Debt Has a Child's Face: Africa overwhelmed Africa has repaid its initial debt many times over in cash terms, losing precious social gains in the process and strapping its economies to the breaking point. Between a quarter and a third of national budgets in sub-Saharan countries (and 40 % in the most heavily indebted poor countries) go to service debt. For the countries enduring the calamitous impact of AIDS, such senseless misdirection of scarce resources is especially cruel. This massive resource shift costs children dearly. In the United Republic of Tanzania, four times more goes to repay debt than to primary education and nine times more than to basic health. Mozambique pays wealthy creditors more than it spends on basic education and health combined. So, too, does Zambia, which currently owes $7.2 billion in debt, five to six times its export earnings. To further deepen the crisis, official development assistance (ODA) is plumbing record lows. The proportion of gross national product (GNP) that industrialized nations devote to assistance now stands at 0.22%, less than a third of the UN target of 0.7%. If it had remained at just 0.33%, its level as recently as 1992, developing countries would be receiving $24 billion more each year. And of the bilateral aid reaching poor countries, about one quarter boomerangs back to donors as debt repayments. In Tanzania, one in every three aid dollars, and in Nicaragua and Zambia, as much as one in every two, is spent in this pointless way, instead of relieving poverty or laying the foundations for future growth. Debt increases dependence on aid, slows growth, inhibits foreign investment, creates instability and soaks up money that could be spent on health, education and other vital services. The debt crisis also cost creditor nations an estimated 6 million jobs in the 1980s, because money that debtor countries could have spent buying products went instead to service debt. A mélange of capitals and countries have given their names to initiatives intended to relieve this debt slavery: London, Lyons, Mauritius, Naples, Toronto, Trinidad. But as far as the poor are concerned, they might all have been launched in never-never land, so meagre have been their results. The approach now being followed is the Heavily Indebted Poor Countries (HIPC) Initiative, designed to help 41 poor countries, 33 of them in Africa. Their child mortality rates are one-third higher — and their maternal mortality rates nearly three times greater — than the average for developing countries. More than a third of their children have not been immunized, and about a half of their people are illiterate. The HIPC Initiative is the best hope yet to reduce all debt to what are supposed to be sustainable levels. But how slowly and grudgingly does it confer its benefits! Only two countries have received relief at the time of writing, despite the extreme urgency of their plight. Countries must pass tough, often inappropriate, criteria to be eligible for the HIPC Initiative, undergoing, for instance, three to six years of harsh structural adjustment programmes that often deepen poverty or widen inequality while failing to promote growth. The Initiative set the debt service to export earnings ratio at 20-25%, although the countries could ill afford the 16% they were paying in 1996. They will thus be no more — and probably less — able to meet the goals set for children than they were before. Little money has actually been provided for this Initiative, which is expected to cost about $12.5 billion, placing the appearance of financial rectitude above any real relief to the poor. How unlikely it is that the funding will materialize might be gauged from the experience of Honduras. Although Honduras was devastated at the end of 1998 by Hurricane Mitch, it has received only a fraction of the help promised by donors to meet $200 million in debt service due this year. In contrast, of course, was the speed with which donors mobilized $100 billion in just a few months to bail out East Asia, where insolvency threatened Western economies! There has been a strong campaign to persuade rich country governments to make the HIPC scheme less rigid and to offer relief more quickly. This year, Canada, Germany, the United Kingdom and United States called for reforms to speed the pace, calling also for debt cancellation for some severely stressed countries. OXFAM similarly has proposed reforms, most notably to give earlier and much deeper relief to debtor countries that wish to devote 85-100% of the savings to programmes to reduce poverty. These would, of course, have to be worked out through collaboration between lenders and borrowers. And a commitment on the part of both borrowers and lenders to protect an indebted country's capacity to deliver basic social services to its people - before any debt repayments are made — is another reform being proposed. Uganda, the first country to get relief, is already educating another 2 million children; Bolivia, the second, is to help fund a national programme to reduce rural poverty. OXFAM calculates that such relief would enable Tanzania to enrol almost all of its children in primary school, Mozambique to double health expenditure and rehabilitate schools and health centres, and Nicaragua to achieve a wide range of objectives, including universal free primary education, improved primary health care for 1.2 million people, and safe water for 600,000 more of its citizens.
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