Africa earned its debt

Debt relief for poor countries is more complex than many of its promoters will admit. Expedient debt relief is only a good idea for countries with clean, pragmatic governments that pursue sensible economic policies, like Mozambique and Uganda. But when countries are ruled by despots, like Zimbabwe and Angola, extra cash only encourages them to squander the money they free up, says author Robert Guest.

That is why the debt relief proposal debated recently in Washington by officials from the World Bank, the International Monetary Fund and the Group of 7 nations would not be a panacea for Africa. According to Guest, it is typical in Africa for the roads to be cratered because someone has looted the maintenance budget; the power fails because the state monopoly utility company is staffed with incompetent relatives of politicians; and the customs officers hang onto your goods for weeks in the hope that you will bribe them to hurry up. Specifically, according to Guest:

The main reason Zambia is bankrupt is that it has been ruled with startling incompetence and venality; for example, its previous president, Frederick Chiluba, is facing multiple charges for embezzlement.

In Nigeria, a militia boss is threatening to start a civil war and shut down the Nigerian oil industry unless his people, the Ijaw, are granted "autonomy" – by which he means "control of the oil money."

In only two African countries – South Africa and Botswana – is it relatively easy to do business, a recent World Bank study found. Cleaning up corruption is a task for Africans themselves, and some are rising to the challenge, says Guest. Nigerian President Obasanjo has hired a team of technocrats to make the public accounts more transparent. However, probably no more than one powerful Nigerian in 20 supports the clean up. That in a nutshell is why Africans are poor: their leaders keep them that way, says Guest.

Source: Robert Guest, Africa Earned Its Debt, New York Times, October 6, 2004.

For text http://www.globalpolicy.org/socecon/develop/africa/2004/1006africadebt.htm

For more on International: Institutions and Growthhttp://www.ncpa.org/iss/int/

FMF Policy Bulletin/ 26 October 2004