[DEBATE] : More Needed than Debt Cancellation - SA Soc Forum
Riaz K Tayob
riazt at iafrica.com
Wed Oct 18 07:21:52 BST 2006
DEBT CANCELLATION NOT A SOLUTION TO SOUTHERN AFRICAN COUNTRIES PROBLEMS,
BY WILLIOT BENJAMIN
Participants to the on-going three-day Southern African Social Forum in
Lilongwe, Malawi have said debt cancellation is not a solution in itself
to the problems of development and called for African countries to stop
borrowing from the International Financial Institutions. It was noted
that if countries stopped relying on the IFIs they would crumble as they
make their money through lending.
The gathering observed that the World Bank and International Monetory
Fund ( IMF ) impose crippling conditionalities on borrower governments,
which in turn affects the entire inhabitants of those particular countries.
Father Brian McGarry, chairman for the Zimbabwe Coalition on Debt
Development said that people should not focus only on the money it self
but look forward to the outcomes.
Father MacGarry spoke about Zimbabwe’s debt which he said had ballooned
about ten-fold since independence in 1980. Zimbabwe inherited its debt
from the illegal regime of Ian Smith, around US$40-55 million, which was
also attributable to the fact that Rhodesia, then, had stopped paying
interest on its loans, despite the fact that it was allowed to borrow
although under sanctions from the rest of the world, thus rendering its
debt illegitimate because the lenders should have not engaged an illegal
government. Nevertheless, Zimbabwe had to start repaying these debts
immediately, and although there was a great deal spent on social
spending in the early years of the government, soon the government fell
prey to conditionalities and had to restructure its expenditure around
the conditionalities imposed on it by the IFIs as part of the Structural
Adjustment Programme that it found itself under.
This exarcebated the debt burden and when the Zimbabwe government
stopped making repayments to the IFIs, it found itself under even more
difficult conditions as they could not access any loans as a result of
the signaling role of the IFIs.
Mungutiwa Sitali, the Debt and Trade Project Assistant of Jubilee
Zambia said Zambia is a recent beneficiary of the Multilateral Debt
Relief Initiative (MDRI) announced by the Group of 8 rich countries at
the Gleneagles Meeting in 2005. He said the good news was that its debt
was cancelled, falling from around US$7,4 billion to about US$502
million. The bad news is that a significant number of people are still
poor and unemployed, while because of its new credit-worthy status,
Zambia had already started borrowing fresh funds.
He added that some of Zambia’s debt can be considered illegitimate
because the funds were used to bolster neighbouring nations’ aspirations
to independence and counter the effects of apartheid. Nevertheless, it
appeared the Zambia should look at putting in place strategies that
ensure sustainable contraction and use of loans. He said Zambia would
have to borrow to create growth in its industry for loans to become
sustainable, a point he said other countries should follow.
Moreblessings Chidaushe, Programme Officer at the African Forum and
Network on Debt and Development, AFRODAD, reiterated that as debt
cancellation activists AFRODAD and others have been calling for the
unconditional cancellation of all debts as Africa does not owe and
therefore should not have to pay anyone anything. This call was welcomed
by participants at the discussion on illegitimate debt who agreed that
it was indeed Africa that was owed by the West and that instead of
wasting time auditing how much Africa has already paid, we should be
auditing how much the West should start paying immediately.
Other participants felt it would be necessary to have debt audits so
that Africans are informed exactly how much they have been exploited
through payments of debt alone at the cost of their citizens.
Malawi is also a beneficiary of the MDRI but is also in danger of
falling into a similar fate to that of Zambia. The impact of the debt
cancellation has filtered into the economy and has had a significant
impact in people’s livelihoods. Mabvuto Bamusi, Programmes Director at
Malawi Economic Justice Network (M E J N) said that Malawi as a nation
should really scrutinize conditionalities in the future to ensure that
loans contracted lead to development. “We need to screen their
conditionalities as well as their policies towards development in (our)
countries,” he said.
Bamusi also said parliaments need to play an important role in loan
contraction processes so that loans really benefit the whole nation.
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