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Africa's Debt And The Upcoming G8 Gleneagles Meeting

Angelique van Engelen - 6/28/2005

Massive rallies are planned for the upcoming Gleneagles summit of the G8 early next month. If the current reports of the organizers are anywhere indicative of its success, it is likely that Gleneagles might be rather overcrowded. Aid to Africa is topping the G8 agenda and a proposal drawn up by the British government offering the most detailed debt relief proposition ever is on the table. But protestors want to see action rather than words. They also are largely concerned with Africa proposal's private sector bias, which they argue is a boost to multinational corporations' control, rather than aid to Africa.

Last Sunday, rallies in Spain were a precursor to the happenings in Gleneagles later this month. Over 50,000 people turned out to demand more be done by G8 country leaders to really eradicate poverty. Spain marked the first in a series of global protests. One banner reading "Zero poverty. No excuses. Who owes whom?" captures the essence of what many protesters believe is a question the answer of which lies closer to home than most politicians would like to think.

Almost everyone that's taking to the streets in Gleneagles, and any of the other cities for that matter, agrees that the answer to Africa's debt is simple; debt forgiveness of 100%. It is an opinion that has been heard for decades -the main rationale being that countries crippled by debts are not likely to ever be able to organize their basic services like health care and education- and perhaps the plan that's on the table is a step in the right direction, because it aims for complete debt forgiveness for a number of the world's poorest countries. A total of 15 out of 18 of these so called Heavily Indepted Poor Countries (HIPC) are on the African continent. Even if the nations that are likely to benefit from the proposal drawn up by the British led Committee for Africa, work that started in February last year, are limited, the fact that Africa is on the top of the list of issues the G8 countries' leaders are discussing, is hopeful at least.

In the wake of the Iraq war, government leaders prove to be more malleable than ever on the Africa issue. A sense of guilt -the cost of war against Iraq alone would have gone far (over 75%) to make all the difference- is at the heart of the effort. But the guilt don't stretch far. For one, even if no other G8 countries follows the UK's lead, the proposal will have effected a total debt forgiveness as something that's on international governments' radar screens, rather than only on pressure groups' agendas.

"[The report] is evidence that the G8 leaders are willing to put their political prestige behind debt relief for Africa. That is very encouraging," said Udoma Udo Udoma, a Nigerian senator who led a group of MPs to lobby creditors for relief last month. The Africa Committee's report, which examines the chances to provide some kind of impetus for development in Africa, can -furthermore- be seen as more than just a financial deal to throw dollars and Euros at the continent by the bucket load to relieve guilty consciences as well as poverty in one and the same whimsical fashion. The commission tried to create a framework in which all of Africa's life size issues were addressed together. This means that not only debt relief is something the G8 wishes to work on, but it's also targeting environmental issues. This holistic approach, as well as a perfect invitation for tons of criticism, is also the only possible way in which to address Africa's problems, simply because they are all interrelated. The declining life expectancy rate sums it up. UNCTAD figures dating back to 2002 show that at birth, life expectancy is currently less than 50 years. Both infant mortality and maternal mortality are rising. The main reason is the lack of investment in the health sector. AIDS is the biggest killer on the continent, and medical facilities as well as medical personnel are both in dire need of funds to function.

Pressure groups are not convinced that Africa's real needs are being addressed. "The proof of the Africa Commission’s worth will be in the political will and energy it manages to drum up to turn its recommendations into reality," said a spokesperson for Oxfam, a UK headquartered agency. "It’s now up to world leaders to rise to the challenge, to take long-overdue action and make this a breakthrough year for Africa."

The one thing that´s most clear is that there´s a lot of confusion about the proposed mechanics of aid to Africa at both governmental and non governmental levels. The Africa Committee proposes that some $25 billion worth of aid money needs to be spent extra a year by 2010 to combat poverty effectively, and a further of $25 billion by 2015 to combat Africa´s other problems. Currently, Africa´s total outstanding debt to non African nations and multilateral institutions is $US230 billion. This it will never for a million years be able to pay back, so whatever country is able to pay its interest on this debt, is doing this. Interest servicing annually is $US12 billion for the entire continent. Much of the debt is owed to multilateral organisations, such as the International Monetary Fund and the World Bank, but there is also bilateral debt owed to members of Paris Club and London Club. To put this into perspective, you have to get an idea of just how much debt servicing amounts make up of actual day to day expenditures by African governments. The paralysing factors are most visible in their export numbers. Some 14-15% of the combined poorest African nations' income from exports is going to debt servicing. All the money spent on debt servicing can not be spent on the provision of very often the most basic of public services, like education, public health, transport etc. Highlighting the scale of the problem is the continent's vast population; Sub-Saharan Africa has 11 percent of the world’s population. It's share of world trade is a meagre one percent.

The Jubilee Debt Campaign site (www.jubileedebtcampaign.org.uk), besides offering some clear explanations of both Africa's debt structure deducts from the Africa Committee's report that it's most likely that the Africa Committee had Africa's Heavily Indebted Poor Countries in mind for debt forgiveness. This would mean that only 15 such countries in Africa are going to benefit from any debt forgiveness. There are 18 countries on the HIPC list, yet the number of countries that copes with severe poverty is a lot higher. It is not certain however that no more than the HIPC countries are going to be targeted. JDC says that there are at least 62 low-income countries that need total debt cancellation if they are to stand any chance of meeting the Millennium Development Goals. These goals, which are spelt out on http://ddp-ext.worldbank.org/ext/MDG/homePages.do, were signed by 189 governments include reducing the proportion of people living in poverty by at last half between 1990 and 2015.


The Africa Committee's proposal does not represent that much progress toward achieving Millennium Development Goals, yet it's a step in the right direction compared to what's being done so far. On the current efforts, the Millennium Development Goals will not be met for more than 100 years, say the Jubiliee Debt Campaigners, who calculated that to achieve the goals, at least 62 countries need total debt forgiveness. "These are not notional goals for the total eradication of the poverty gripping much of the world, but were intended as achievable, realistic targets simply for the partial alleviation by 2015 of extreme poverty. The collective response of the richest and most powerful nations in the face of this monumental global failure has, so far, been grotesquely inadequate," the campaigners write on their site.

Also, what's not really clear is what the proposal is on Africa's multilateral debts. Talking after meeting with Britain's Prime Minister a few weeks ago, President Bush referred specifically to debts owed to the World Bank and African Development Bank as being subject to forgiveness. This is very much the line that the G8 governments have been taking. "It is unacceptable to exclude debts owed to the International Monetary Fund (IMF) and other multilateral institutions. Debts to the IMF account for about one third of HIPC debt", the JDC says.

The activists also stress that there's a need for a guarantee that cancellation will come with additional resources to off-set the cost of debt cancellation. Apparently, given the amounts involved, these fees can run up quite a bit and the US has in the past been suggesting they ought to be paid for out of aid budgets. Tony Blair has reiterated however that substantial funding needs to be added.

Other pressure groups' reactions to the actual African proposal vary from extreme to mildly extreme. Many inside and outside pressure groups share the viewpoint that the danger of the report's the corporate sector's input in the continent is an open invitation to further impoverishing the continent and not helping it.

Slagging the deal off as an attempt to impose 'neo-liberal "solutions" on Africa', Corporate Watch, a UK based group, says the deal has been directly influenced by the very corporations responsible for creating poverty and havoc in Africa. "These include Rio Tinto, De Beers, Shell and Anglo American as well as one of Africa's largest companies – UK alcohol multinational Diageo, which just happens to own Gleneagles Hotel where the Summit is taking place", the writers at the site point out.


The input from the private sector for the report was organized by the UK Chancellor Gordon Brown and Reuter's chairman, Niall FitzGerald, who set up Business Contact Group last summer under the heading 'The Contact Group'. According to Corporate Watch, the private sector business group consulted the Commission three times during the drafting. "Its 16 or so corporate members read like a role call of the most exploitative and despised companies currently operating on the continent including Anglo American, Shell, De Beers, Rio Tinto and Diageo.

The way the report aims to organize the aid to Africa is largely by means of public-private partnerships (PPPs) in which the private sector, rather than governments are targeted to build and run major league infrastructure projects like roads but also ports. Even more basic services like water and electricity are not excluded from the intended private sector's involvement under the report's guidelines.

The ins and outs of the conditions stuck on this aid package are, from the outset, less obvious than perhaps the stringent rules involved in other deals. The IMF and World Bank loan packages come on the condition that structural reforms of countries' economies are carried out, yet the Africa Committee has a strong private sector bias, which is strongly criticized not only by pressure groups, but also by other organizations who claim that it is not proven at all that private companies really are more efficient than governmental agencies. Corporate Watch cites a report by the South African Institute of International Affairs which has concluded that the opposite is true from researching PPPs across Africa over the last 15 years. Not only are the private sector companies often not more efficient, they also overprice their services by far and are often subject to complex regimes themselves that are also highly corruptible. Notably, energy and water provisions have been the least successful examples of PPPs, the South African institute claims. What's more these companies are not in the game to help the poor, unlike governmental agencies.


This message is heard too from African leaders themselves, who point at Asia as a region that's testimony that good governance works miracles for economies. The Asian countries, now dubbed 'tiger economies' in many ways were worse off than the African countries in the early last Century and the recipients of more aid than any continent proportionally has ever been. The Asian government's way of dealing with developmental issues has been a case highlighting the merits of structural government led reform, something that emerged as a godgiven truth when the Asian economies started to flourish in the 1990s. African governmental structures are in many cases hardly defined yet the debate is focusing in on their role versus private sector led development. For years, people have been criticising the conditionality of the IMF and World Bank organized efforts, saying the economic reforms imposed by these institutions were hurting ordinary people on the street. Bypassing the governments altogether and having the corporations take center stage, simply might turn out worse effects on the local populations, it is feared. The old-time socialist versus capitalist argument in aiding Africa is the main big difference between governments and pressure groups and African countries, but somehow the help that's coming from Western -thus capitalist- governments, can't be refused simply because there is no alternative to it. The Africa Committee's report once again shows that the main argument that the Western governments are -by dint of their own political leaning- willing to debate, is limited to changes in the way they assist African nations in their liberalization efforts.

One main fear of the proposed Public-Private Partnership structure is that the trade agreements are likely to turn out like the Economic Partnership Agreements (EPAs) already in existence, which are said to be nothing but mere vehicles promoting 'northern' companies at the expense of 'southern' corporations in so called efforts to achieve regional integration. "Such agreements will not respond to the people’s needs and they will open wide the economies of the African [..] countries. This situation will reinforce the unipolarity of the triad – Europe, Japan and United States," one speaker at the the International Experts' Meeting in the European Parliament in Brussels, entitled 'Globalisation and Africa', pointed out a few years ago.

It remains to be seen whether any tangible deal will come off the G8 meeting. People are highly sceptical of G8 meetings, but the protests have made the summit's organizers slightly more aware that their convening is held most accountable of all multilateral events for actually achieving its goals. Governments are slow, pressure groups impatient, but somehow there is a little bit of hope to be derived from the fact that Africa simply tops the agenda this year. The challenge for the outside world is now to put pressure on their governments to actually make good on their promises made in all these summits over the past decades and most of which are totally unfulfilled still. Africa's by now proverbial 'scar', thanks to the words of the UK prime minister, simply won't disappear all by itself. The most 'scarry' pledges that have proven to be just only pledges, include the 2002 Seattle agreement to donate USD6 bn of extra aid to Africa. This simply never happened. Governments stuck to their conventional aid assistence programs without paying heed to their message. Currently, the pressure is on pushing governments to actually invent a time table by which they agree to actually transfer the promised annual aid contribution needed reach the Millennium Goals.

The Africa Committee's draft could be part of the Millennium Goals. But if the past record's indicative of how things go in future, we might do best not to get our hopes up. Aside from Britain itself and the US, the rest of the G8 - France, Germany, Japan, Italy, Canada and Russia - have yet to be persuaded to sign any deal. This looks difficult. Paris, Tokyo and Berlin each have their own debt relief proposals. Even though these only target five African nations, the countries might not immediately be prone to join in the new deal - which goes to show just how limited people´s horizons are on the problematic issue of African poverty. President Bush, after meeting with the British Prime Minister indicated he´s likely to only intensify efforts to help Africans suffering from war, famine and AIDS, but he has remained vague as to exactly how the US is going to step up its efforts. So far, the US is proportionately among the Western nations that offers the most meagre contribution to African poverty. The US has indicated it is interested in wiping off a few extra billions of dollars in international debt, dispatching two key White House officials to the region, and planning to announce more direct aid for Africa as early as next month.

The ever-lacking tangibility of the past few decades' so-called debt forgiveness ventures by Western nations is still likely a feature of this summit. For starters, you cannot break down the Committee for Africa's report down on a country by country basis and point out what's going to be done where. A real decision hasn't been made yet as to which countries to target even. The 650 participants to the G8 meeting are studying the proposal currently. The document, which numbers over 300 pages, which aren't necessarily all that readable by any means.

Speaking of complexities, these are most poignantly reflected, if not magnified, in the anti-globalization movement's own current make up. This might be a reason that the opinions of protestors are generally underreported in the mainstream press. Perhaps the reasons really are more sinister and really to do with press and media structures that -at least in the US- have over the past few years become apparent in the coverage of the Iraq war. Anti globalization participants themselves believe -of course- in a variety of reasons for why their concerns aren't more prevalent in the press. It will be interesting to see what comes out of the coverage of the event in the mainstream press this time around. For the time being, to decide whether or not to be an anti globalizationist, requires some self defining on the part of pressure groups and activist campaign organizations, as well as an effort to understand the other elements of the global anti-globalization movement.

"The [concerns about which way the movement is leaning] are valid. But they should not be used as reasons not to be involved in the "anti-globalization" movement. The new movement represents an important development for the international working class and a massive opportunity for the anarchist movement at dawn of the twenty-first century", describe the anarchic communists at Nefac.com the anti globalization movement. Despite the fact that the movement also harbors right wingers and Islamic fundamentalists, the communists believe that it's more important to seize the day. "...being involved, shaping the movement... this is the best opportunity available today to implanting anarchism within the working class and clawing our way back to our rightful place as a movement of millions, a movement that can help dig capitalism's grave", they say on their website www.nefac.com, a bilingual North American site.

To dissect the anti-globalization movement itself and break it down percentagewise into the worrisome rightwingers, the left wingers, the environmentalists, the religious sects and the neo liberals, is virtually impossible. At the same time, it would not be unimaginable that the international intelligence agency community is highly interested in finding out the score from this July's Scottish convention of the anti globalization movement. A recent mock attack by the CIA of an impressive group of hackers including anti globalizationists, lasting three days and attempting to down its systems, shows that it does assign anti globalizationists a significant future role in state-undermining activities. Even if names are compiled on lists, it is still hard to actually pinpoint the feelings that are alive in the movement on any scale of extremism.

Many global issues have changed during the last three years, mainly as a result of the war against terror, and there's an inherent confusion on all fronts of the political spectrum. Yet for all this 'coming off age' of the left and right and middle ground politics, it's not working out a lot in terms of issues that are really tangible, like Third World poverty and crime rates. Resolving political differences without really making a difference for the issues of poor and rich means that somewhere all of us in the fortunate areas of the world are misleading ourselves, thinking complacent thoughts about our evolution to highly sophisticated people who no longer have any time for silly ideological differences that simply are resolved by an increase in wealth anyways.

Perform a search under Africa and Aid in your Google news browser and you'll see that the word accountability and transparency is consistently top-linked with this phrase. Money going amiss or being transferred to bank accounts overseas has been a major worry for years. It's a known fact that corrupt use of World Bank funds, dating back all the way to 1946, was is estimated late last year at between USD26 billion and USD130 billion. The latter figure is contested by the World Bank itself. Most of the missing aid money however has 'gone missing' in Africa. Efforts are made by the World Bank to combat this. Its website even blacklists series of firms that have been found to be corrupt.

One effective remedy to the corruption could be new or improved accounting rules. In terms of what's being done to combat corruption, it is general knowledge that a lot more is going on than is reported in the press. The Financial Times reported in March last year that a new law in the UK is proving rather effective in combating the crimes. Apparently, a total of 20 allegations have been registered by government agencies since the new law made became effective in February 2002, which makes crimes committed in Africa easier to prosecute in the UK. According to the newspaper, the National Criminal Intelligence Service had been notified of 17 allegations of fraud committed in Africa. Even though only a few were under active investigation, it is an example of how justice can be done in cases like bribery of overseas public officials. The real pressure has yet to mount however, because only a few cases are actually being paid notice to. But it is likely no real change will take place unless a few high-profile cases are investigated. Africa's in need - of its own Enron!