Africa: Debt Statements, 3/25/98

Africa: Debt Statements, 3/25/98

Africa: Debt Statements
Date distributed (ymd): 980325
Document reposted by APIC

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Region: Continent-Wide
Issue Areas: +economy/development+ +US policy focus+
Summary Contents:
This posting contains a statement by the Uganda Debt Network, presented to African heads of state meeting with President Clinton this week, and a briefing statement by Oxfam International on President Clinton's trip, highlighting debt and other issues. Additional information on Africa and the need for debt relief/cancellation is available on the Africa Policy Web Site (

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P.O BOX 21509
Tel/Fax. 256-41-223152 or Fax: 256-41-220197
Offices: UCIL House, UMA Showground, Lugogo


To: The African Heads of State and Government of: Congo, Eritrea, Ethiopia, Kenya, Rwanda, Tanzania, Uganda, Zimbabwe, And The OAU Secretary General.

We, the members of Uganda Debt Network, a coalition of Uganda NGOs, Instutions and individuals, welcome the African Heads of State and Government and The OAU Secretary General to the Kampala meeting with President Clinton. The meeting should be used to obtain concrete results that can translate into significant changes in the social and economic development of Sub-Saharan Africa.

The members of the network are concerned that:

* The countries you represent are some of the highly indebted poor countries and have some of the lowest social indicators in the world. This is where 43% of the population of 15 years and above are illiterate. Out of these 52% is female and 33% is male. Although it has a large land mass of 23,628 square kilometres, it is highly dependant on food aid and the region is the most vulnerable to the vagaries of weather.

* The region is home to over 600m people where women, youth and children form the bulk of the population. Life expectancy in this region is a mere 52 years. Over 73% the population live in the rural areas eking out a bare existence. The average national income from the sale of goods and services per person per annum in the region is a mere 481 dollars.

* Sub-Saharan Africa owes a total of US$235 billion. Out of this amount, US$182 billion is a long term debt which is payable over a period more than 10 years. The external debt will only be repaid by sacrificing the health and education of poor people in your countries. This means that poor people in our countries will remain in debt bondage for much of their lifetime.

* Sub-Saharan Africa continues to pay out large amounts in debt service. For instance, while it received US$15 billion in loans in 1996, it paid out US$ 12billion in debt service.

* The large external debt of Sub-Sahara African countries is hampering foreign direct investment, economic growth, employment and is a stumbling block to sustainable development. The external debt burden impedes social development and stifles consumption of poor people.

* The highly indebted poor countries (HIPCs) debt relief initiative sponsored by the World Bank and IMF is not a comprehensive strategy to deal with our external debt burden and will not have impact unless:

(1) The period between the decision and completion point is shortened.

(2) The funds for debt relief are provided to the countries within a shorter period (less than six years) to enable them undertake their social development programs and to improve the quality of life of the people.

(3) The management of the few available resources involves the participation of the ordinary people themselves who are the target for the development programs.

(4) The resources from debt relief are targeted towards poverty eradication, improved health and education of poor people.

* African Heads of State have not shown strong support for the NGO's international campaign for total cancellation of debt of poor countries that would give a new start to the people. The world-wide campaign aims to ensure that creditors write off the massive debt of poor countries in Sub-Saharan Africa which is choking their development.


We therefore appeal to your Excellencies to use this opportunity to:

a) Firmly put your position behind accelerated debt relief for the struggling economies of Sub-Sahara African countries.

b) Urge the US President to give a firm commitment to influence international financial institutions and creditor countries to accelerate debt relief for Sub-Sahara African countries.

c) Obtain President Clinton's support for the Jubilee 2000 International campaign for total cancellation of external debt of Sub-Saharan Africa.

The concerned members are:

CECORE, OXFAM, UWONET, DENIVA, UWESO, ACTIONAID, ACORD, UWFCT Ltd., HURIPEC, VINLAW Ass. LTD., DRT, WORLD VISION, UMWA, DWNRO, EPRC, OSCA, ACFODE, Makerere University Business School, Dept. of Political Science-Makerere University, R. Zedriga, Maude Mugisha, Joseph Okune, MUDDA, MS-Uganda, May Sengendo, Waswa Balunywa, Nuwa Mwesigwa, Zie Gariyo, Mathias Mulumba, Vincent Edoku, Ann Kamya, Lena Komushomo, Stella Kyakuhaire, URDT, NUDIPU.



MARCH 23, 1998

For more information contact: Justin Forsyth, 202.393.5332 <> Lydia Williams, 202.783.7305 <> Graham Saul, 258-1-304674 <>

Trade and private investment are not enough--investing in Africa's people is an essential complement if all Africans are to benefit from these new opportunities. President Clinton must use the considerable influence of the United States to promote partnerships with African governments focused on investment in Africa's greatest resource -- its people, by taking action to;

* provide leadership to end Africa's debt crisis * to reverse the decline in aid to Africa for poverty alleviation * mobilize global action to get all African kids in primary school * measure trade success by impact on African people not just US business

Oxfam welcomes efforts by President Clinton to seek a new relationship with Africa based on greater trade and investment. Greater opportunities for trade and investment are essential to Africa's long-term development. Yet by itself, Clinton's "Partnership for Economic Growth and Opportunity" initiative will yield only modest results in Africa, where roughly half the population live on less than one dollar a day. The initiative must be coupled with bold actions to create an enabling environment in which all Africans can benefit from new opportunities.

Perhaps the biggest obstacle to attracting investment and improving the lives of Africans is the region's massive foreign debt. Yet, in contrast to the vigor with which the U.S. has reacted to the crisis in East Asia, the Clinton Administration has moved too slowly and timidly to deal with the urgency of Africa's debt crisis. If President Clinton wishes for his trip to Africa to be truly historic, he should use it as a platform for generating the political will -- here at home and internationally -- that is necessary to tackle the debt problem and reverse the declining human welfare of most Africans before the next millennium.


Education is the key to poverty reduction

The single most important investment a country can make is in the education of its people. In an increasingly knowledge-intensive global economy, where human resources are of greater importance, access to education is becoming a central determinant of economic growth and poverty. Sadly, half of all African children do not attend primary school and Africa is the only developing region in which school enrollment rates are actually declining. Currently, 44 million African primary school aged children do not go to school; that figure is expected to rise to 59 million by the year 2000. The single most important variable in the different growth rates of East Asia and Sub-Saharan Africa is primary school enrollment. Africa's crisis in education must be addressed now if it is to attract investment and reverse the widening gap between it and the rest of the world.

Massive debts are robbing the future of African children

While African countries face educational decline, their foreign debts continue to mount. Sub-Saharan debts total about $223 billion. Currently, African countries are only able to pay one-half of scheduled payments. And yet, debt service still represents one-fifth of the region's foreign exchange earnings. These debts are a formidable deterrent to private investment, and threaten higher inflation, increased taxation, and access to vital imports necessary for investment.

The costs of these debt payments are borne by the most disadvantaged of Africans. Foreign debt forces poor countries to divert scarce resources away from health, education, and other human resource investments, representing an unacceptable waste of human potential. President Clinton will not have to look far to see the havoc that debt has wrought in the countries he will visit. In Uganda, 800,000 children or one third of all children do not go to school. Yet the government's debt payments are seven times what it spends on primary education.

For less that what is being spent on debt, it would be possible by the year 2000 to make social investments which would save the lives of some 21 million African children and provide primary education to 90 million children.

The US resolve displayed in Asia is sorely lacking in Africa

In September 1996, the United States played a leadership role in pressing for an international agreement on debt - the Highly Indebted Poor Country Initiative (HIPC). This initiative aims to reduce the debt of some of the poorest countries in the world to sustainable levels through bilateral and multilateral creditors such as the World Bank and the IMF acting together.

In sharp contrast to the economic crisis in East Asia, where the US and its allies mobilized $100 billion and bent IMF rules, raising the $7 billion needed to grant relief to roughly 20 countries under HIPC has been fraught by internal squabbles, disputes over eligibility, and outright opposition among some creditors. At the current pace, only three African countries Burkina Faso, Mozambique, and Uganda will receive relief before the year 2000.

While the United States has supported debt relief in concept, its actions during the secretive proceedings of the Paris Club and IMF and World Bank Board meetings have been problematic. The U.S. insistence that countries demonstrate their commitment to strict IMF conditionality before receiving relief has meant costly delays in badly needed relief. In spite of Uganda's exemplary record on economic reform and its pledge to translate debt relief into education for disadvantaged children, the US argued that Uganda should wait a full two years before receiving relief. The U.S. position effectively played into the hands of powerful opponents of relief such as Germany, Italy, and Japan; in the end, Uganda was made to wait one year which resulted in it receiving $193 million less than if it had received immediate relief. A more recent case where the United States leadership was lacking was during negotiations over how to reduce the $5.5 billion debt burden of Mozambique. One of the poorest countries on earth, Mozambique is emerging from a 16 year civil war which destroyed two thirds of its primary schools and a third of its health centers. In order for Mozambique to reach a sustainable level of debt, each bilateral creditor had to agree to forgive 90% of its share of Mozambique's debt. But action was delayed by squabbling within the Paris Club between G7 countries. In stark contrast to the high-level attention to the situation in Indonesia, where were the phone calls to G7 countries who were blocking progress?

In addition to debt relief, bilateral and multilateral aid is also an important means for mobilizing resources for human development. Investments in education and health provide the building blocks for equitable growth and help to attract investment. Poor countries can not rely on market forces to provide these. Well-targeted aid can help to create a secure foundation for equitable growth and poverty reduction. Unfortunately, US aid to Africa has declined by some 25% in recent years, and the "partnership" initiative fails to reverse these trends nor protect aid to the most needy countries, which includes several African countries.


President Clinton's historic trip has the potential to mobilize broad support for reducing poverty in Africa.

We urge Mr. Clinton to use his influence to:

* Provide global leadership to end Africa's debt crisis

The Partnership initiative offers very little new debt relief. Mr. Clinton should pledge to forgive all U.S. bilateral debt to all HIPC countries,and challenge other creditors to follow suit. The U.S. should provide even deeper debt relief for countries committed to a"debt for poverty reduction" contracts which would translate debt relief into human development investments.

* Reverse the decline in aid to Africa for poverty alleviation

President Clinton should work with Congress to reverse the decline in aid to Africa, and to improve its poverty focus. Expanding poor people's accessto health, education, credit, and other productive resources should be a priority. Aid is also vital to helping African countries overcome obstacles (such as high transport costs, limited access to technology, and poor infrastructure) that prevent them from competing in the global economy and from taking full advantage of U.S. trade preferences that already exist.

* Mobilize global action on getting all African kids in school

Mr. Clinton's trip offers an excellent platform for rallying support for achieving the internationally agreed target of universal access to primary education by 2015. President Clinton should work with African leaders to launch a global action plan, committing donors and developing country governments to mobilize the necessary resources through aid, debt relief, World Bank lending, greater national government spending, and protection of education and social expenditures during the economic reform process.

* Measure trade success by impact on African people not just US business.

The success of the Partnership must be based on its ability to help Africa compete in the global economy and to improve the welfare of its people. The initiative should set realistic targets to achieve these goals.

Please see our website for reports on debt and poverty, including: "Debt Relief and Poverty Reduction: New Hope for Uganda", September 1996 "Poor Country Debt Relief: false dawn or new hope for poverty reduction?", April 1997 "Growth with Equity: An Agenda for Poverty Reduction", September 1997

Oxfam is an international aid agency working with grassroots organizations in 120 countries to combat poverty and injustice.


Message-Id: <> From: Date: Wed, 25 Mar 1998 20:27:35 -0500 Subject: Africa: Debt Statements

Editor: Ali B. Ali-Dinar

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