Magazine article UN Chronicle

Confronting Debt. Including Africa

Magazine article UN Chronicle

Confronting Debt. Including Africa

Article excerpt

"In many African countries there are political obstacles to economic progress as well. ... They boil down to a 'winner-takes-all' attitude to political competition, the control of society's wealth and resources, and to the power of patronage and the prerogatives of office. It is coupled in too many instances with appalling violations of fundamental rights and a readiness to resort to force to resolve disputes or hold on to power. Only Africans can break out of these vicious cycles. I am gratified that so many have chosen to do so ...".

AMONG ALL THE WORLD'S poorest countries, including those in Africa, debt servicing requirements in hard currency prevent adequate investment in education and health or effective response to natural disasters and other emergencies.

REPEATED RESCHEDULING of bilateral debts of such affected countries has not significantly reduced their overall indebtedness.

SUB-SAHARAN AFRICA has the largest proportion of people living below $1 a day. Per capita income growth averaged +1.5% in the 1960s, -1.2% in the 1980s. Today, per capita income is just $500 a year.

AND YET, Mozambique topped the world's GDP growth last year, before its recent devastating floods. Higher commodity prices, of course, were a significant factor. But Mozambique, utterly impoverished and in the grip of an apparently intractable civil war only a few years ago, has taken great strides in many other ways as well. Botswana, ranked second on the list, and several other countries in the region have enjoyed good economic performance and good governance for some time.

EXTRACTIVE INDUSTRIES dominate the region's economy, and resources are being depleted at an alarming rate. Yields of basic food commodities have not increased significantly. Variable rainfall, highly-weathered soils, disease and pests have taken their toll. Inputs like fertilizer are often controlled by State monopolies and are not available to farmers at competitive prices.

AFRICAN PRODUCTIVITY has suffered because economic regimes tend to be tightly controlled and inefficiently managed by the State, resulting in high trade barriers, poor delivery of public services and widespread corruption. The private sector is unable to compete internationally because it lacks access to appropriate technology and information.

THE POOR INFRASTRUCTURE restricts the ability to move goods, so that transportation and shipping costs remain prohibitive. Electrical power consumption per person is the lowest in the world. Africa has 0.4 telephones per 1,000 people, and less than half of 1% of all Africans has used the Internet. A mere 17% of road surfaces is paved.

PRIVATE CAPITAL FLOWS to Africa are a tiny fraction of global flows, and for some countries capital flight is several times their GDP. Total outstanding external debts often exceed the entire gross national product, and it is not unusual for debt servicing requirements to exceed 25% of export earnings.

What We The Peoples Can Do

Ask donor countries and international financial institutions to consider wiping off their books all official debts of heavily indebted poor countries in return for their making demonstrable commitments to poverty reduction.

Encourage Governments, in designing such national programmes, to consult closely with civil society. …

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