Democratic Socialist Movement (DSM)

For struggle, Solidarity and Socialism in Nigeria

Committee for a Workers' International logo

Committee for a Workers' International


DSM, PO Box 2225, Agege, Lagos

Come to DSM secretariat at 162, Ipaja Road, Agbotikuyo Bus-stop, Agege, Lagos

Call our national office on (01) 8046603

email

Home   
Join DSM
Contact DSM

Fuel Crisis

About us
Our Manifesto
Statements
Donate

Socialist Democracy

Newspaper of the DSM


Campaigns
NCP
Trade Unions
DSM News
Students
Women
International
Links

Downloads

email

June 23, 2005

G8 AND AFRICA’S DEBT CRISIS

CAPITALISM MUST BE OVERTHROWN TO MAKE POVERTY HISTORY IN AFRICA

By Pelad, DSM Nigeria

 

On the front burner at the meeting of the eight most advanced economies, G8, holding in Gleneagles Scotland, on July 6-8, is the crushing debt stock of Africa, put at $300 billion. In fact, Tony Blair and his heir apparent to Downing Street, Gordon Brown, have recently put on the garbs of the champions of Africa’s campaign to be rid of debt burden.

 

They would like to be credited for the proposal before the G8 summit by the group’s finance ministers calling for cancellation of $55 billion debt of 18 countries, 14 of which are African. Looking at the roles, past and present, of the British imperialism as regards ruthless exploitation and devastation of Africa’s economy, this latest disposition (which is most probably fuelled by the desire to get Africa’s support for London’s bid for the hosting of 2012 Olympic Games) is, to say the least, both hypocritical and fraudulent.

 

To start with, the term cancellation is misleading in that it is only multilateral debts owed to the World Bank, IMF and African Development Bank (ADB) that are agreed to be cancelled. The ‘beneficiaries’ will still have to continue coughing up debt payments, including the steeply accumulating interest charges, to the Paris Club of creditor nations, which include all the members of G8, and the London Club of usurious private/commercial banks. Therefore, it is not yet hurray for the ‘lucky’ countries. Besides, for the Africa, the partial debt relief to the 14 countries only represents just about 14.5% of the total debt stock of the continent.

 

Moreover, there is a big question mark on the benevolent light the rich countries would love to be seen in as regards this relief. The poor countries that still exist on the ravages of war like Sudan, Sierra Leone, Liberia, Somalia, etc are conspicuously missing from the list. This shows that the countries benefited must have paid some price, and will definitely continue to do, to their ‘benefactors’ in one form or the other at the gross expense of their economies and wellbeing of their populace. There is no free lunch in international system, goes a popular saying.

 

Of course Nigeria, the African biggest debtor, being the world’s eighth largest producer of crude oil, does not get anything out of the largesse. But even if it did, that would have only saved it just paltry $ 2.52 billion (7% of its $36 billion debt stock) it owes World Bank and ADB which is less than half of the $5.9 billion excess realised, up to December 2004, from the recent increase in the crude oil price.

 

Furthermore, to the 14 countries whose main exports have continued to experience steep falls in prices due to unfair international trade system, the debt relief can only be momentary. For instance, Uganda, the star pupil of Highly Indebted Poor Countries (HIPC) initiative, found out it had to pay more for debt service and get more loan than estimated after it had got a debt relief, when the price of coffee, its mainstay of economy, fell by 60% in 2002.

 

Several tonnes of shocking statistics have been released revealing the parlous situation of Africa. World Bank, for instance, says that more than 300 million people in sub-Saharan Africa – nearly half the population- live on less than $ 1 a day and the number is expected to rise to 400 million by 2015. Whereas, 2015 is the magic year that world imperialism has targeted to have halved the ravaging world poverty through its fabled Millennium Development Goals (MDG). It will be easier for camel to pass through the eye of a needle than for these goals to be achieved on the basis of capitalism particularly in Africa. Apparently appreciating this fact, ADB says Africa is the region least likely to meet MDG

 

Pretending to be concerned by the Africa’s plight, Tony Blair, at the official launch of the report, his pet but dubious project - Commission for Africa (CFA) - on May 11 2005 stated, "In a world where prosperity is increasing, it is obscenity that should haunt our thought that four million children will die in Africa this year before their fifth birthday". Yes this is heart rending but the sincerity of Blair is suspect. He knows that capitalism, the profit driven system which he is one of chief defenders lacks conscience. Four million children die because Africa spends $15 billion annually on debt payments leaving little to be spent on health and other social services.

 

CFA report in its summary says: "Africa’s poverty and stagnation is the greatest tragedy of our time. " But the tragedy does not start today, neither is it a congenital curse on the continent. The tragedy is rooted in capitalism. In terms of natural resources, Africa is as stupendously rich as any of the richest continents of the planet. However, on the basis of capitalism, the imperialists, right from transatlantic slave trades through colonial era to the current reign of neo-colonialism, have continued plundering the fabulous wealth of the continent and thereby condemning its population to harrowing suffering and extreme poverty in the midst of inexhaustible abundance.

 

The continued pillage of Africa’s economy compounded by unfair international trade system that has seen steep fall in the prices of main exports of most African countries (coffee, cocoa, sugar, copper, labour, etc) in the world market and the characteristic looting of treasury by the habitual corrupt politicians, has meant that the continent is deprived of the resources to finance its developmental projects and meet the needs of its populace. It is thus predisposed to debt crisis by being forced to rely only on foreign capital mostly in form of loans and in the same breath made to be short of earnings to fulfil its debt obligation.

 

Since early 1980’s when the monster of debt burden mounted Africa like an incubus, the continent has kept growing poorer. Its share of world trade has reduced by more than two-third i.e. from 6% in 1980 to less than 2% that obtains at present.

 

Adding insult to injury, Africa is like a victim forcibly haemorrhaging blood to an overflowing blood bank. This is because Africa is a net exporter of capital in form of debt service and the looted money (in most cases the original loans collected) stashed away in European and the US banks mainly by the dictators propped up by the west during the cold war era and their modern day creations, the so-called elected democrats. "Much Africa’s ill-gotten wealth is stashed abroad. In a study of 30 – sub Saharan African countries total capital flight for the period (1970-1996) amounted to $187 billion. Adding imputed interest earnings, the stock of capital flight of the countries under review stood at $274billion – equivalent to 145% of debt owed by those countries" (James K Boyce and Leone Ndikumana, Bangkok Post, July 2, 2003). Despite the much touted international laws against money laundering, the stashing of looted Africa’s resources not weighed down by debt burden has always been done with the active connivance of the western leaders and banks. Moreover, while Africa pays $ 15 billion yearly to service its debt to the rich nations and financial institutions, it receives less than $13 billion as aid with strings attached. Nigeria’s situation is much more pathetic. Its annual debt payment is equivalent of $14 per capita while receiving aid of just $ 2 per capita.

 

Having put shackles of debt burden around Africa’s neck, world imperialism offers the continent bitter pill of Structural Adjustment Programme (SAP) before any of the countries could get relief from the associated pains and pangs. SAP better known today as neo-liberal policies, imposed and monitored by the world imperialism debt management agencies, IMF/World Bank, entails devaluation of currency, removal of subsidies, cut in social spending, privatisation, trade liberalisation, etc. Among the essence of these anti-people policies is to free up resources that would enable the countries operating these programmes to service their debts. With privatisation, African countries are selling at giveaway prices to the so-called foreign investors and the local parasitic politicians and business men, the essential public properties some of which were built from loans. For instance, in Nigeria, the Delta Steel Company whose share alone in Nigeria’s debt stock is $700 million, was priced by the highest bidder at $31 million. As the experience of counties in Africa and the third world has shown, neo-liberalism has only succeeded in deepening the socio-economic crises and compounding the debt burden in particular.

 

Today, Nigerian officials keep lamenting that despite paying fortune to service debt, the country’s debt has kept skyrocketing at higher rate without new borrowing. According to Mansur Muhtar, the head of Nigeria’s Debt Management Office (DMO), since 2000 when DMO was set up, Nigeria has made payments of $6.9bilion but its debt has increased by $7.4 billion. (Financial Times (London), Special Report on Nigeria, April 26, 2005). This is pathetic. But what the pro-imperialist Nigerian leaders have refused to tell the world is that this despicable condition obtains due to the fact that the foreign exchange market regime that has been in operation since 1986 when Ibrahim Babangida collected $ 450 million World Bank SAP loan, makes the US dollar the only main direct currency of intervention. However almost 80% of Nigeria’s debt stock is denominated in the currencies other than the dollar. Therefore with the continued depreciation of dollar against other international currencies, which is the prevailing situation now, this means that the dollar value of the debt increases automatically.

 

However, in Africa, neo-liberal policies have not gone without resistance from the working people, although not in the same degree as the recent mass movements and revolutionary mood in Latin America. Nigeria, for instance has witnessed seven massive protests and general strikes in the last six years against the neo-liberal policy of deregulation of petroleum and associated incessant increase in the pump prices. Seeing the militancy of the working people led by the labour as a potential obstacle to full implementation of the neo-liberal economic reform, Obasanjo’s government has recently promulgated a viciously repressive law aimed at crippling the labour movement and limiting the democratic rights of workers. The law for instance makes it illegal for workers to go on strike or protest against economic policies of the government. The disgraced former senate president Adolphous Wabara actually betrayed the main rationale behind the law when he stated that the labour’s militancy (expressed in general strikes mentioned above) was the main cause of Nigeria not being able to get debt relief.

 

Marxists and socialists support the struggle of the international working people for debt cancellation of not only Africa but the entire Third World. The wealth of the advanced economies can support this without tears. The Pentagon budget alone in the US for the year 2005, apart from well over $200 billion it has spent on wars in Iraq and Afghanistan, is around $500 billion, while Africa’s debt stock is $300 billion. The British economy is almost four times the size of the entire sub-Saharan Africa including South Africa. The total debt owed to Britain by the entire developing world is just about 1.1% of its one year economic output, GDP. A study conducted by the Jubilee 2000 in 1999 reveals that the cost of writing off the third word debts is not more than 2 pound sterling for the average British tax payer. But to the US and British imperialism and the G8 in general, the debt burden is a whip used to force neo-liberal policies down the throat of poor countries. They will therefore not willingly cancel the debt except they are forced by fighting mass movements across the world, especially mass movements that begin to concretely pose the issues of political power with a view to implement working people’s oriented policies.

 

However, debt cancellation on the basis of capitalism cannot automatically end poverty and translate into human, social and economic development of Africa and indeed the Third World. In fact, on the basis of neo-liberal policy of trade liberalisation and the continued fall in the prices of the main exports, Africa can only inevitably relapse back into debt crisis. Also, for countries whose governments on the basis of neo-liberalism are not committed to the provision of essential and social services, the resources freed up should there be cancellation of debt will surely form part of the money to be looted and siphoned to European banks. Moreover, besides debt burden, the imperialist domination of the commanding heights of economy, massive corruption, poverty wages, neo-liberal policies, etc constitute the main source of Africa’s underdevelopment and its extreme poverty.

 

Therefore, the struggle of the international working people elements for the cancellation of Africa and third world debt must be linked with the overall struggle to replace profit-driven, exploitative global capitalism with democratic socialist system. This will ensure that the enormous resources and economy of Africa are placed under the democratic management and control of the working people elements to develop the continent and provide for the needs of its populace. It is only on this basis poverty in Africa can be made history.

 

Socialists thus demand:

  • Total cancellation of Africa’s debt stock with no strings attached

  • Repatriation of all Africa’s stolen wealth stashed in foreign banks by the corrupt pro-west leaders.

  • Africa’s resources to be totally committed to guarantying food, housing, health care, education, decent jobs, etc to the African masses.

  • Public ownership of all the commanding heights of economy and main resources of nature firmly placed under the democratic management and control of the working people themselves.

  • For a united democratic socialist confederation and, when possible, federation of African countries in a world socialist order.