by Virginia Muwanigwa – SANF 04 no 83
As lobbying for debt cancellation gathers momentum, governments have been urged to ensure negotiations for new loans with international financiers involve the public who bear the burden of debt servicing.
A meeting of legislators and civil society organisations from the Southern African Development Community (SADC) held in Harare in August made the suggestion in view of the unsustainable debt servicing burden whose liability is eventually passed on to a country’s citizens often through increased taxes.
The objective of the meeting was to influence SADC parliamentarians to be more involved in the national loan contraction process prior to any signing of agreements.
Under the theme “Making the loan contraction process inclusive, transparent and accountable in Africa”, the call arose from research findings that reveal a lack of or inadequate public consultation by governments prior to their entering into loan agreements with international financing institutions.
A research commissioned by the African Forum and Network on Debt and Development (AFRODAD) in Malawi, Mozambique, Tanzania, Uganda and Zambia in 2003, investigated the links between debt management, the build up of new loans and the most sustainable way of financing the Millennium Development Goals (MDGs).
The five countries are classified as low-income and highly indebted and collectively have a shortfall of at least US$65 billion required to meet their MDGs targets by 2015. The research found that the five countries have since contracted additional loans of US$4.4 billion with another US$2 billion expected for future projects.
Developed countries have been urged to write off part of or all of Africa’s debts, which collectively amount to annual repayments of an estimated US$15 billion.
The research also revealed that the process by which governments and international financial institutions often negotiate and sign loan agreements is neither transparent nor accountable.
“In some cases, the government may overrule their parliament’s objections to a loan, and often parliaments end up rubberstamping new lending agreements without being properly involved in the decision-making process,” says the report.
Civil society organisations, according to the research, have played a very limited role as there is no formal legislation to involve them in the loan cycle and they lack the resources and skills to research, critique and monitor government loans.
Emmerson Mnangagwa, Zimbabwe’s Speaker of Parliament, says it is critical that the process by which debtor countries agree to accept the terms and conditions for loans is open to scrutiny by parliamentarians and other citizen groups.
This transparency would avoid the mistakes that often lead to the accumulation of “unsustainable debts that have to be paid off at the cost of financing critical programmes such as education, health, transport and infrastructure”.
Mnangagwa emphasises that the role of parliamentarians in the process is vital as they are elected to represent the constituents to monitor terms and conditions imposed upon governments by such institutions as the International Monetary Fund and World Bank.
He also believes that the link between the loan contraction process and the role of donors should be interrogated as lending has become one of the most powerful tools that bilateral, multilateral and private creditors are using to continue bleeding the continent and keeping it in bondage with dire political and social consequences.
The worsening debt problem has called into question the effectiveness of existing debt management systems as individual African countries and regional blocs do not seem to have comprehensive national and regional systems beyond mere debt recording, says Mnangagwa.
According to the legislator, most African countries have not lived within their constitutional and policy framework for debt management. As a result, there is no proper monitoring and evaluation to ensure that borrowing remains within constitutionally accepted limits.
“It would seem that borrowing for recurrent as opposed to capital expenditure has also made it difficult for most countries to repay their external debts,” he says.
Edith Nawakwi, a parliamentarian from Zambia, highlights the need for introspection beyond debt cancellation. “… the tendency to put the blame for the massive debt burden besetting the African continent today on the western donor countries alone blinds us to our own culpability,” she says.
She adds that some Sub Saharan Africa countries have not been prudent in the use of resources, borrowed or otherwise, and current poverty levels should be blamed, among other factors, on the inadequate institutional framework for promoting development. (SARDC)
