Why Creditors should...
Why Creditors Should Cancel All of Africa’s Foreign Debt
Aklog Birara (Dr.)
Part II of III
This commentary is the second of a series setting the background on Africa’s foreign debt. In graduate school at the School of Advanced International Studies (SAIS) of the Johns Hopkins University where the emphasis was on political economy and regional studies, I used to argue with my distinguished professors that Africa’s abject poverty was a function of untold oppression, suffering, theft and robbery by European colonialism, outright racism and the colonialists’ divisive schemes and institutions that persist to this day.
The policy, structural and institutional hurdles of the transatlantic slave trade that enriched Europeans, North American Whites and Latin American Hispanics and that kept Blacks trapped in a cycle of perpetual poverty remain intact. The ugly face of institutional racism in the United States is now wide open; and has been aggravated by COVID-19. One would have thought rightly that, by this time in the 21st century, African-Americans, Black immigrants, Indians and other Asians and Hispanics who contribute to the richness of American society would no longer face racism and or marginalization.
Africa is home to one of the world’s largest youthful populations. Given a conducive policy and political environment, I am convinced that this human capital has enormous potential to transform Africa’s economy; and to make abject history a story of Africa’s past. Among the requisite transformative ingredients is to shed the outdated development paradigm of development that caters to political elites and to global capital. Africans need to embrace a development model that caters to community, humanity, human worth, equity and sustainability. Africa cannot afford to adhere to the opposite development model.
I remember attending high school in Pennsylvania, college in Indiana and graduate school in Washington D.C, all in the midst of liberal of scholarships from the generous people of the United States, that there were two powerful civil rights movements and ideologies on two sides of the Atlantic: the one led by Dr. Martin Luther King in the USA and the other in Africa championed by Pan-Africanists such as Kwame Nkrumah, Julius Nyerere, Patrice Lumumba, Amilcar Cabral and others. Cabral understood best the corrosive and oppressive nature of colonialism, imperialism and racism. He said this: “The colonists usually say that it was they who brought us into history: today we show that this is not so.” I never for once accepted the value-added of the colonialist narrative of “a civilizing mission and role” in Africa or anywhere else. I understood its exploitative nature though.
Major colonial powers that divided Africa among themselves like a piece of merchandise, notably, Belgium, France, Great Britain, Holland, Portugal, Spain and the late comer to the conquest, Fascist Italy and earlier Turkey under the Ottoman empire as well as imperial Japan and Nazi Germany have all participated in massive brutalities, killings, dehumanization and subjugations of hundreds of millions of peoples; and in the exploitation of minerals and other natural resources, in the marginalization of indigenous peoples and their communities most
notably in Africa, Asia, the Caribbean and other places. These conquerors and colonizers created artificial boundaries in many countries in Africa. They planted the seeds of ethnic and religious divisions that remain hurdles to this day. They inflicted psychological scars that still need healing. They robbed artifacts and took them to their homelands. They deliberately and systematically degraded local and indigenous creativity, innovation and institutions.
In the case of the massive slave trade, there has not been repentance for dehumanization, degradation and for crimes against humanity. Despite huge efforts among African-Americans, the demand for reparation has not come to fruition.
I shall always remember Walter Rodney’s classic book, “How Europe Underdeveloped Africa” in which he says “Many guilty consciences have been created by the slave trade. Europeans know that they carried on the slave trade, and Africans are aware that the trade would have been impossible if certain Africans did not cooperate with slave ships. To ease their guilty consciences, Europeans try to throw the major responsibility for the slave trade on to the Africans. One major author on the slave trade (appropriately titled Sins of Our Fathers) explained how many white people urged him to state that the trade was the responsibility of African chiefs, and that Europeans merely turned up to buy captives- as though without European demand there would have been captives sitting on the beach by the millions! Issues… can be correctly approached only after understanding that Europe became the center of a world-wide system and that it was European capitalism which set slavery and the Atlantic slave trade in motion.” This mindset of blaming the oppressed is preserved and prompted.
The slave trade paved the way for the outright annexations of lands and the exploitation of Africa’s minerals such as gem stones, diamonds, gold, copper, high value industrial commodities that contributed immensely to European, North American other Western country rapid manufacturing and industrialization. Trade relations between Africa and Europe reflected Europe’s dominance and Africa’s dependence, governance that needs overhauling.
“From the beginning, Europe assumed the power to make decisions within the international trading system. An excellent illustration of that is the fact that the so-called international law which governed the conduct of nations on the high seas was nothing else but European law. Africans did not participate in its making, and in many instances, African people were simply the victims, for the law recognized them only as transportable merchandise. …. Above all, European decision-making power was exercised in selecting what Africa should export – in accordance with European needs.” This too needs overhaling.
Things have changed dramatically since then. This is because African nations have alternatives to trade their commodities and to import what they need, for example, from non-traditional sources such as China and India. Despite this alternative that allows African nations to make hard choices, sustainable growth and development in Africa is still weak and uncertainty looms large, especially when unexpected and cataclysmic events such as COVID-19 occur.
If we flip the situation though, COVID-19 offers African nations to ask the hard and inevitable question of whether or it is not time for African nations to translate Pan-Africanism into a concrete set of new narratives and projects that would bring substantial socioeconomic
resiliency for Africans as a whole. The Organization of African Unity (the OAU) has already evolved into the next phase of Pan-Africanism, namely, into the African Union (AU) that Nkrumah, Nyerere and Haile Selassie had hoped for. Today, this Pan-African organization acts as the sole representative and collective voice for Africans. If scaled-up, I suggest that the AU will have greater weight, leverage and potential impact in global governance than individual nations. In order to win and to compete, Africa needs to abandon national fragmentation.
As a collective body, the AU can, for example: • Demand that Africa’s huge debt burden should are cancelled; • Refuse to accept colonial agreements on trades and tariffs; and claim market access;
• Demand that colonial Agreements, for example, the one on the inequitable, unjust and unfair Nile River Agreement of 1959 that Egypt and its backers support should be determined only by Stakeholders, including African riparian nations;
• Negotiate for fair trade for Africa’s immense resources including minerals;
• Demand that developed nations stop polluting Africa’s rich soil and refrain degrading the environment as a precondition for investing in Africa;
• Demand that external powers stop proxy wars and pitting one ethnic or religious group against another, displacing indigenous groups from their lands when and if they invest in any African nation; and sanction them if they do not abide by guidelines that the AU can and should issue;
• Demand that European, Middle Eastern, North American nations and China stop dehumanizing and mistreating African students and or migrant workers; and sanction discriminatory treatment of all Africans;
• Urge wealthy nations to keep Africa in mind in the development and fair and effective distribution of a vaccine or vaccines to combat COVID-19; and them to invite representatives from the AU so that Africa is not left out from access when such a vaccine is discovered and approved for use; and,
• Demand that nations that are identified as hiding places of the billions of dollars stolen from and taken out of Africa through illicit transactions cooperate with African nations so that stolen monies are returned to the rightful nation.
These suggestions might sound wishful. It will not be if and when the AU determines to be bold and innovative enough and spearheads transformation that will lead to the formalization of an African Economic Union (AEU) similar to that of the European Union (AU). The AU must recognize by now that scale does matter for Africa’s survival and prosperity.
You may rightfully ask “Why worry about Africa at all?”
Africa is no longer the “Dark Continent” depicted in Tarzan like movies. It is an emerging and dynamic continent with more than 1 billion people. By all accounts, it is a developmental frontier. It has potential to contribute to the global common good in multiple ways.
This emerging African development is now adversely impacted by the pandemic. Africa has to deal with the same and common enemy, the pandemic that afflicts the rest of the globe. As I urged in this commentary, each African nation cannot do it alone. The global economy faces a depression type recession. This affects the entire Africa.
Africa, especially Sub-Saharan Africa, does not possess the monetary and financial resources and the health infrastructural to deal with COVID-19.
Below are four economic variables that affect all African countries:
1. Commodity prices such as petroleum and gas, copper and cocoa, coffee and others have declined significantly.
2. Income from tourism that accounts for 5-10 percent of GDP in Cape Verde, Egypt, Ethiopia, Kenya, Morocco, Rwanda, Seychelles, South Africa and Tunisia respectively, employing in excess of 1 million Africans has virtually stopped.
3. Remittances constitute 5 percent of Africa’s GDP. According to a 2018 study by Brookings, Africa received a staggering $85 billion from remittances, compared to $50 billion in Official Development Assistance (ODA).
Remittances support families. Remittances generate foreign exchange and enhance development. Remittances help governments offset foreign exchange shortfalls, etc.
Early statistics from remittances transfer companies from the U.K. to Eastern Africa shows a decline of 80 percent in remittance transfers. Gulf countries have begun to expel migrant workers, thereby compounding the remittance short fall. Experts tend to believe that remitters from rich countries enjoy a safety net that may mitigate losses. This too is debatable. In the U.S. job losses from the pandemic affect more than thirty-six million people with no end in sight.
4. Foreign private investors have started pulling hundreds of billions of dollars from developing nations, including Africa.
Estimates of job losses for developing nations emanating from pull back that is driven by the pandemic are in excess of 150 million, the brunt borne by youth.
5. The debt burden and debt repayment services picture loom large; and is a huge drag on Africa’s economies.
This huge drag requires bold and life changing interventions. Africa as a whole, and especially Sub-Saharan Africa faces two interrelated problems at the same time.
•Africa faced a financial and economic crisis that persisted before COVID-19 and that remained unresolved; and
• It now faces a public health crisis that threatens the lives of millions of Africans.
First thing first though. The possible loss of 4 million lives in SSA from COVID-19 that is estimated by the UK’s famous Imperial College modelers is gruesome. It must be prevented at all cost. Even if all efforts are carried out by governments and the world community, the minimum number of African lives that could be lost as a result of the pandemic is forecast at 800,000. Infections among Ethiopians are estimated at 1.4 million. There is no projection in terms of deaths from COVID-19.
On April 17, 2020, the United Nations Economic Commission for Africa (ECA) reported that "Anywhere between 300,000 and 3.3 million African people could lose their lives as a direct result of COVID-19. Rates projected by Trinity College and by the ECA depend entirely on the timing, efficiency and effectiveness of intervention measures taken to stop the spread the pandemic. The slower the response, the higher the death rate.
Let me summarize this commentary with caution but with a positive note. Africa must concentrate on prevention. In this regard: • It is commendable that Ethiopia is doing all it can to prevent massive deaths and the spreads of the virus using its limited resources in order to mitigate the damage through early monitoring and constant testing.
• I also appreciate the fact that the Ethiopian Diaspora is heavily involved by mobilizing and provisioning preventive tools, knowledge and financial resources. It needs to do much more.
• In some countries, ordinary citizens do not seem to understand the magnitude of COVID19. For example, in Malawi, it is reported that “thousands of informal workers took to the streets to protest the regimes newly announced 21-day lockdown measures… which prevent the workers from earning income, that will in turn cause these workers and their families to go hungry.” Ethiopians should be cautious too.
• I am encouraged that the Government of Ethiopia is providing air transport to thousands of Ethiopian migrant workers from Lebanon; all African nations need to do the same. The long-term solution is to create an empowering environment in Ethiopia and contain migration out.
• It is important to note that, ‘without enhanced social safety nets, the livelihoods and lives of informal workers and their families across” SSA are under constant threat. Social distancing measures that are easier in high income countries in the West, China, Japan and other rich nations are more difficult to enforce in SSA countries.
• The government of Uganda has been more successful in enforcing and extending lockdown measures and in banning public transportation until May 5, 2020. Ugandan borders and airports remain closed to all except cargo and emergency flights. Uganda has
applied lessons from its Ebola experiences; and has also instituted food delivery mechanisms to its citizens. I worry a great deal about food-security and self-sufficiency in Ethiopia and other African nations owing to the Pandemic and to the devastating effects of wide-spread locust swarms in Eastern Africa; we need to finance food banks.
• Two countries, Botswana and Cameroon have announced large-scale prisoner releases in the forms of pardons and/or sentence reductions. The country of Guinea announced that the wearing of masks in public would now be mandatory, with violators facing a fine of 30,000 Guinean francs (about $3).
• Kenya announced a similar measure, threatening a fine of 20,000 Kenyan shillings (about $200) and/or a jail term of six months for offenders.
• Positive measures similar to Ethiopia include Kenyan and South African and Zimbabwean government decisions to carryout widespread, mass testing efforts.
• The African Union’s Africa Centers for Disease Control and Prevention (Africa CDC) announced a plan to distribute one million (1) testing kits across the continent. Africa CDC director Dr. John Nkengasong announced that “Over the next three months or six months, we probably need like 15 million tests, however, a journey of 1,000 miles starts with the first mile.”
• African governments are doing their level best to mitigate the devastation projected by Trinity College modelers; and Africa’s friends should and must help as well.
Part III of this series will focus on the effects of the Pandemic on the economies of African nations. I shall propose a set of recommendations for creditors to consider.
May 17, 2020