UNIVERSITY OF PENNSYLVANIA - AFRICAN STUDIES CENTER |
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Region: Continent-Wide Issue Areas: +economy/development+ +US policy focus+ Summary Contents: This posting contains a slighly abridged version of the testimony before the Africa Subcommittee of the U.S. House of Representatives by Njoki Njoroge Njehu, Director of the 50 Years is Enough Campaign, at hearings on debt relief for Africa. The full testimony can be found at: http://www.50years.org/update/testimony.html
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April 13, 1999 Testimony by: Njoki Njoroge Njehu, Director
50 Years Is Enough: U.S. Network for Global Economic
Justice
Thank you, Mr. Chairman and members of the Africa Subcommittee.
I'm very pleased and grateful that the question of
the impact of external debt on Africa has become a
subject of genuine concern for U.S. lawmakers.
My name is Njoki Njoroge Njehu, and I am here today
as the Director of 50 Years Is Enough: U.S. Network
for Global Economic Justice, a coalition of over 200
environmental, social justice, anti-poverty, development,
solidarity, and religious organizations in the U.S.
calling for the fundamental transformation of the policies
of the International Monetary Fund -- the IMF -- and
the World Bank. ...
We have called since our founding for the immediate
cancellation of all debt owed the international financial
institutions by the impoverished, most indebted countries,
and for mechanisms to insure that citizens of borrowing
countries are adequately consulted about future loans
taken out in their names. When we call for debt cancellation,
it is in support of the commitment of civil society
organizations in indebted countries to ensure that
the benefits of debt relief are reinvested in education,
health, housing, food security, clean water, hospitals,
and other basic needs of life and to implement mechanisms
that guard against debt reoccurring.
I am also here as an activist and as an African woman,
as someone who has seen her people ravaged by the effects
of debt and the policies forced on indebted countries.
I am a Kenyan, from a family of moderate means, a family,
like most African families, whose well-being depends
on agriculture and family-level production. My experience
as an environmentalist in Kenya, my observations of
how Kenya has changed for the worse over the last 20
years, and my understanding of the policies that continue
to destroy lives, livelihoods, communities, countries,
and entire continents led me to take up the cause of
debt cancellation. The devastation, the experiences
of millions of poor and working debt-ravaged peoples,
and the desire for the basic needs of life (food security,
shelter, water, education, health services) energized
many people to fight for a change from the economic
policies that the experts at places like the IMF and
World Bank have designed for countries like Kenya and
large parts of Asia, Latin America, and the Caribbean.
In addition to my position as director of the U.S. 50
Years Is Enough Network, I am very involved with the
international Jubilee 2000 movement. Jubilee 2000,
echoing the Biblical call for periodic renewal of the
land, release of slaves, and forgiveness of debts,
has over 40 national coalitions (over a dozen of them
in African countries) calling for the cancellation
of the unpayable debts of the impoverished countries
by the millennium. I am an elected member of the Executive
Committee and sit on the Steering Committee of Jubilee
2000/USA. I am also a member of the Jubilee 2000 Afrika
Campaign in the U.S. ... I am heartened that we are
here today addressing African debt -- a very significant
component of the debt issue.
I believe that it is because of the momentum of the
international Jubilee 2000 movement that Chancellor
Schroeder of Germany and Prime Minister Blair of the
U.K. led G-7 countries by putting forth initiatives
for debt relief that go beyond what the international
financial institutions have yet devised. President
Clinton, in March during the African Trade Ministers
meeting, announced a debt relief proposal. I hope that
the U.S. Congress, recognizing this momentum, and the
justice and necessity that underlie the call for debt
cancellation, will urge President Clinton to take a
more substantial debt initiative to the Summit of the
G-7 heads of state this June in Cologne, where Mr.
Schroeder has indicated that the issue will be a prominent
part of the agenda.
Why do I believe that debt is the key to beginning to
productively address the problem of global poverty
and inequity? Why do I believe that the term "debt
crisis" is fully applicable today to Africa and
other parts of the world? And why do I believe that
cancellation of those debts is the reasonable solution
to the crisis?
* Because sub-Saharan Africa (excluding South Africa,
with its anomalous history and unusual level of industrialization)
owes $203 billion, which is three times the annual
value of its exports.
* Because in sub-Saharan Africa the GNP per capita is
$308 but the per capita external debt is higher, at
$365.
* Because debt servicing accounts for about 20% of Africa's
export income.
* Because our governments in sub-Saharan Africa spend
four times more on interest payments than on health
care.
* Because from 1990 to 1995, the 33 African countries
officially classified as heavily-indebted and poor
experienced forest loss 50% greater than that in better-off
countries. Those 33 countries' forest loss was 140%
greater than the world average during the same period.
...
* Because Zambia can spend $37 million on primary education
in the same year that it devotes $1.3 billion to debt
payments.
* Because the persisting huge debts are a major disincentive
to productive investment in the region.
* Because in 1996 Africa paid $2.5 billion more in debt
servicing than it got in new long- term loans and credits.
So much for the idea that the North is pouring money
into basket case, corrupt countries.
But diversion of resources is only one reason many people
call this a crisis. Just as significant are the policies
that African countries have to adopt because of their
debts.
These debts accumulated for various reasons: interest
rate hikes, borrowing sprees in the 1970s when loans
were readily available and aggressively marketed by
private banks, poor advice from Northern economists,
corrupt and undemocratic governments that misdirected
funds, failed infrastructure projects, economic mismanagement,
war and famines. No matter who or what is to blame
in any given country -- and who will argue that lenders
giving money to dictators like Mobutu in the 1980s,
banks pushing cheap loans with little attention to
long-term repayment prospects, or financing from institutions
like the World Bank that admit that over a third of
their projects are "failures" should share
in the blame? -- the answer has always been the same.
Not annulment or debt reduction, but austerity programs.
Austerity programs for the world's impoverished people.
And make no mistake: in any given country, the people
hit hardest by austerity programs adopted because of
debt problems are the most vulnerable people -- the
people who benefitted least from the original loans.
Surely the easy talk of taking responsibility for your
decisions, of short-term pain for long-term gain, of
tightening your belts a little bit more a little bit
longer, should begin to sound suspicious after 20 years
of the same economic prescriptions ... These austerity
programs have not only hit the most impoverished people,
but they have been failures in economic terms as well.
Even the World Bank's optimistic projections suggest
it will take until 2006 merely to return to 1982 (pre-structural
adjustment) levels of per capita income in sub-Saharan
Africa.
We're more than suspicious in Africa -- we're exhausted.
We need someone in the North to recognize that these
economist-emperors coming to our countries are arriving
with no clothes on. Africans know it, but they're working
16 hours a day to scratch out a living. As Coumba Toure,
a colleague from Mali said in a visit here a few weeks
ago, we can learn and educate others, but at a certain
point the power to change system just isn't ours. Today
I'm talking to some people who do have some real power
to start to make a change.
The austerity policies I'm talking about the IMF and
World Bank economists imposing on Africa are called
structural adjustment programs (SAPs), and SAPPED us
they have. ... Since 1979 or so, as countries have
fallen into such debt that they can't get loans from
anywhere else, they have to turn to these multilateral
public institutions, which demand adherence to the
austerity programs in exchange for sending capital
in. As Harvard economist Jeffrey Sachs explained at
a Congressional briefing on the IMF last week, in sub-Saharan
Africa, the IMF operates as a "proconsular force
[...] it runs these countries. The sad part is it runs
them very poorly." Debt and structural adjustment
programs are really two sides of the same coin: debt
brings on structural adjustment, which creates more
debt, which brings on more structural adjustment, which
creates more debt, . . . And the countries like Kenya
which have had to get on this treadmill are many --
close to 90 countries, most of which have agreed to
several programs. There have been some refinements
over the decades, but the main ideas, and most of the
details, have really changed very little: emphasize
export production over food security, lay off public
sector employees, slash public spending (such as health
and education), raise taxes, raise interest rates (thus
putting credit out of reach of small farmers and businesses),
open up economies to foreign corporations, end subsidies,
and end support of local manufacturers.
This recipe has failed. Over 17 years, sub-Saharan Africa's
total debt has risen 350% (from $58 billion to $203
billion over the period 1980-1996). Sub-Saharan African
countries with ESAF programs experienced an average
annual .3% decline in real per capita incomes over
the period of IMF adjustment from 1991-1995. Poverty
has increased to the point where half of Africa's people
will fall below the official poverty line in 2000.
Even when the statistics show short-term growth we
have to ask what this growth is. The statistics don't
reflect the distribution of the growth: when I look
around Africa, around Kenya, it's clear that it's not
the poor whose economy is growing, nor the middle class;
it's the rich and the foreign corporations who get
the benefits of any statistical growth.
I know that employees of the IMF and World Bank, the
institutions that design these policies and are empowered
by the international financial and political community
to impose them in Africa and elsewhere around the world
-- including in East Asia over the last two years,
where the higher level of scrutiny has finally exposed
them to the criticism and controversy they deserve
-- will say that many governments haven't been diligent
enough in applying their prescriptions, that they need
to try a little harder, a little longer, and make sure
their governments agree to the policies, take "ownership"
of them and enforce them wholeheartedly. ...
Today I'm talking to legislators, and I'm glad to be
doing so. I know you understand that there's no such
thing as economic policy that stands apart from politics.
Yet the economists at the IMF and World Bank insist
they don't get involved in politics. But in Africa
we live in societies, in worlds with politics, just
like you. Our governments and politicians have just
as hard a time selling mass layoffs, price increases
for basic foods, high interest rates, loss of protection
for industry, cuts in education and health spending,
as you would here. But they do it -- the undemocratic
governments more easily than the democratic ones --
they all have to do it. Because they can't get any
capital any other way. Pressure from suffering populations
means the application of these brutal austerity programs
isn't always as wholehearted as the international financial
institutions would like, but maybe they need to consider
that asking even remotely democratic governments to
constantly implement draconian economic policies is
not feasible in a political world. These structural
adjustment programs are killing children, denying opportunities
to whole generations, and crippling democracy in Africa.
...
I know politics is the art of the possible, and I'm
often told by colleagues here in Washington that I
have to adjust my ideals to practical realities. But
look at the practical realities my fellow Africans
are dealing with every day of their lives, year in,
year out. Cuts in health spending mean, says UNICEF,
that 35,000 children around the world, nearly half
of them African, continue to die every day from curable
and preventable diseases. Cuts in food subsidies and
turning fertile lands over to production of flowers
or cotton or coffee for export mean millions more children
suffering from malnutrition and dying from starvation.
When I was a young girl growing up near Nairobi, Kenyatta
Hospital was the pride of East and Central Africa --
a sophisticated regional center of care like, say,
the Washington Hospital Center. When I visited my aunt
there in 1997, she was sharing a bed with another patient.
Most wards have no beds because of lack of resources,
and all the beds had two people in them. Guards used
to check visitors to prevent them from bringing food
in from the outside; now the guards are gone and if
you don't bring food your relatives simply won't eat.
My aunt was lucky that the dollars I brought with me
could buy the medications she was prescribed, and which
we had to purchase elsewhere and bring back to the
hospital for the nurse to administer. Not everyone
has relatives in the U.S., or can get to Kenyatta,
the best public hospital in Kenya -- which is far from
being one of the poorest African countries. In 1981,
there were ten thousand people for every doctor in
Kenya; by 1994 that ratio had gone up to nearly 22,000
people for every doctor. In Uganda, just to our west,
there were 661 people for every hospital bed in 1981,
while in 1994 there were 1,092 for every bed. In Ghana,
a country often touted as an example of how structural
adjustment can work, the percentage of infants with
low birth weight has gone from 5% in 1988 to 17% in
the period of 1992-1995.
On that same trip in 1997, I was saddened to read in
one edition of the newspaper that people were starving
to death in eastern Kenya from the effects of drought,
while tons of cotton were rotting in storage in western
Kenya due to lack of transportation. I was devastated
by the irony of a nation that could not feed its most
vulnerable, but was raising non-food cash crops in
order to earn foreign currency to service its debt
-- and even then couldn't maintain its transportation
systems to get that cash.
Perhaps the answer is not as easy as western Kenya growing
maize, millet, beans, and cassava so that people in
eastern Kenya never starve to death. But perhaps it
should be that easy. We know that structural adjustment
programs have not worked in 18 years for over 80 countries,
since poverty just continues to increase. And we know
that the debt burden continues to crush the hopes and
dreams of entire generations. We know that the more
countries pay, the more they seem to owe. So perhaps
Africa's march into the 21st century will not begin
with hooking African villages to the Internet, as Mr.
Clinton suggested in Uganda, but with the meeting of
everyday needs -- food, water, health care, shelter,
a clean environment, and basic education for all. ...
That march to the future will only truly begin when
the multilateral financial institutions and powerful
countries like the U.S. get serious about debt relief.
And that debt relief must be de-linked and disassociated
from structural adjustment.
The unnecessary ironies like the one I found in the
Kenyan newspaper, these tragic ironies, are a result
of debts that have grown while the programs meant to
remedy them have thrown countries deeper into debt,
exposing them to more pressure to adopt the same sorts
of policies and so acquire more debt. It is the impoverished
people in the world's most impoverished continent who
are paying the price, life by life and generation by
generation. You have the power we in Africa don't --
to make the officials of the international financial
institutions, and of your own Treasury Department,
which has been complicit in designing these programs,
explain why they insist on doing this to Africa. ...
Let me also address the ostensible debt relief program
of the IMF and World Bank. It's called the HIPC Initiative
-- the acronym stands for Heavily Indebted Poor Countries.
To qualify for its meager rewards, a country must adhere
to several years of IMF-approved structural adjustment
programs. This means, essentially, that in order for
these institutions to do anything to allow countries
to devote more of their resources to their people,
they must first prove that they're willing to starve
those same people of credit, education, food security,
health care, and the democratic right to have a voice
in their governments' policies. As former Tanzanian
President Mwalimu Julius Nyerere has said, African
mothers and fathers are asked to starve their children
to pay the debt. The 50 Years Is Enough Network believes
that HIPC is less a debt relief program than a cynical
scheme to entice countries to commit to more structural
adjustment when they have few other incentives to do
so. ...
This is not debt relief, but public relations for the
World Bank and IMF, and more debt blackmail for Africa.
And the debt proposals being offered by President Clinton
and other G-7 leaders still rely on the HIPC framework
- debt relief linked to structural adjustment. They
may talk about reducing the time spent in IMF programs,
but with rhetorical loopholes it looks like more of
the same: countries are still on the debt treadmill.
And now under the guise of debt relief the IMF is asking
permission from its stockholder countries to sell a
portion of its gold stocks. The majority of that money
would actually go not to debt relief, but to allow
the IMF's ESAF fund to become self-sustaining. This
would put the IMF permanently in the development arena
and remove this program from Congressional oversight
that comes with periodic authorization.
A year ago, while in South Africa during his African
tour, President Clinton said that he would be looking
into debt because everyone was talking to him about
it. I believe what happened was that Mr. Clinton, in
visiting African countries, meeting and talking to
Africans, got a real glimpse and somewhat understands
the impact of debt in ordinary people's lives. No matter
how hard or long they work, debt is strangling them,
crushing them, and debilitating them. President Clinton
got to experience a reality which could never have
been conveyed by a policy briefing, a newspaper story,
or a TV documentary. As he danced with schoolchildren
in Uganda, he might have been touched by the great
level of hope and determination and the realization
that they don't stand a chance of achieving their dreams
in the current circumstances. ...
Only cancellation can revive hope in Africa. We cannot
see our future sold out to more sadistic IMF programs
and debt reschedulings and manipulations. Together
we can bring about a true new beginning in Africa by
joining the momentum of the international Jubilee 2000
movement: a debt-free start for the millennium. As
Members of the United States House of Representatives
you have the power. Please support the cry of African
peoples, end the suffering: "Cancel the Debt!
Break the Chains of Debt!"
Njoki Njoroge Njehu Director, 50 Years Is Enough Network
1247 E Street, SE Washington, DC 20003 Phone: 202/IMF-BANK
or 202/544-9355 Fax: 202/544-9359 Email: wb50years@igc.org
Webpage: http://www.50years.org
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From: apic@igc.org Subject: Africa: Debt Cancellation Testimony Date distributed (ymd): 990429
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Editor: Ali B. Ali-Dinar
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