilee partners in the South so that our
concerns and issues are effectively represented in your campaigns.
To our African Governments:
- Acknowledge that the current HIPC initiative is not only not
sustainable but also is not working to promote the well being of
the majority of our people.
- Improve your negotiating capacities in order to move away from
reacting to foreign proposals toward setting initiatives to protect
our national priorities.
- Put in place transparent, accountable and participative
mechanisms to assure that any available debt relief goes to poverty
eradication programmes and safeguards against future irresponsible
borrowing patterns.
- Be readily open to listen to civil society's experience and
analysis so that our national programmes will have true ownership.
To Ourselves, African Jubilee partners:
- Renew our motivations to be involved in this debt cancellation
campaign on the basis of our commitment to the poor in our midst.
- Recommit ourselves to a debt cancellation campaign that mobilizes
people in the widest sense to demand the justice of debt
cancellation.
- Cooperate with each other more effectively with information and
resource sharing.
- Demand that our governments put in place transparent, accountable
and participative mechanisms to assure that any available debt
relief does go to our PRSPs or other poverty eradication
programmes.
- Commit ourselves to the hard analysis that demonstrates that the
current HIPC arrangements are not adequately working in our
countries.
- Pledge ourselves to monitor our fulfillment of our plans, with
specific evaluation in six months.
[Countries represented: Kenya, Mozambique, Malawi, Zambia,
Zimbabwe, Angola, South Africa, Uganda, South Africa, Belgium,
United Kingdom, Brazil.
5 Nov 2002
NEPAD Controversy mocks African finance ministers
By Yao Graham, TWN-Africa (Third World Network - Africa)
http://twnafrica.org
[Note: The TWN-Africa web site also has extensive additional
critical commentary and documentation on NEPAD and other issues,
particularly trade and investment.]
Controversies over the allocation of Canadian NEPAD aid and
divisions within the Heads of State Implementation Committee (HSIC)
of NEPAD about the African Peer Review Mechanism (APRM) have cast
shadows over key conclusions of a conference of Africa's Ministers
of Finance, Planning and Economic Development.
The meeting, convened by the UN-Economic Commission for Africa
(ECA), was held in Johannesburg late October. It focused on the
implementation challenges of the New Partnership for Africa's
Development and its final communique strongly endorsed NEPAD
including the APRM. It also called for mutual accountability
between donors and recipient African countries as part of the
transformed partnership envisioned under NEPAD, and a deepening of
Africa's integration into global markets, i.e. more trade
liberalisation.
On 3rd November, the 5th meeting of the HSIC, hosted in Abuja by
Nigerian President Olusegun Obasanjo, eased confusion about the
exact scope and nature of the APRM when 12 of the 17 heads of state
and government present agreed that its coverage should include
political as well as economic governance . The host and South
Africa's President Thabo Mbeki were among the consenting 12 but it
is clear that many issues on the APRM remain to be settled.
Days before the summit public disagreement within the South African
government and speculation about Obasanjo's position brought new
focus onto NEPAD's prospects. The controversy started when South
Africa's Deputy Foreign Minister Aziz Pahad announced that the APRM
would not cover political governance. Mbeki's economic policy
adviser and head of the NEPAD secretariat Wiseman Nkuhlu denied
Pahad's claim. Mbeki supported Pahad only to be contradicted hours
later by Deputy President Jacob Zuma who insisted that political
peer review remains a critical part of the APRM and that Pahad must
have been misunderstood! Mbeki argued that the APRM would cover
only socio-economic matters because NEPAD is a socio-economic
programme. Other AU institutions, such as the African Parliament
and Commission for People's and Human Rights, have jurisdiction
over matters of democracy and human rights. The Finance Ministers'
views on the APRM underscored the depth of the confusion.
The final communique said the Ministers 'concur that the basis for
the APRM mechanism is the assessment of key features of the capable
state, looking at the political (emphasis added), economic, and
institutional aspects of governance'. This merely summarised what
is repeated in numerous NEPAD documents.
South African commentators, rightly assuming that Mbeki's position
is the official one, speculated that the exclusion of political
matters from the APRM was the result of a compromise with African
leaders such as Nigeria's Olusegun Obasanjo. These rulers were
reportedly uncomfortable with political governance being included
under it and are also unhappy about the proposed mechanisms of the
APRM, including a role for the UN-Economic Commission for Africa
(UN-ECA). Whilst very active and prominent in African affairs,
primarily because of the weak capacity of the structures of the AU
and its predecessor OAU, the ECA is a UN rather than an African
body. The ECA is known to be campaigning for a leading role in the
management of the APRM. The Finance Ministers meeting underscored
the leading role of the ECA in African affairs and particularly in
NEPAD processes.
The two-day meeting applauded a number of ECA initiatives including
a controversial decision to open a mission in Geneva 'to support
African delegations to the WTO' and its work on economic and
corporate governance. The respected South African daily Business
Day concluded that the gathering leaned towards supporting the
ECA's lobbying on the APRM. The Abuja agreement and Obasanjo's
strong support for the inclusion of political matters in the APRM
has confounded the doubts about his positions, but questions remain
about what led to the Pahad-Mbeki announcement.
The resulting confusion about the APRM, not completely cleared by
the 5th HSIC meeting confirms a key criticism levelled against
NEPAD by many sections of African society- that it was hurriedly
put together primarily to satisfy the G-7 powers and was not
preceded by adequate discussion within African countries and
consultations among their governments. So radical changes to
supposedly key principles were announced without clarity on how and
why they came to be revised. The confusion over the APRM is
highlighting the dangers inherent in the failure of the promoters
of the programme to root their continental development vision in a
broad based and credible democratic process .
The Finance Ministers conference while agreeing with 'the overall
vision for Africa's development as enshrined in NEPAD' made a
slight nod in a direction of the programme's critics by calling for
better explanation to and understanding by 'all development
stakeholders'. A week proved to be long time in the life of NEPAD
and within that time the powerful Finance ministers joined the
ranks of those in need of better clarification and understanding of
NEPAD's high principles by whoever is the ultimate arbiter of
these.
The APRM controversy was one of two major developments that framed
the Finance Ministers conference mocking some of its conclusions.
Commenting on Africa's relations with donor countries the Ministers
declared that 'a key feature of NEPAD is the principle of
transformed partnerships', including 'a move away from tied aid'
with 'mutual accountability'. A fortnight before the conference,
revelations in Canada, a key G-7 NEPAD promoter alongside Britain,
showed that tied aid is very much alive and the era of mutual
accountability is not yet with us. It was disclosed that nearly
half of a much-publicised CAN$500m NEPAD support aid package was
meant to improve Canada's trade with Africa. A further $100m was
earmarked to support Canadian private investment in Africa,
compared with a mere $30m for governance and strengthening of civil
society projects, a subject supposedly at the heart of Western
concerns within NEPAD.
The Canadian media and civil society organisations, especially the
Canadian Council for International Co-operation (CCIC) have
condemned this corporate welfare policy. Gerry Barr, head of CCIC,
noted that the policy is 'treating Canadian profit making as if it
were development'. The Canadian government has vigorously defended
its action claiming that the funds are being used in a manner that
African countries want. Certainly some of the positions in the
Finance ministers' Johannesburg communique indicate that they at
least may not fundamentally disagree with this claim. The statement
vigorously defends a neo-liberal economic vision and calls for the
deepening of Africa's integration into the global economy,
describing it as a priority for the achievement of NEPAD's goals.
The ministers also declared their faith in private-public
partnerships in the social services and also a puzzling belief that
'NEPAD provides a framework to develop common negotiating
objectives that would enhance Africa's negotiation power at WTO
meetings'. This is puzzling because the negotiating principles
adopted by successive meetings of African Ministers of Trade, under
the auspices of the AU, reflect a more cautious and critical
attitude to liberalisation than is reflected in NEPAD or stated in
the Finance Ministers' communique.
A charitable view would be that the divergent trade policy outlook
of the Finance Ministers simply reflects one of two things. Either
this reflects the traditional difference between the liberalizing
impulses of Finance ministries and the more development focused
perspective of other ministries or it is simply a continent-level
projection of the domestic policy incoherence on trade in many
African countries. A less charitable view would be to say that
there is a conscious statement of a desire for trade negotiating
positions more overtly neo-liberal than those so far taken by
Africa's trade negotiators. At the very least however, the
positions of the Finance Ministers on the trade policy-NEPAD link
has put that issue firmly in the frame.
This commentary from Third World Network Africa was distributed
through the Africacanadaforum-l mailing list. For more information
on that list see
http://list.web.net/lists/listinfo/africacanadaforum-l or contact
Aziz Fall Coordonnateur / Co-ordinator Africa-Canada Forum / Forum
Afrique-Canada, CCIC / CCCI 1 Nicholas, Suite / Bureau 300 Ottawa,
Ontario K1N 7B7 Canada; Tel. : (613) 241-7007 x 321, Fax : (613)
241-5302; E-mail / Courriel : [email protected]
This material is being reposted for wider distribution by
Africa Action (incorporating the Africa Policy Information
Center, The Africa Fund, and the American Committee on Africa).
Africa Action's information services provide accessible
information and analysis in order to promote U.S. and
international policies toward Africa that advance economic,
political and social justice and the full spectrum of human rights.
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