[DEBATE] : More Needed than Debt Cancellation - SA Soc Forum

[Riaz K Tayob]

DEBT CANCELLATION NOT A SOLUTION TO SOUTHERN AFRICAN COUNTRIES PROBLEMS, 
2006-10-15
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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.