SUNS4516 Monday 27 September 1999



Africa: Debt problems on front burner



Mexico City, Sep 23 (IPS/Gumisai Mutume) -- Africa figures high on the agenda at the annual meetings of the World Bank and International Monetary Fund (IMF) in Washington next week and those involved hold a wide disparity of views on what needs to be done to redeem an increasingly impoverished continent.

African governments, living with IMF and World Bank structural adjustment programmes (SAPS) and hoping for further debt reprieves, most certainly will have their begging bowls out as in the past.

On the other hand non-governmental organisations (NGOs) attending a parallel summit in the US capital will be bringing something new to the negotiations: demands for the cancellation of total debt and an end to the so-called Washington Consensus.

The annual meetings of the 182-nation IMF and World Bank are generally seen by African finance ministers as opportunities to lobby governors at the two agencies for extra financing.

The continent has been subjected to SAP's since the 1980s and, between 1987 and 1996 countries south of the Sahara received about $110 billion in IMF loans - a figure equal to the sales of the 50 largest multi-media companies in 1993.

During the same period the region transferred about $100 billion back to the institution in debt and interest servicing. Africa's foreign debt currently amounts to about $260 billion and there is little to show for it.

African civil society groups, convinced of their governments' compliance with Washington have proposed an alternative think- tank, the African Consensus which is calling for an end to this "new form of slavery."

The NGOs position is in stark contrast to that of the African ministers - whom they accuse of auctioning off the continent and being ill-prepared to negotiate from a powerful African position with the Bretton Woods institutions.

Kenyan Finance Minister Chris Okemo summarised the priority of African leaders in Washington this way:

"If I manage to make them (IMF and World Bank) understand our position, I will have succeeded in my mission. If I come back with promises on money, it would be a success for the nation," Okemo told a news conference.

NGOs faulted this method of negotiation.

"African governments don't put enough time and resources into developing collective negotiating positions and strategies for the annual World Bank/IMF meetings, or other similarly influential events," said Salih Booker of the Washington-based think-tank the Council of Foreign Relations.

"Given the number of countries in Africa, collective action is difficult to organize, but that's no excuse for not trying given the severe power imbalance that most individual countries face when trying to negotiate with the international finance institutions," he said.

The dominant assumption of the 1990s has been that alignment with globalisation would guarantee economies more or less uninterrupted growth.

The standard macro-economic prescriptions were liberalisation, privatisation, deregulation, flexibility and a 3% budget deficit, embraced by most of Africa, but that thinking is now in crisis.

Frustrated with the lack of results, NGOs led by Jubilee 2000 recently set up an Africa Consensus Commission "to challenge the Washington Consensus and determine a human path to sustainable development on our continent", even though it is being shot down in some sectors as too idealistic.

It is the Africa Consensus that is taking to Washington the demands for cancellation of African and Third World debt which it says is unsustainable. It also says it will also call on the wealthy nations of the North to stop using debt as a means to enforce structural adjustment policies so as to dominate Africa and the South.

"It will take forward the call for reparations from the IMF, World Bank, other agencies and governments of the North for the damage they have caused in Africa and the South," the group says.

Despite evidence of failure in Africa the Washington Consensus dogmatically promotes free trade, financial liberalisation, deregulation, fiscal austerity, privatisation and flexible labour markets in developing countries.

But even Nelson Mandela's first democratic South African government (1994-99), obedient disciples to IMF and World Bank preaching, suffered at least half a million lost formal-sector jobs during its brief life. Under new president Thabo Mbeki the economy continues to shrink adding to the estimated 50% unemployment rate.

Across the continent the World Bank can only point to three successful structural adjusters including Ghana, Mozambique and Uganda. But it continues to offer top-down solutions to the continent's heavily indebted poor countries (HIPC).

After several years of no relief it became clear that programmes meant to assist HIPCs were insufficient to free Africa from debt bondage. The top industrial countries, the so-called Group of 7, put forward their Cologne initiative in June to accelerate the relief process - keeping the basic policy reform requirements of
SAPs and proposing gold sales to finance it.

"There was no African alternative position put forward, or an attempt to collectively negotiate a reformed HIPC process or to go even further and demand debt cancellation, or even to propose an African moratorium on debt payments," said Booker.

"At the Washington meetings the question of how to finance the Cologne initiative is likely to come up, and I have yet to see an African proposal either on that issue or the larger issue of whether the Cologne initiative is itself adequate."

But it is not as if there are no voices of defiance, muted as they may, observed Patrick Bond of the Campaign Against Neo- Liberalism in South Africa (CANSA).

"From Malaysia to Zimbabwe and to Venezuela, IMF-bashing is back in style - even if the rhetorical flourishes of their leaders have different origins...Self-evidently, the trajectory chosen in these three cases, amounts at best to attempting to join the system, to play by its rules and, having discovered that the game
is set up unfairly, to adjust these rules somewhat in the Third World's favour," Bond said.

More typical of a tamed nationalism was the offhand remark by then South African president Nelson Mandela last year at a gathering of the Southern Common Market (Mercosur) countries that "globalisation is a phenomenon we cannot deny; all we can do is accept it."

The demise of communism has seen the muting of the once defiant calls in Africa during the 1970s for a New International Economic Order. "Most leaders and political parties of Second and Third World societies who at one point carried the aspirations of a mass-popular electorate rapidly reversed allegiance, imposing ineffectual and terribly unpopular structural adjustment programmes," said Bond.

Whether the voice of the NGOs will have any effect on IMF/World Bank policy, however, remained open to debate - both in Washington and elsewhere in the international arena.