Debt and Poverty in Africa

Debt and Poverty in AfricaThe North-South Institute welcomes this opportunity to participate in this roundtable on African issues and to present on the issue of poverty and debt in Africa. During the remainder of this presentation particular reference will be made to Sub-Saharan Africa because I believe that this is the region where the issues of poverty and debt present us with the greatest immediate challenges. However, I urge the sub-Committee to remember that although poverty and debt are of less immediate concern in North Africa, human rights in particular, and human security in general, remain of tremendous concern in that region.Let me start by pointing out some sobering facts about Sub-Saharan Africa. These facts which are not meant to elicit your sympathy, but rather, to point out how far and for how long this region has been allowed to slide out of the worlds peripheral vision. In 1995 the per capita income of South Asians (in terms of purchasing power) surpassed that of Sub-Saharan Africans making Sub-Saharan Africa the poorest region in the world. That statistic may seem relatively meaningless until we consider that in 1980 (measured in the same terms) per capita income in Sub-Saharan Africa was twice that of South Asia Average per capita income in Africa in 1997 was only 75 percent of what it had been in 1980, representing an average negative growth rate of 1.6% a year over that period. Income distribution was also worsening during that period. In 1980 the income of the wealthiest 10% of the continents population was 37 times higher than that of the poorest 10%, in 1995 it was 62 times higher. The poor thus bore a disproportionate share of the burden of negative growth. The average rate of annual per capita income growth for the poorest 20% of Sub-Saharan Africas population was -2.0 between 1980 and 1995. (For the richest 10% it was only -1.2%). The dual realities of falling incomes and worsening income distribution in the region have meant that poverty in Africa has been increasing faster than in any other region of the world. The (approximate) proportion of the continents population living on less than a dollar a day increased from (a rough estimate of) 18% in 1980 to 24% in 1995. Africa was the only continent that recorded an increase the numbers living at such a desperate level of deprivation. The numbers living on less than a $1000 a year increased from 55% to 70%. As poverty has increased, so has debt. Of the 41 countries that are currently classified as heavily indebted poor countries 33 are African. The regions total debt to total income ratio was 71.3 % in 1997, nearly twice as much as the region with the second highest debt-to-income ratio (Latin America and the Caribbean) at 38.4%. During that period Africa received a far higher level of aid (as a proportion of GNP) than any other region. Aid, as a proportion of GNP, rose throughout the 1980s, peaking at 10.7% in 1992, but has since been fallingit was only 5.0 % in 1997. Canadas bilateral aid to Africa has followed a similar pattern. It increased through most of the 1980s but the current value of aid in 1997-98 fiscal year was less than it was in the 1985-86 fiscal year, both in absolute (449.6 versus 424.9) and real terms (449.6 versus 319.4 when measured in 1985 dollars) The news is not all bad for sub-Saharan Africa. Whereas in 1980 only Senegal, Botswana and Mauritius could boast elected, multi-party, governments in the region, today elected, multi-party, democracies are the rule rather than the exception. Also, the enhanced HIPC Initiative approved at the World Bank-International Monetary Fund meetings in September of this year, affords the hope that a significant proportion of the regions debt will be forgiven. Both of these factors bode well in terms of the regions ability to address its formidable problems in terms of governance structures and the availability of domestic resources.However, these factors represent only the beginning in terms of creating the framework for solutions to the regions problems, not the solutions themselves. They are merely small parts of a larger puzzle that must be pieced together. In continuing to develop that framework it is important that the African tragedy is not seen simply as crisis brought on purely by corrupt and undemocratic African governments; the greed of multinational corporations; the misguided policy prescriptions of multilateral institutions; or the wanton interference of foreign governments.There is sufficient blame to go around, and all of these constituencies must be willing to carry their share of the blame, but we must focus on the one group that is blamelessthe marginal, uneducated, landless (or nearly landless), and powerless African poor. All initiatives must concentrate on addressing the plight of that group and must aim ultimately at providing that group with the tools for addressing their own problems. Improving human security in this context means providing these people with access to the means to avoid hunger, war and harm.Human security for the disadvantaged can only be assured over the long term only if the structures that maintain the status quo are addressed. These are: poor education, poor health, lack of access to land and markets (domestic and international), limited employment opportunities, and the absence of a voice in their future. Making a direct connection between debt relief and poverty reduction is one first step, but this is a workable approach only if debt relief is sufficient to release some of the domestic resources re