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----- Original Message -----
From: <apic@igc.org>
To: <apic@igc.org>
Sent: Thursday, April 29, 1999 11:21 PM
Subject: Africa: Debt Cancellation Testimony
> Africa: Debt Cancellation Testimony
> Date distributed (ymd): 990429
> Document reposted by APIC
>
> +++++++++++++++++++++Document Profile+++++++++++++++++++++
>
> Region: Continent-Wide
> Issue Areas: +economy/development+ +US policy focus+
> Summary Contents:
> This posting contains a slighly abridged version of the
> testimony before the Africa Subcommittee of the U.S. House of
> Representatives by Njoki Njoroge Njehu, Director of the 50
> Years is Enough Campaign, at hearings on debt relief for
> Africa. The full testimony can be found at:
> http://www.50years.org/update/testimony.html
>
> +++++++++++++++++end profile++++++++++++++++++++++++++++++
>
> April 13, 1999
> Testimony by:
> Njoki Njoroge Njehu, 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 Njehu, 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.
> ...
>
> 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 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. ...
>
> * 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 ... 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 Toure, 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. ...
> 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. ...
>
> 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. ...
>
> 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. ... 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. ...
>
> 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. ...
>
> 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 its 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. ...
>
> 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!"
>
> Njoki Njoroge Njehu Director, 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
>
> ************************************************************
> This material is being reposted for wider distribution by the
> Africa Policy Information Center (APIC). APIC's primary
> objective is to widen the policy debate in the United States
> around African issues and the U.S. role in Africa, by
> concentrating on providing accessible policy-relevant
> information and analysis usable by a wide range of groups and
> individuals.
>
> Africa Policy Information Center, 110 Maryland Ave. NE, #509,
> Washington, DC 20002. Phone: 202-546-7961. Fax: 202-546-1545.
> E-mail: apic@igc.apc.org.
> ************************************************************
>
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