With debt lifted, Africa can rebuild: G-8 leaders implement debt relief strategy for African nations

Black Enterprise, Oct, 2005 by David C. Ruffin

The United States and seven other wealthy industrialized democracies are making good on claims of putting Africa at the top of their priority list for development. Led by British Prime Minister Tony Blair at the Group of 8 summit in Gleneagles, Scotland, in July, heads of state from the U.S., Japan, Germany, France, Italy, Canada, and Russia pledged to double the aid going to Africa to $50 billion by 2010. A month earlier, many of the same nations agreed to cancel at least $40 billion in debt owed by some of the world's poorest nations.

United Nations Secretary-General Kofi Annan was upbeat about the aid pact. "I hope Gleneagles will be remembered as the beginning of something very big, perhaps even the beginning of the end of mass poverty," Annan said in a statement. "We got here through the exercise of political will. That will must not be allowed to disperse if we are to keep on track."

The aid agreement fails short, however, of the goal of committing rich nations to donate 0.7% of their national incomes by 2015. The current U.S. contribution is only 0.16%, the second-lowest percentage of any G-8 country, and the Bush administration's assertions of a dramatic increase in U.S. assistance to Africa have been called into question.

"President George W. Bush's claims of tripling aid to Africa are misleading. The real figure is far less than that," says Rep. Donald Payne (D-N.J.), ranking member of the House Subcommittee on Africa. "Unfortunately, Bush has given no indication of plans to reach the 0.7% goal."

Though limited, the aid agreement was welcomed by African nations, many of which have been ravaged by poverty, war, and disease. For decades, billions of dollars that should have gone to education, healthcare, agriculture, and infrastructure have been diverted to servicing debt. According to the United Nations Conference on Trade and Development, African nations received $540 billion in loans between 1970 and 2002. During the same period, they repaid $550 billion in principal and interest. In 2002, the total debt African nations owed was $295 billion.

The June 11 agreement to cancel 100% of the debt of 18 African and Latin American nations means that their annual debt burden will be eased by $1.5 billion. The 14 African states included in the deal are Benin, Burkina Faso, Ethiopia, Ghana, Madagascar, Mali, Mauritania, Mozambique, Niger, Rwanda, Senegal, Tanzania, Uganda, and Zambia.

Other countries, such as Sudan, Congo, Angola, and Nigeria, were not part of this round of debt relief mostly because they didn't pass the anticorruption and transparent governance criteria required for debt cancellation. Nigeria's $36 billion debt is being considered separately by the Paris Club, an informal group of creditors with 19 permanent member countries, including the U.S. In June, the Paris Club announced it had agreed in principle to a debt treatment that would include some debt reduction. Nigeria, the world's seventh-largest oil producer, is a major source of energy for the U.S; Nigeria and other West African countries provide the U.S. with about 15% of its oil.

"Assisting Africa is not only in the economic interest of the United States, it's the right thing to do," says Payne. "American esteem has declined around the world as a result of its failure to take the lead in helping poor countries."