WASHINGTON - July 6 - Last year, leaders of the world's economic powers
proclaimed that 2005 would be the "year for Africa" and gathered at the
annual Group of 8 (G8) meetings to create a plan to address the
continent's challenges. Debt cancellation figured prominently on the
agenda, and the G8 leaders crafted a deal to cancel 100% of the debts
owed by 18 countries - 14 in Africa - to the World Bank and
International Monetary Fund (IMF).
This Africa Action statement examines the current reality in Africa's
debt crisis and investigates the results of last year's promises. As the
G8 leaders prepare to convene in St. Petersburg, Russia, it is clear
that Africa's debt crisis is far from resolved, and there is an urgent
need for new action from the G8 on this critical priority.
The Outcome of the G8 Promises
Last year's G8 deal promising to cancel $40 billion in debt owed by
developing countries was met with global acclaim. This deal was the
result of years of activism on the part of civil society in Africa and
throughout the Global South, supported by activists across the U.S. and
beyond. However, this agreement marked only an initial victory on the
path to debt cancellation for Africa, as the past year has made clear.
Once the spotlight dimmed after the G8 meetings in Gleneagles, the World
Bank and IMF initially made attempts to renege on the debt cancellation
commitments, arguing over details of eligibility and seeking to insert
further economic conditions. In addition, Mauritania was dropped from
the deal, due to a dispute over its governing practices. After new
pressure from activists and others, the IMF finally carried out its debt
cancellation in January 2006, releasing $3.3 billion. The World Bank
followed suit this week, on July 1, 2006.
Despite claims of "100% multilateral debt relief," the G8 deal does not
apply to all countries in need of cancellation, nor does it cancel 100%
of the debt for any one country. The 14 African countries considered
eligible under the G8 deal - Benin, Burkina Faso, Cameroon, Ethiopia,
Ghana, Madagascar, Mali, Mozambique, Niger, Rwanda, Senegal, Tanzania,
Uganda, and Zambia - represent only about one-quarter of Africa's 54
countries and a small portion of the African nations in critical need of
A number of the selected African countries have had significant
fractions of their debt cancelled. For example, Uganda will have 79% of
its debt cancelled, and for Mozambique the proportion is 48%. But there
are dozens of other nations that still require debt cancellation to meet
their development goals.
The handful of countries that were eligible for debt cancellation under
the G8 deal must all meet harmful economic conditions established by the
Heavily Indebted Poor Countries (HIPC) initiative. HIPC terms, such as
the forced privatization of public enterprises and the implementation of
unfair trade regulations, undermine the ability of African governments
to look after the welfare for their populations. Only once these
stipulations had been carried out to the satisfaction of the World Bank
and IMF, however, would the countries be said to have reached their
"completion point" qualifying them for debt cancellation.
Nigeria, with its $30 billion debt burden, was one of the many African
countries considered ineligible for inclusion in the G8 deal. Nigeria's
debt was largely incurred during the military and dictatorial regime of
Sani Abacha, and the borrowed funds provided little benefit for the
Nigerian people. In a separate deal reached last year with members of
the Paris Club of major world creditors, which did not recognize the
odious nature of the debt, $18 billion of Nigeria's debt was written
off. In exchange, Nigeria agreed to make a payment of $12 billion. This
substantial sum siphoned money away from other more pressing domestic
concerns, such as addressing extreme poverty in the country.
One year after the G8 announcement of a debt deal, Africa's debt crisis
is far from over. While initial debt cancellation for an initial list of
countries has freed up some funds that will make a difference in
alleviating poverty, improving health systems, and attaining other
development goals, Africa's debt crisis persists and demands new action
from G8 creditors.
What Remains to be Done
In the past, the benefits of debt cancellation have been plainly
demonstrated. In Burundi, elimination of school fees in 2005 allowed an
additional 300,000 children to enroll. In Mozambique, debt relief
allowed the government to provide free immunization to all children.
Culminating with IMF debt cancellation in January 2006, Zambia's debt
burden was reduced from $7.1 billion to $500 million. This drastic
change allowed the government to grant free basic healthcare to its
population, a major step in countering health threats such as HIV/AIDS
and malaria. These examples illustrate the significant leaps that can be
made when African countries are not forced to funnel their resources
away in onerous debt payments.
Despite last year's deal, African countries still owe over $200 billion,
and are still required to pay $14 billion annually in debt service. This
is barely a modest improvement from the $15 billion annual payment that
existed before the G8 deal. Most African countries continue to spend
more on debt repayment than on health and education for their populations.
Under these current trends, most African countries will not be able to
reach the United Nations (UN) Millennium Development Goals by 2015. If
the international community and particularly the G8 nations are serious
about attaining these goals, they must recognize debt cancellation as a
necessary prerequisite and free the resources to achieve these targets.
The international community must also recognize that the bulk of
Africa's debts are illegitimate and odious. Years of creditor
mismanagement of poorly planned projects, and irresponsible lending to
despotic leaders during the Cold War years, have saddled African
populations with huge and harmful debts, which must now be canceled as a
matter of justice.
Africa Action maintains that last year's G8 deal was insufficient on
paper and carried out incompletely in practice. The agreement excluded
the vast majority of African countries and the vast majority of Africa's
debt. It is insufficient to alleviate the burdens sapping the
continent's resources and its ability to face major economic, and social
challenges, especially the HIV/AIDS pandemic. As the G8 assembles once
again, Africa Action exhorts G8 leaders to take new action on the debt
crisis by expanding the debt deal and cutting the harmful conditions.
The leaders of the world's wealthiest countries must now finish what
they started one year ago - the only moral and practical course is to
fully cancel Africa's debt.
This statement is available on the Africa Action website, at