October Y2K
Bailing Africa Out of Debt
By Rosalind McLymont
If you live in the United States and, like most of us, you charter your life along the course laid down by the first and second estates of American life—banks and advertising agencies—then debt is your rite of passage into social acceptance.
Your creditworthiness or indebtedness, is measured by your credit cards, your car loan and your mortgage.
As a result, so many are ailing in debt that a debt-handling industry has been born, complete with lawyers, consultants, counselors, writers, lotteries and Web sites.
What does all this have to do with a column about Africa? Plenty. What does this have to do with the readership of this magazine? Plenty, although nothing as facetious as Blacks in America being so much in debt that they can teach Africa a thing or two.
Africa got caught in the debt trap the same way your average Joe and Jane America did, following a course chartered by institutions that subscribe to the notion of reaping more than they sowed.
The amount of money some countries owe to the World Bank, the International Monetary Fund and other foreign lenders is more than double the value of goods and services those countries produce. In some cases, debt payments consume 30 percent to 40 percent of the national budget, diverting already scarce resources from health care, education, sanitation and economic development to pay interest on debts.
The term “donor nations” should be banned from the lexicon of African development because of its implication of inequalities.
“Debt is Africa’s newest plague. It is as devastating as AIDS,” Senegalese President Abdoulaye Wade told a small group of journalists during his visit to the United States last month to attend the United Nations Millennium Summit on Peace.
“Slavery lasted three centuries, colonialism less than one century. But this debt seems endless. We don’t know when it will end,” President Wade said.
What hurts most is that there is nothing to show for the debt, he said.
“If you trace all this debt, none of this money is in Africa. In spite of World Bank financing since the 1960’s we still do not have adequate roads. No head of state knows how his country became so indebted,” President Wade said. “We need to attack the causes of this debt, perform an x-ray on it.”
The big lie, he pointed out, is that debt is the only alternative, the only way for developing countries to develop.
President Wade’s passionate call for the “undebting” of Africa is a challenge to the African Diaspora, including the readership of this magazine.
One way out of the debt morass, he and his fellow heads of state say, is to increase the continent’s hard currency revenues through the sale of raw commodities and manufactured goods on the international market. Under the Clinton administration’s policy of facilitating a two-way trade with Africa, African governments are looking to do precisely that. They are counting on Blacks in the Americas to buy.
“With the Black community in the U.S., we have a good market. There is great potential in importing (African products) into the United States,” President Wade said.
Ensuring that African factories meet America’s strict quality standards and picky consumer tastes is an opportunity for which many Diaspora Africans with relevant experience and competence crave. It’s up to the Africa side—public and private sectors alike—to proffer those opportunities.
Similarly, Black financial professionals could play a role in devising financial mechanisms to manage foreign debt and generate capital. President Wade, for example, has called for the creation of a managed fund into which all of Africa’s foreign debt would be transferred and which would be guaranteed by individual states.
He has yet to figure out exactly how it should be structured and managed.
All options will be discussed at a series of continent-wide seminars on the debt that President Wade has proposed.
In Guyana, they say, ‘hand wash hand make hand clean.’ In this case, one hand is in Africa, the other is in the African Diaspora. Time to wash.
Rosalind McLymont is partner of McLymont Kunda and Company, an international business consulting firm.
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