"Debt Relief for Africa": Congressional Testimony (fwd)

[Robert Weissman <rob@essential.org>]

Testimony from our good friend Njoki Njoroge Njehu of the 50 Years is
Enough Campaign:

Africa Subcommittee of the House International Relations Committee
Hearing on "Debt Relief for Africa"

April 13, 1999
Testimony by:
Njoki Njoroge Njehû, 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 Njehû, 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.  Since our inception in 1994, on the
occasion of the 50th anniversary of the founding of these institutions, we
have identified debt -- the massive, wholly unpayable external debt burdens
of the impoverished countries of Africa, Latin America, the Caribbean, and
Asia -- as the most important root cause of the perpetual poverty, failed
economic policies, and environmental devastation that afflict people
throughout the so-called "Third World."  

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 pleased to report that the
Jubilee 2000 movement has great momentum and includes a call to people of
conscience in Northern countries to act.  To act by asserting their
responsibility for ending the moral outrage of continuing to demand that
the world's poorest people pay the world's richest countries and
institutions some $47 billion every year for loans that have manifestly
failed to develop their countries and lift them out of poverty.  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.  And as Kenyan
environmentalist Professor Wangarî Maathai has observed, the Sahara is now
spreading north because it is being created in every backyard. 
	• 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, after 20 years of the expert economists
from the IMF and the World Bank saying they are coming in to help our
economies recover from our debt problems.  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 Touré, 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.  SAPs are administered through the Enhanced Structural
Adjustment Facility (ESAF), the IMF's lending facility for poor countries.
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.  Twenty years of
belt-tightening.  As Mr. Sachs noted last week, once a country is bankrupt,
it's very hard to recover, and the evidence is that 20 years after coming
under IMF control, the countries of sub-Saharan Africa are still bankrupt
and still under IMF control.  

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.  And make no mistake: these fiscal remedies, which
have worked nowhere in Africa, are built on a foundation of debt.

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.  The march to the 21st century must begin by
thinking and providing the basics of life.  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.  Colleagues of mine who met with
Treasury Department officials in the wake of Hurricane Mitch's devastation
of Central America reported being told -- how directly I don't know -- that
the U.S. government was reluctant to countenance either bilateral or
multilateral debt cancellation for Honduras and Nicaragua, not because it
needs the money, but because it wants to maintain leverage over these
countries' economic policies.  Of course many of us have long suspected
that this was the motive in the case of Africa's debt too, for the amounts
themselves aren't large at all in terms of the global economy, but seldom
do officials explicitly acknowledge such a motivation.  I would like you,
however, to ask if leverage over Africa's economic policies is a
motivation, and if so, what is being gained with that leverage?  And is it
worth the continued buildup of debt, the growing poverty levels, the
increased burdens on African women, the millions of children who die each
year before age five from malnutrition and starvation and from preventable
and curable diseases, the cuts in wages for those not laid off, the
suffering that afflicts the African continent and its peoples and leads,
quite arguably, to the civil wars that keep plaguing the region.

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.  We feel this is borne out by the
experiences of two of the first beneficiaries:  Uganda, which is now,
according to Clare Short, the U.K.'s Development Minister, back to where it
was before it became the first HIPC graduate in April of 1998 -- this after
the World Bank rescheduled the benefits so that Uganda's debt payments
wouldn't actually be greater as a result of HIPC; and Mozambique, which
will see its annual debt servicing reduced from $111 million to $100
million . . . if it complies with an IMF demand to quintuple the fees that
people must pay for health care.  Mozambique spends over 6% of GDP on debt
servicing, it is estimated that turning half of that to health and
education would each year halve child and maternal mortality saving the
lives of 115,000 children and 6000 mothers giving birth.

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
it 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.  Perhaps "the man from
Hope" saw and knew there was very little hope, if any, for most of Africa's
children.  How can African schoolchildren have any hope for their future
when so many of them die young (17% before the of five) and their
educational opportunities are reduced each year:  by the IMF's own
admission in African countries with ESAF programs, per capita education
spending actually declined by 0.7% annually between 1986 and 1996.
				
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!"

To contact 50 Years:

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