Last week, Nicky Oppenheimer, the respected chairman of South African mining giant De Beers, observed, "It is more politically expedient to pour aid into Africa than for Europe and America to cut farm subsidies that enable their own farmers to dump their produce into the continent and impoverish African producers." The point here is that debt relief should be given as part of a comprehensive package encompassing greater levels of aid and trade access to the markets of developed countries.
JUST OVER A WEEK AGO, finance ministers of the G-8 - Britain, Japan, Canada, the US, France, Italy, Germany and Russia - announced that they had reached a deal to write off all the multilateral debts of 18 countries, including Uganda and Tanzania, in a package worth $40 billion. Cancellation of the debts will see the poor countries save anywhere between $1.5 and $2 billion in debt repayment per year, freeing money for such social services as health and education.
For Uganda, this will translate to much of the $120 million that the country uses annually to service debt. For Tanzania, the debt cancellation will free up to 12 per cent of the budget. Although we welcome the G-8 initiative, we are constrained to caution that for the world's poor, it is not yet time to celebrate. Conditionalities in the qualification criteria used to select the countries to benefit also raise concern. The G-8 says that, for poor countries to qualify, they will have "to cut corruption, free up their economies and liberalise trade."
Given the negative experience of Africa with the World Bank's structural adjustment programmes in the 1980s, it is important that the social effects of these conditionalities are closely examined. Perhaps most important, the debt relief package should not be allowed to supersede trade, the only intervention that holds the real possibility of pulling the world's poor out of their misery.
Last week, Nicky Oppenheimer, the respected chairman of South African mining giant De Beers, observed, "It is more politically expedient to pour aid into Africa than for Europe and America to cut farm subsidies that enable their own farmers to dump their produce into the continent and impoverish African producers." The point here is that debt relief should be given as part of a comprehensive package encompassing greater levels of aid and trade access to the markets of developed countries.
