Many African leaders today impute the desperate economic situations in their countries to the European colonization. Although this may be significantly true, the countries are perpetuators of their situations. During colonization, the European rulers deprived the Africans of their fundamental rights. This in effect rendered the Africans ‘passive’ towards development and by the time the Europeans left, the nations ushered in an era of debt.
Historians argue that Cold War exacerbated the situation and today, for example, independent Africa owes more than $300 billion to IMF, World Bank and foreign creditors. While these countries continue to spend more than $14 billion annually to service these debts, most citizens subsist on $1 a day. Economists observe that these countries spend more finances in payment of debts than in development of their economies. Politics in these nations continue to exasperate the situation resulting into irrepressible levels of poverty and debt.
For the past two decades or so, the IMF, World Bank and the developed economies have sought to alleviate the problem. Unfortunately, in 1996, the IMF and World Bank initiative to assist the heavily indebted countries failed to offset the external debt of these countries. In 2005, the developed countries, which include the G-8 and the U.S., designed a plan to cancel the debts for most of the poorest countries out of which 14 were African.
Despite the attempts, these countries still languish in extreme poverty and high levels of debt. This paper argues that the developed countries should not provide debt relief to the poorest indebted countries in Africa. By illustrating the root cause of the situation in these countries, the paper will disapprove the arguments by most political leaders and in particular the positions by Logie and Rawson.
Developed Countries should not provide debt relief to poor nations
The leadership in African indebted nations is the profound cause of the problem. Although Logie and Rawson argue that debt relief by the IMF, World Bank and the developed countries to these nations could assist in realization of the human rights, it is apparent that the leadership in these countries denies these rights to their own citizens.
Unfortunately, the present African leadership emulates their colonial leaders (Snyder 682). Autocratic leadership characterized the colonial systems in Rwanda until 1994. During these colonial times, Africans had limited rights to freedom, speech and possession. While these features may not be easily evident in the independent African regimes, the governments have concealed and integrated them into their systems.
As such, the African people continue to thrive under ‘colonial leadership’, which scholars refer to neo-colonialism. Under such situations, people feel alienated from the economic development and therefore their contribution to the economy is insignificant. This has resulted into stagnant economies in the African nations.
As per economic view, low production is the extreme result of economic stagnation. Economists posit that low production in these nations which are characterized by high population, results into deficits in the budget of the countries and hence dictating borrowing as the option to these economies. With this kind of leadership, the African countries will continue to experience low production and hence budget deficit.
Is the relief of the debt burden a solution? Debt cancellation for the African nations will just solve the superficial problem but not the root cause of the problem. Instead, the developed, IMF and the World Bank should focus on transforming the leadership in these countries.
Through this way, they will empower the leaders to embrace participative leadership in which people enjoy their rights as human beings and citizens. In effect, people will participate in production resulting into increase in the nation’s output. This would offset the financial deficit in these nations. Resolving the leadership issues in the African countries will improve the governance in the public systems. As a result, the leaders will formulate practical policies for development and therefore they will be able to settle the outstanding debts.
With the biting autocratic leadership, Africa will continue to experience financial deficits and high levels of poverty. In order to overcome these challenges, African nations require active and permanent solutions. The developed countries should play an active role in alleviating poverty and transforming leadership instead of the passive role of debt relief.
Poverty is another cause for high debts in the African nations. While the leaders in these countries live in affluence, common people languish in extreme poverty. In fact, the World Bank estimates that most African people live below one dollar a day. As Roberts asserts poverty results into budget deficit and in order to countervail this effect, the nations borrow money from the developed countries (683).
Since leaders do not seem to seek for permanent solution for poverty alleviation, the condition results into a cycle, which further creates pile of debts in these nations. Providing relief of these debts would not really solve the poverty problem. Nigeria, for example, is one of the African countries characterized by high levels of poverty.
It was among the African countries that benefited from the 2005 plan. The initiative granted Nigeria the relief to pay 40% of its 30 billion US dollars. The country however continues to owe the developed economies billions of dollars in debts. Logie and Rawson observed, “at least one-fifth of the world’s population live in absolute poverty with 70% of them composed of women” (85).
Poor housing, sanitation and incapability to access safe water are features of poverty. Since these countries channel 90% of its income to defrayment of the debts, the issue remains unresolved creating a need to borrow again. This phenomenon is the reason for high debts in Nigeria despite the relief.
From the Nigeria’s example, it is evident that unless these nations fight poverty to the ultimate end, the realization of debt-free economies in Africa and Asia will remain a dream for all the generations. In contrast to Logie and Rawson’s observations, poverty alleviation will grant people their rights but not debt relief.
The alleviation can only be possible through the involvement of the developed countries. By doing so, these nations will be able to pay for their debts rather than being assisted to do it. It will end the cyclic behavior of debt mentioned earlier on. In fact, this would serve as a permanent solution to the financial problem in the African countries.
Economists note that poverty alleviation results into growth in income per capita, thereby resulting into growth of the GDP. GDP growth indicates economic expansion of a country and positions the country in a capacity to pay its debts and cater for all its expenses; therefore, reducing borrowing. It is justifiable that developing countries should not relief these countries of their debts but instead empower them to repay them through poverty alleviation among the citizens.
Power struggle in the poor countries is another cause for their economic situation. Although politicians in the African countries blame the colonial masters like France and Britain for the economic situation in their countries, it is the power struggle, which perpetuate the condition (Moseley 385).
Major economic breakdown in Africa and Asia are results of competition for power. The infamous Rwandan genocide, which resulted into irreversible economic situation, was due to power struggle between the Tutsi and Hutu leaders. The economic breakdown currently experienced in Egypt and other Islamic countries are results of power struggle, among the liberalists and the conservatives.
Historically, borrowing has been the major solution to leverage such economies. Similarly, the continued struggle for power in Africa exposes these countries’ vulnerability for economic breakdown and hence continued practice of borrowing. In struggle for power, the leaders strive to oppress their opponents by any means possible. Such leaders misappropriate the public finances to maintain their positions and power in governance.
Misuse of finances causes huge deficit in the national budget. In order to offset the deficits, the government has to borrow from the developed countries, the World Bank or the IMF. This implies that most of the borrowed finances do not benefit the people but the political elite.
Therefore, by relieving these debts, the developed countries will be servicing the debts of the leaders. In order to ensure these leaders pay for their own debts, the citizens should demand for performance from their governments. The developed countries cannot solve the problems of these countries. It is the citizens and leaders of these countries who can solve their problems. Leaders should learn to resolve their issues peacefully.
Peace provides an environment for investment and economic empowerment for the citizens. Instead of the developed countries offering to relief these debts, they should invest in these nations and hence play an active role in expansion of the economies. Economic expansion means that these nations will be able to pay for their debts. As a result, the economic breakdowns and hence increase in debts in Africa witnessed in most countries in Africa will be outdated.
Debt relief on the other hand will enhance power struggle simply because leaders who depend on borrowed money do not understand the sacrifices involved in economic expansion. In fact, leaders struggle for the powers to enrich themselves from the borrowed money knowing that either the IMF or the World Bank will cancel the debts. In order to avoid this notion and subsequently reduce power struggles in Africa, the developed countries should not provide debt relief to the poorest African countries.
Ethnic violence and inequality are other factors, which justify the arguments against debt relief. The objective of human rights is to achieve economical, political and social equality in these countries. In contrast to Logie and Rawson, debt relief cannot help the poor countries to achieve the said equality.
Ethnic violence instigated by politics in these countries contributes significantly to the increase in debt levels. Therefore, resolving ethnic differences in Africa would largely help these countries to achieve the objects of the human rights. Rwanda continues to experience the economic struggles due to the effects of the 1994 ethnic clashes.
The Jubilee 2000, which aimed at forgiving debts for countries such as Rwanda has not solved any problems (Snyder 684). Conflict resolution experts warn that, debt relief may in fact instigate the inequality in these nations. As long as these divisions exists, some communities remain empowered than others and therefore, debt relief may further enhance these divisions. Therefore, the developed countries should not provide relief for the debts as this might enhance the inequalities and hence instigate ethnic violence.
Although developed countries, the IMF and the World Bank strive to relieve the poorest nations of their debts, it is still evident that the debt levels of these countries continue to grow beyond uncontrollable levels. The important aspect which leaders have not acknowledged is that, developing countries need permanent solutions to their financial problems. Forgiving these nations their debts is not a permanent solution.
In fact, debt relief exposes the developing countries to higher chances of incurring more debts. As a result, developed countries should shift their attention to empowering the leadership in the poor countries instead of expending time in developing initiatives to scrap the outstanding debts.
Empowering leadership shall enable the leaders to embrace principles of transformational leadership and hence develop policies for expansion of the economy. Economic expansion in effect shall enable these countries to not only service their debts but also become independent of the developing countries.
In order to avoid the reversible behavior of debts, these countries should focus on poverty alleviation. Instead of pleading for debt relief, the leaders should empower the citizens as a way of reducing the levels of poverty. Finally, debt relief encourages passivity in the leadership and economy of these nations. Therefore, in order to enhance economic growth, the developing countries should not provide debt relief to these nations. As they put it, the developed countries should train Africans how to fish not giving them the fish.
Logie, Dorothy, and Rawson, Michael. “Poverty and Health: Debt of relief Could Help Achieve Human Rights Objectives.” Health and Human Rights 3.2 (1998):83- 97.
Moseley, William. Taking sides: Clashing views on African Issues. New York: McGraw-Hill Higher Education, 2008.
Snyder, Robert. “Proclaiming Jubilee-For Whom?” Christian Century 2.4 (1999): 682- 684.