Africa: Economy and Debt, 11/19/02

Africa: Economy and Debt, 11/19/02

Africa: Economy and Debt Date distributed (ymd): 021119 Document reposted by Africa Action

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Region: Continent-Wide Issue Areas: +economy/development+ +political/rights+


This posting contains two recent documents (1) a renewed and unambiguous critique of the creditors' HIPC debt initiative, from a meeting in Lusaka, Zambia of African groups working for debt cancellation, and (2) a commentary from Third World Network (TWN) Africa on recent meetings by African leaders on NEPAD (the New Partnership for Africa's Development), and particularly on the African Peer Review Mechanism (APRM). As the TWN-Africa commentary indicates, the clarity of the widely shared NGO position on debt contrasts with a complicated and ambiguous debate among African leaders on the continental position on economic policy questions and "donor" initiatives.

Previous critiques of the HIPC debt initiative can be found at and, in particular, Africa Action's statement of June 2002 at See also and

The official statements referred to in the TWN commentary can be found at:

Economic Commission for Africa


African Union / NEPAD

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10 October 2002


For further information, contact Charity Musamba, Jubilee-Zambia, Lusaka Phone: 260-1-290410; E-mail:; Web:

The IMF-WB sponsored Highly Indebted Poor Countries (HIPC) initiative meant to provide debt relief to developing countries has failed to deliver. Instead HIPC has left many developing countries commiting scarce resources to debt servicing instead of meeting the needs of their people, the majority of whom live in desperate poverty.

This is the conclusion of 44 participants representing eight African countries and several major Jubilee cooperating partners from the North who gathered in Lusaka, Zambia, 8 and 9 October 2002 to address the question, "Will the Current Creditor Arrangements on Debt Make a Difference?"

Our experience of the impact of HIPC answers that question with a resounding NO! HIPC has failed to make a difference primarily because its focus is on economic measures to assure continued debt servicing rather than on social measures to meet the enormous needs of the poor.

Other related reasons for HIPC's failure: debt sustainability estimates are based on unrealistic estimates of economic growth (e.g., increased trade); the conditionalities it imposes are replays of the discredited elements of the Structural Adjustment Programmes (SAP); it lacks an impact assessment of what is actually happening through its implementation; and both the International Financial Institutions (IFIs such as the World Bank and the IMF) and our governments are not practising good accountability regarding priority setting, management, expenditure practices, etc.

We are aware from the recent meetings of the Boards of the World Bank and the IMF in Washington DC that these institutions are not in fact interested in reform of HIPC but simply in increasing the funds available for its implementation. This is not a realistic approach to debt relief that is consistent with their stated objective of meeting the Millennium Development Goals (MDG) of cutting the levels of poverty in half by 2015.

While there are a few HIPC success stories (e.g., increased primary school enrollment, better access to water resources), the fact is that debt relief under HIPC is not benefiting the people as a whole. This can be seen in the many examples we shared from our experiences. We have learned that, contrary to Northern creditors' claims, Uganda is not a "show case" of HIPCs' success, having fallen three times into unsustainable debt levels and now paying almost as much in debt servicing as before HIPC. Similarly, Mozambique has found itself borrowing more since debt relief was offered to it, and 60% of its national budget depends on external credit. Under the HIPC arrangements, Zambia still spends more on debt servicing than on health and education.

An additional major fault we noted in our deliberations was that three heavily indebted African countries facing serious poverty situations - Kenya, South Africa and Zimbabwe - are not included in the HIPC arrangements.

What do we say, then, must be the way forward? We make the following demands:

To the IFIs and creditor countries:

* Be responsible and honest enough to admit that HIPC in its present form is not meeting the objectives for which it was established, namely, to achieve "a robust exit from unsustainable debt."

* Be ready to move to alternative approaches that tie the sustainability of debt to the ability of governments to meet the Millennium Development Goals (MDG) endorsed by the international community.

* Recognise that debt cancellation is in fact the fastest and most effective way of financing poverty eradication programmes.

To our Debt Campaign partners in the North:

* Do not let your governments and your citizenry get distracted from the goal of debt cancellation, since the debt problem has not been solved and is still the major block to sustainable development that enables poverty eradication.

* Push your governments to push the World Bank and IMF on whose Boards they sit to deliver debt cancellation that focuses on debt sustainability based on the achievement of the MDGs.

* Advocate for an independent, fair and transparent arbitration system that ensures just debt solutions that must be accepted by all creditors and debtors.

* Keep close contact with Jubilee partners in the South so that our concerns and issues are effectively represented in your campaigns.

To our African Governments:

* Acknowledge that the current HIPC initiative is not only not sustainable but also is not working to promote the well being of the majority of our people.

* Improve your negotiating capacities in order to move away from reacting to foreign proposals toward setting initiatives to protect our national priorities.

* Put in place transparent, accountable and participative mechanisms to assure that any available debt relief goes to poverty eradication programmes and safeguards against future irresponsible borrowing patterns.

* Be readily open to listen to civil society's experience and analysis so that our national programmes will have true ownership.

To Ourselves, African Jubilee partners:

* Renew our motivations to be involved in this debt cancellation campaign on the basis of our commitment to the poor in our midst.

* Recommit ourselves to a debt cancellation campaign that mobilizes people in the widest sense to demand the justice of debt cancellation.

* Cooperate with each other more effectively with information and resource sharing.

* Demand that our governments put in place transparent, accountable and participative mechanisms to assure that any available debt relief does go to our PRSPs or other poverty eradication programmes.

* Commit ourselves to the hard analysis that demonstrates that the current HIPC arrangements are not adequately working in our countries.

* Pledge ourselves to monitor our fulfillment of our plans, with specific evaluation in six months.

[Countries represented: Kenya, Mozambique, Malawi, Zambia, Zimbabwe, Angola, South Africa, Uganda, South Africa, Belgium, United Kingdom, Brazil.


5 Nov 2002

NEPAD Controversy mocks African finance ministers

By Yao Graham, TWN-Africa (Third World Network - Africa)

[Note: The TWN-Africa web site also has extensive additional critical commentary and documentation on NEPAD and other issues, particularly trade and investment.]

Controversies over the allocation of Canadian NEPAD aid and divisions within the Heads of State Implementation Committee (HSIC) of NEPAD about the African Peer Review Mechanism (APRM) have cast shadows over key conclusions of a conference of Africa's Ministers of Finance, Planning and Economic Development.

The meeting, convened by the UN-Economic Commission for Africa (ECA), was held in Johannesburg late October. It focused on the implementation challenges of the New Partnership for Africa's Development and its final communique strongly endorsed NEPAD including the APRM. It also called for mutual accountability between donors and recipient African countries as part of the transformed partnership envisioned under NEPAD, and a deepening of Africa's integration into global markets, i.e. more trade liberalisation.

On 3rd November, the 5th meeting of the HSIC, hosted in Abuja by Nigerian President Olusegun Obasanjo, eased confusion about the exact scope and nature of the APRM when 12 of the 17 heads of state and government present agreed that its coverage should include political as well as economic governance . The host and South Africa's President Thabo Mbeki were among the consenting 12 but it is clear that many issues on the APRM remain to be settled.

Days before the summit public disagreement within the South African government and speculation about Obasanjo's position brought new focus onto NEPAD's prospects. The controversy started when South Africa's Deputy Foreign Minister Aziz Pahad announced that the APRM would not cover political governance. Mbeki's economic policy adviser and head of the NEPAD secretariat Wiseman Nkuhlu denied Pahad's claim. Mbeki supported Pahad only to be contradicted hours later by Deputy President Jacob Zuma who insisted that political peer review remains a critical part of the APRM and that Pahad must have been misunderstood! Mbeki argued that the APRM would cover only socio-economic matters because NEPAD is a socio-economic programme. Other AU institutions, such as the African Parliament and Commission for People's and Human Rights, have jurisdiction over matters of democracy and human rights. The Finance Ministers' views on the APRM underscored the depth of the confusion.

The final communique said the Ministers 'concur that the basis for the APRM mechanism is the assessment of key features of the capable state, looking at the political (emphasis added), economic, and institutional aspects of governance'. This merely summarised what is repeated in numerous NEPAD documents.

South African commentators, rightly assuming that Mbeki's position is the official one, speculated that the exclusion of political matters from the APRM was the result of a compromise with African leaders such as Nigeria's Olusegun Obasanjo. These rulers were reportedly uncomfortable with political governance being included under it and are also unhappy about the proposed mechanisms of the APRM, including a role for the UN-Economic Commission for Africa (UN-ECA). Whilst very active and prominent in African affairs, primarily because of the weak capacity of the structures of the AU and its predecessor OAU, the ECA is a UN rather than an African body. The ECA is known to be campaigning for a leading role in the management of the APRM. The Finance Ministers meeting underscored the leading role of the ECA in African affairs and particularly in NEPAD processes.

The two-day meeting applauded a number of ECA initiatives including a controversial decision to open a mission in Geneva 'to support African delegations to the WTO' and its work on economic and corporate governance. The respected South African daily Business Day concluded that the gathering leaned towards supporting the ECA's lobbying on the APRM. The Abuja agreement and Obasanjo's strong support for the inclusion of political matters in the APRM has confounded the doubts about his positions, but questions remain about what led to the Pahad-Mbeki announcement.

The resulting confusion about the APRM, not completely cleared by the 5th HSIC meeting confirms a key criticism levelled against NEPAD by many sections of African society- that it was hurriedly put together primarily to satisfy the G-7 powers and was not preceded by adequate discussion within African countries and consultations among their governments. So radical changes to supposedly key principles were announced without clarity on how and why they came to be revised. The confusion over the APRM is highlighting the dangers inherent in the failure of the promoters of the programme to root their continental development vision in a broad based and credible democratic process .

The Finance Ministers conference while agreeing with 'the overall vision for Africa's development as enshrined in NEPAD' made a slight nod in a direction of the programme's critics by calling for better explanation to and understanding by 'all development stakeholders'. A week proved to be long time in the life of NEPAD and within that time the powerful Finance ministers joined the ranks of those in need of better clarification and understanding of NEPAD's high principles by whoever is the ultimate arbiter of these.

The APRM controversy was one of two major developments that framed the Finance Ministers conference mocking some of its conclusions. Commenting on Africa's relations with donor countries the Ministers declared that 'a key feature of NEPAD is the principle of transformed partnerships', including 'a move away from tied aid' with 'mutual accountability'. A fortnight before the conference, revelations in Canada, a key G-7 NEPAD promoter alongside Britain, showed that tied aid is very much alive and the era of mutual accountability is not yet with us. It was disclosed that nearly half of a much-publicised CAN$500m NEPAD support aid package was meant to improve Canada's trade with Africa. A further $100m was earmarked to support Canadian private investment in Africa, compared with a mere $30m for governance and strengthening of civil society projects, a subject supposedly at the heart of Western concerns within NEPAD.

The Canadian media and civil society organisations, especially the Canadian Council for International Co-operation (CCIC) have condemned this corporate welfare policy. Gerry Barr, head of CCIC, noted that the policy is 'treating Canadian profit making as if it were development'. The Canadian government has vigorously defended its action claiming that the funds are being used in a manner that African countries want. Certainly some of the positions in the Finance ministers' Johannesburg communique indicate that they at least may not fundamentally disagree with this claim. The statement vigorously defends a neo-liberal economic vision and calls for the deepening of Africa's integration into the global economy, describing it as a priority for the achievement of NEPAD's goals.

The ministers also declared their faith in private-public partnerships in the social services and also a puzzling belief that 'NEPAD provides a framework to develop common negotiating objectives that would enhance Africa's negotiation power at WTO meetings'. This is puzzling because the negotiating principles adopted by successive meetings of African Ministers of Trade, under the auspices of the AU, reflect a more cautious and critical attitude to liberalisation than is reflected in NEPAD or stated in the Finance Ministers' communique.

A charitable view would be that the divergent trade policy outlook of the Finance Ministers simply reflects one of two things. Either this reflects the traditional difference between the liberalizing impulses of Finance ministries and the more development focused perspective of other ministries or it is simply a continent-level projection of the domestic policy incoherence on trade in many African countries. A less charitable view would be to say that there is a conscious statement of a desire for trade negotiating positions more overtly neo-liberal than those so far taken by Africa's trade negotiators. At the very least however, the positions of the Finance Ministers on the trade policy-NEPAD link has put that issue firmly in the frame.

This commentary from Third World Network Africa was distributed through the Africacanadaforum-l mailing list. For more information on that list see or contact Aziz Fall Coordonnateur / Co-ordinator Africa-Canada Forum / Forum Afrique-Canada, CCIC / CCCI 1 Nicholas, Suite / Bureau 300 Ottawa, Ontario K1N 7B7 Canada; Tel. : (613) 241-7007 x 321, Fax : (613) 241-5302; E-mail / Courriel :


Message-Id: <> From: "Africa Action" <> Date: Tue, 19 Nov 2002 12:24:42 -0500 Subject: Africa: Economy and Debt

Editor: Ali B. Ali-Dinar

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