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You are here:Home>>Strategic Research & Analysis>>Stevie C. Chiakwelu>>WHY DEBT CANCELLATION FOR AFRICA?
Thursday, 24 June 2010 21:01

WHY DEBT CANCELLATION FOR AFRICA?

Written by Stevie C. Chiakwelu
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In this continent, the four horsemen of the apocalypse - conquest, conflict, famine and death are no mere visitors. They have taken up residence.
-Martin Wolf (Financial Times)

In view of mismanagement of Africa’s resources and funds; even the looting of her treasury by some of her leaders, it can be said thereof, that corruption has attained an alarming proportion in the continent. In fact, it has eroded the system. It may therefore, sound incredible and laughable when one suggests that time has come for a cancellation or rather a major debt relief to Africa’s enormous foreign debt.
The cost of the foreign debt payments to the African citizens is not a child’s play. The funds that would have been used to upgrade the health care system and quality of education were diverted to debt servicing and payments. African children are paying the price for debt servicing.
These debts are owed to industrialized nations. African governments have been unable to meet up with their financial obligations and have resorted to continuous rescheduling of the loan payments as regulated by International Financial Institutions and their agents, such as IMF, London Club, Paris club, World Bank and others. 
As years progress, so also the burden of the debt widens. However, all the stakeholders fully take cognizance of the fact that these loans seem impossible to be liquidated with ease. 
So many figures have been thrown around, but the most recent data stated that Africa’s foreign debt currently stood at $350 billions. This is outrageous, a gigantic yoke!
To buttress the level of poverty in Africa, out of the 41 nations identified as Heavily Indebted Poor Countries (HIPC) according to World Bank, 33 of those nations are from Africa.
Africa has nothing to show for such an enormous debt but weak and dilapidated infrastructures with a very devastating low human development index.
Below are the intrinsic reasons why AFRIPOL subscribe to debt cancellation for Africa, which must go forward without much ado or conundrum: 

1. Mutual Benefit: Africa and the West can share an affirmative interdependence based on mutual respect and benefit. This can only be possible when the burden of debt is released from African’s shoulder. When Africa is stable, this spells well for democracy and capitalism. This will in return stimulate trade.

2. Global Stability: A healthy and wealthy Africa will contribute to the world stability. Moreover, Africa will have the adequate resources to make impact in resolving conflicts within her continent. This is good for Africa in particular and the world in general.

3. Social Security and Freedom: Actually, the brunt of the debt payments mostly rests on children and women and not on African leaders. Those who absorb the agonizing pains are the poor masses. For them, there is no job; no food; no shelter. The leaders hide under the guise of being incapacitated because of foreign debt payment obligations, to shy away from their responsibilities and they allow the masses to wallow in abject poverty while they themselves live flamboyantly and affluently. Therefore the debt cancellation at least, if judiciously managed will affect the poor positively, when such funds are channeled to areas that will make life worth living. 

4. Non Restrictions on Economic Policies: The truth is that as a result of these foreign debts, the West directly or indirectly dictates Africa’s economic policies. Africa’s economy is import driven. They rely heavily on importation. It is not always economic policies that suit African that matter but those that are favored by the foreign creditors. That is why their policies are tailored to suit foreign debt demands. If debt relief is granted, Africa can now employ policies that will be considered unique to her economic goals.

5. A Clean Slate /Economic Freedom: What Africa desperately needs now is a fresh beginning. For the fact that the debts are cancelled, it will give Africa hope and a sense of belonging. Africa will now put up confidence to bargain for what is good for the continent in the comity of nations without ego problem of being indebted. 

6. Africa’s History: Yes, it is important too. This is not just to be visceral but to be realistic to Africa and again for the sake of history, Africa has suffered untold hardship via slavery and colonialism. This time around, reasonable people can conclude that Africa needs a push.

7. Principal Loan Accomplishment: The actual principal borrowed had been paid. The problem now is the accumulated interest over the years and it is still going up. It is point clear now that Africa has demonstrated concerted commitment to her financial obligations.

8. State of Health Care in Africa: Against all odds, a case must be made for a sound healthcare in Africa. There is no fund to implement Africa Union agenda on health. The cost is beyond the resources and funds at hand. AIDS, Malaria, Polio, Ebola are confronting Africa. This continent needs the funds to aggressively fight back these killer diseases. 

9. Promotion of Democracy: A political paradigm based on fairness and equality with broad-based representatives known as Democracy cannot survive on an empty stomach. Democratic system of government is quite expensive to operate. For democracy to have a true light of the day in Africa, the needed resources must be available.

10. Reinforcement of Economic Capitalism: For Adam Smith’s concept of free enterprise to take hold in Africa, Africans must have good impression of capitalism. These foreign loans servicing and payments do not augur well for capitalism and laissez faire before the suffering masses of Africa. Africa’s weak and dilapidated infrastructures must be developed to international standard. This will enable industrialization and investments to be realized in the continent.

Last modified on Sunday, 18 July 2010 20:51

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