Africa’s Debt Cancellation

Transparency needed, but especially in G-8 plans and aid programs

As the G-8 countries meet in Edinburgh, Scotland, to discuss debt cancellation for Africa there is much buzz in the media and elsewhere on transparency and reform. Speaking on June 13th at a White House ceremony with a number of African leaders present, President Bush said that, “The countries eligible for this relief are those that have put themselves on the path to reform. We believe that by removing a crippling debt burden we’ll help millions of Africans improve their lives and grow their economies.”

At a summit with British Prime Minister Tony Blair a few days earlier, the president remarked that he wanted the money to go to countries with “open economies and open markets.” Blair chimed in, saying that “we require the African leadership also to be prepared to make the commitment on governance against corruption – in favor of democracy, in favor of the rule of law” and that “no developed nation is going to want to support a government that doesn’t take an interest in their people, that doesn’t focus on education and health care.”

While no one, especially Africans themselves would argue in favor of corruption or against democracy, it is important to read between the lines that Bush and Blair are spouting. What does reform really entail for them? What do open markets really mean for sub-Saharan Africans saddled with annual debt repayments of almost $15 billion? What does a focus on education and health care mean in the context of G-8 plans or World Bank programs? And what is one to make of Bush’s explicit concern for protecting the World Bank and the African Development Bank, or Blair’s unequivocal desire to “cancel the debt in such a way that it doesn’t inhibit or disadvantage the international institutions”?

As Africa Action reports, the Heavily Indebted Poor Countries (HIPC) that are the focus of this G-8 debt cancellation drive already had to fulfill various World Bank (WB) and International Monetary Fund (IMF) conditionalities to qualify for HIPC status when the HIPC initiative was launched in 1996. They had to be eligible only for concessional loans from the WB and the IMF; have a debt burden that was “unsustainable” as opposed to “sustainable,” meaning that debt could not be more than 2-2.5 times the value of exports; and that they had to have a track record of WB and IMF-sponsored economic reforms.

These prior conditionalities had limited the scope of this most recent discussion even before it began. What the president and prime minister are demanding amount to additional conditionalities that do not take into account the desires and lived experience of hundreds of millions of Africans affected by a debt that is primarily owed to public rather than private lenders, with almost 40 percent of it held by governments of industrialized countries. Further, these conditionalities severely restrict rather than promote democracy by constraining what African peoples and their elected representatives can do to best promote their own welfare and set their own priorities. And ultimately, these positions are not divorced from northern governments’ interests in opening up African markets to their corporations including agro-business, as G-8 countries continue to push a neo-liberal economic model of free trade and global economic integration.

As Africa Action and others have pointed out, a significant portion of Africa’s debt is “odious debt,” a principle well-established under international law, whereby debt incurred by dictatorships and repressive regimes “for their own benefit or for the purposes of enforcing the dictatorship is ‘odious’, and therefore not the responsibility of the population or of subsequent democratic governments.” Additionally, under this custom it is not just the borrower’s purpose but also the lender’s intent and due diligence that is at issue. As such, many civil society groups in Africa as well as elsewhere demand that this illegitimate debt must be cancelled unconditionally.

For more on the issue of African debt and debt cancellation see http://www.africaaction.org/