Release: GCAP Africa Calls for an International Debt Court
As the members of the G20 prepare to meet in France in November for their Summit, the civil society organisations that comprise GCAP Africa entreat world leaders to endorse the creation of an International Debt Court (IDC) within the organs of the United Nations.
On a daily basis, the world's poorest countries pay creditors more than US$23 million, most of it interest payments to service debts. But many of these debts are illegitimate, the result of loans knowingly made to corrupt dictators or to facilitate the exploitation of Africa's natural resources by foreigners.
Concrete and prudent actions are urgently needed to diffuse African national debts, which are diverting funds from much-needed development initiatives and the fulfilment of the Millennium Development Goals (MDGs).An IDC can justly arbitrate sovereign debts, similar to how conflicts are currently resolved in the World Trade Organisation.
“The G20 as part of their commitments to the Millennium Development Goals must take concrete actions to ensure that Africa is relieved of its debts,” says GCAP Ambassador Adelaide Sosseh. “The Summit in France offers them the finest platform to take that decision. It will be a major landmark in the history of the G20 if an International Debt Court is considered and seen as an action plan in the outcome document from France. ”
African countries currently spend a large chunk of their internally generated funds – as well as proceeds from major export commodities such as gold, oil, diamonds and cocoa -- to service debts. These payments are made at the expense of investment in crucial areas of the economy like agriculture, education, health and infrastructure.
Yet much of Africa's debt dates to loans made by international bodies and developed countries to corrupt dictatorships. The World Bank for instance gave loans to the Democratic Repulblic of Congo (ex-Zaire) to former dictator Mobutu Sese Seko, even after an IMF representative noted that Mobutu was stealing the money and there was "no prospect" of getting it back.
Rich countries also added unjust terms and conditions to many loans in order to take undue advantage of African countries’ natural resources such as gold, oil, diamonds and cocoa.
“It is sad and unfortunate that Africa has to spend so much in servicing debts that they unfairly inherited at the expense of spending on pro-poor programmes” notes GCAP Africa Programmes Officer (Secondment) Kyerewa Asamoah-Sekpey.
Africa has what it takes to become a continent free of poverty and inequalities and this will require deliberate actions from government and well-meaning assistance from developed countries. Defusing Africa’s debts is one of the major ways of putting the continent on the path to accelerated development. The World We Want (TWWW) is a just world where no one is poor.
About GCAP: The Global Call to Action Against Poverty challenges the structures and institutions that perpetuate poverty. More information at www.whiteband.org
The world's poorest countries paid over US$8.3 billion to the creditors in 2008. That is more than US$23 million a day.
Losotho spent $47 million servicing debts in 2006. This is equivalent to two-thirds of the annual development assistance it receives.
Sixteen percent of Africa's export earnings in 2009 were spent servicing external debt. According to the 2009 IMF World Economic Outlook Database, African nations owe creditors US$300 billion.
The debt was at its height during the global economic crisis when Africa was hard hit, despite its relatively weak financial integration with the rest of the world. Remittances and exports sank, tight credit worldwide reduced Foreign Direct Investments (FDI) and portfolio investments, and commodity exporters suffered from depressed prices, leading to a weakened domestic growth performance in Africa – down to 1.9% in 2009 from more than 5% the previous year (IMF World Economic Outlook, 2009).