AFRICANEWS

Africa

Let's free abillion slaves

International Debt

Amidst other problems facing Africa, the debt crisis is now a partinent isssue as the world moves into the next millenium. Often loans have been used for military purposes or for the satisfaction of the rich. Churches are concerned about this crisis, especially as it affects the poor.

What are the Kenyan churches doing in connection with the campaign Jubilee 2000?" One hears this question more and more from visitors who are also committed Christians. Often, Kenyan based church people addressed in such a way do not even understand what is the meaning of the question.

In Europe and North America there is a campaign, led by the churches, for the cancellation of the external debt of the poor countries on the occasion of the year 2000. Title of the campaign varies from the emotionally charged "Let's free a billion slave" to the neutral "Jubilee 2000" but the aim remains the same: the total cancellation of the international debt that is crashing the poorest countries on Earth. It refers to the Biblical concept of Jubilee, whereby every seven years, and especially every 50 years, people are freed from the burdens and injustices that have built over the past, as it expressed in Leviticus 25:10.

Facts and figures, even in the limited form allowed by a newspaper article, are always a powerful aid to understand a particular situation. With the input of some reliable statistics circulated by the World Council of Churches, in a pamphlet for Jubilee Year 2000, it is possible to grasp the dramatic implications of the international debt.

According to the estimates of the International Monetary Fund (IMF), at the end of 1997, the total external debt of developing countries was at about $2,066 billion. In the same year, the same developing countries paid back to the countries and financial institution of the develop world $272 billion. So, each year, the developing countries pay to the west three times more in debt repayments than they receive on aid. Contrary to the usual belief, wealth is not moving from the rich to the poor countries, but from the poor to the rich.

The World Bank identifies two categories of indebted countries: The heavily indebted and the moderately indebted. Forty five countries are considered severely indebted, 28 of them in Africa. Kenya is in the list, together with Angola, Burundi, Cameroon, Central African Republic,Congo, Democratic Republic of Congo (DRC), Equatorial Guinea, Ethiopia, Ghana, Guinea, Guinea-Bissau, Cote d'Ivoire, Liberia, Madagascar, Mali, Mauritania, Mozambique, Niger, Nigeria, Rwanda, Sao Tome' and Principe, Sierra Leone, Somalia, Sudan, Tanzania, Uganda and Zambia.

Other nine African countries are considered moderately indebted, while Botswana, Burkina Faso, Cape Verde, Djibouti, Lesotho, Mauritius, Seychelles and Swaziland are basically debt free. Who is responsible if the external debt crisis in Africa has reach such a critical level?

Creditor government and international lending institutions are responsible. They have pushed poor countries into this situation, when they had huge amounts of money and they needed to lend to keep world economy going. Banks lent to poor countries enormous amounts of money with little or no control over their use. In some cases, it was common knowledge that most of the funds would go back immediately in the Swiss bank accounts of the local "big man". Later, a sharp increase in interest rates aggravated the already fast deteriorating situation. But responsibility does not, of course, rest with creditors alone. African countries have borrowed to excess, failed to adopt sound economic and social policies, ignored the real needs of their people, squandered funds on poorly conceived and corruptly or ineptly administered projects.

Why is international debt a problem?
Almost all countries are indebted but to different degrees. For the poorest, it is a problem because:
Paying interest on debt means that governments have less money to spend on public health, education and other social services such as sanitation, safe water and so on.
In Zambia, for example, the government's spending on education fell from 13.4 per cent in 1985 to 9.1 per cent in 1992. In Mozambique, 33 per cent of public expenditure goes to pay debt servicing, while only 7.9 per cent goes to education and 3.3 per cent to health.

In Uganda, the government spends only $3 per person each year on health, but $20-30 per person on debt repayments to creditors like the World Bank and IMF.

From 1980 to 1992, the Third World countries, after repaying what they owed three times over, far from being less in debt, in fact owed 250 percent more than in 1980.

Debtor countries have to be engaged in the policy; "everything for export at any price" in order to increase their income in hard currency. Devaluation of local currency pushes up prices of basic goods within the debtor countries - cereals, tea, coffee or cocoa - while salaries remain frozen.

The total debt of Sub-Saharan Africa has almost tripled in the period 1980-96, from $85 to $235 billions. From each dollar earned by its population, 0.75 cents are owed as international debt.

Today, every African man, woman and child, even the children newly born as you are reading this article, have an external debt of more than $440. The debt burden makes it very difficult for the poorest countries to attract investments for development. The question asked by Julius Nyerere, former President of Tanzania; "must we starve our children to pay our debts?" should be in the mind of every responsible African leader.
It is not an exaggeration to say that the international debt is like a noose around the neck of the poor countries.

Where did the money behind the international debt of the Third World countries go?
Very little of it went to sound economic and social investment. Most of it was used to build "white elephants", prestige projects with no real impact on development. A fifth of it was spent on arms, often to shore up oppressive regimes. A great amount, difficult to estimate, went to support corruption, and at the end, it was sent back into western banks.

For instance, under the dictatorship of Mobutu Sese Seko, the DRC (then Zaire) contracted an external debt of about $10 billion. Six billion went to build up the personal treasure of the same Mobutu, most of it kept in bank accounts of the western world.

What are the moral arguments for considering the debt, as a whole, to be unjust?
Here are the most common reasons:

• even though there may have been a contract in the beginning, the debt has increased and become more burdensome over time in ways that were unforeseeable when the contract was made. Neither creditors nor debtors foresaw the extent to which developing countries' terms of trade would decline, the severity of the world economic recession in the early 1980s, or the unprecedented rise in interest rates that occurred at the same time. In retrospect, it was unrealistic to expect that the indebted countries could service their large debts no matter what occurred to the world economy, but that is what the original contracts required of them.

• the debt was accrued without participation by or benefit to those - the poor - who suffer most from the austerity measures imposed on their countries to pay it back.

• the debt has been paid already many times over, through the unusually high interest rates.

• most of the renewed borrowing, beyond the initial loans, has been undertaken almost entirely to service the debt, rather than for genuine development.

• a considerable part of the borrowed funds was expended on dangerous and wasteful armaments or on projects and programmes benefiting the elites. In some cases it was simply returned to the industrialised world in the form of foreign investment - what has come to be called flight capital.
  The churches, in particular the Catholic Church, in the last thirty years, have spoken up frequently on this issue. The basic principle is that today, with all the talk on "globalization", we should expand the standards of justice and charity traditionally applied to a single society, to embrace the whole world. A German, a Nigerian, a Brazilian, an Australian should not only be concerned and held responsible for justice and compassion in their own country: Their commitment to justice and compassion should not stop at the national boundaries, but extend to everybody. It is a step difficult to do, but is also a challenge for the Church to give witness to a true brotherhood of all children of God. Maybe for the first time in history there is a chance to feel and be a united human family.

Does debt cancellation mean that those responsible for the past accumulation of debt are given a new chance to make debts? The Vatican document on the international debt question, At the Service of the Human Community, published in 1986, states forcefully that: "The various groups in authority in the developing countries must accept having their actions and any responsibility they may have in their country's indebtedness scrutinised. Negligence in the setting up of suitable structures or abuses in the use of existing ones, tax fraud, corruption, currency speculation, national capital reserve drain, or kick-backs in international contracts... It is too easy to throw back on others responsibility for injustices, if at the same time one does not realise how each one shares in it personally, and how personal conversion is needed first. This applies to the Church as well."

Foreign debt is the most apparent sign of an underlying disorder. Unless the deeper causes are addressed, any solution will be temporary and the debt trap will be set again. We need new structures of participation and accountability, structures which will promote the dignity of each one of us and hold us responsible when we fail.

What can be done by the Churches in Africa?
The international movement Jubilee 2000 is a challenge for the African churches to work together for the cancellation of the international debt of the poorest countries, and to act so that the most marginalised of Africans can benefit from it.

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