Campaign to Cancel Africa's Debt
Africa's massive external debt burden is the single biggest obstacle
to the continent's development and to the fight against HIV/AIDS. The
over $200 billion that African countries owe to foreign creditors represents
a crippling load that undermines economic and social progress. The All-Africa
Conference of Churches has called this debt "a new form of slavery,
as vicious as the slave trade".
The albatross of illegitimate debt diverts money directly from spending
on health care, education and other important needs. While most people
in Africa live on less than $2 per day, African countries are forced to
spend almost $14 billion each year servicing old, illegitimate debts to
rich country governments and their institutions, the World Bank and the
International Monetary Fund (IMF). Over the past two decades, African
countries have paid out more in debt service to foreign creditors than
they have received in development assistance or in new loans.
Much of Africa's foreign debt is illegitimate in nature, having been incurred
by unrepresentative and despotic regimes, mainly during the era of Cold
War patronage. Loans were made to corrupt leaders who used the money for
their own personal gain, often with the full knowledge and support of
lenders. These loans did not benefit Africa's people. More generally,
many Africans question the notion of an African “debt” to
the U.S. and European countries after centuries of exploitation. They
ask, “Who really owes whom?”
Yet, despite the social and economic costs of this massive outflow of
resources from the world's poorest region, the wealthy creditors of Africa's
debts continue to insist these debts be repaid.
For years, the Heavily Indebted Poor Countries (HIPC) Initiative, a debt
relief framework launched by the World Bank and IMF in 1996, failed to
provide a solution to the debt crisis. Designed by creditors, this initiative
was intended to extract the maximum in debt repayments from poor countries.
It failed even to meet its stated objective of reducing Africa's debt
burden to a “sustainable” level.
In July 2005, following years of civil society campaigns in Africa, the
U.S. and elsewhere, the Group of Eight (G-8) rich countries announced
a deal on debt cancellation for 18 impoverished countries, 14 of which
are in Africa. The World Bank and IMF approved this debt package in September
2005. Separately, the Paris Club of rich country creditors recently finalized
a deal to cancel some of Nigeria's massive external debt, after moves
by the Nigerian parliament to repudiate this debt. In the deal, which
covered $30 billion in debt, Nigeria had to pay 40% of the total, or $12
billion. Those funds would have been more appropriately and justly directed
at reducing poverty and achieving other development goals. Nigeria is
not eligible for debt relief under the HIPC Initiative, and civil society
in that country has long demanded cancellation of Nigeria's odious external
debts.
While the G-8 deal marked a small victory, it still fell short of the
promises of 100% debt cancellation made by G-8 officials in 2004, and
it did not take full effect until July 2006. The deal still leaves the
majority of African countries on “debt row,” required to meet
harmful economic conditions as a condition for future debt relief or cancellation.
Moreover, both the G-8 deal and the Paris Club deal for Nigeria failed
to recognize the illegitimate nature of Africa's debt. African governments
must still spend billions of dollars each year repaying old, illegitimate
debts at the expense of urgent priorities like the HIV/AIDS pandemic.
The U.S. is the single largest shareholder in the World Bank and IMF,
the institutions to which most of Africa's debts are owed. As such, it
holds major influence over the international response to Africa's debt
crisis. An independent audit of these two institutions has revealed that
they can afford to write off Africa's debt completely. Recent IMF reports
have also demonstrated how debt cancellation can be financed primarily
through IMF gold and secondarily from World Bank reserves without harm
to these institutions.
The U.S. should use its power to achieve the cancellation of all of Africa's
debts. Just as the U.S. advocated for the cancellation of Iraq's odious
debts, it should apply the same standard to the illegitimate and odious
debts African countries still have to repay. Debt cancellation is essential
to the continent's efforts to fight HIV/AIDS and poverty, and to regain
its economic independence.
Africa Action condemns the repeated failure
of the U.S. and other wealthy creditors to take sufficient decisive action
on the debt crisis. Our Campaign to Cancel Africa's Debt mobilizes pressure
on the U.S. government to push for 100% unconditional debt cancellation
for all African countries. Please see Africa
Action's statement on what constitutes 100% debt cancellation for
Africa. The statement also highlights the relationship between debt, health,
and HIV/AIDS.
Check out our " Campaign
Updates " for more information on our current initiatives to change
U.S. policy on this issue.
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Campaign to Cancel Africa's Debt
