Margaret Ashira, sitting in a tin-roofed shack in Africa’s largest slum, owes her survival to private charity groups who donate treatment. She believes her own government could do more to help her and other people living with Aids if it weren’t haemorrhaging money to pay the interest on its huge foreign debt.
Far away from Ashira’s Kibera slum, where 600 000 Kenyans live with neither sewage nor public health care, finance chiefs from the world’s richest countries were considering a proposal to alleviate the debt burden of countries like Kenya.
Britain, host of this week’s meeting of the Group of Seven (G7) most industrialised nations, has suggested that rich countries wipe out the debt service obligations that poor nations owe the World Bank and the African Development Bank by paying it themselves, and that what the poor owe the International Monetary Fund be erased by re-evaluating the fund’s gold reserves.
“They need to tackle this problem of debts if they really want to end poverty in the country and in Africa,” Ashira said as a mouse peered out from under her bed. “I say this because I know from experience that the HIV disaster is an epidemic that can make a person and a country very poor.”
About 2,2-million Kenyans, out of a population of 30-million, are infected with HIV. Many of those who need treatment, however, have no access to life-prolonging drugs. Last August, Ashira became one of only 28 000 Kenyans receiving free anti-retroviral drugs from charity groups that receive them from the United States Centers for Disease Control.
The need is undeniably great, but debt relief is not a clear-cut solution.
Kenya spends about 40% of its annual budget to service its $9-billion debt — more than what it spends on health and education combined. But the country also loses millions of dollars every month to corruption, including 500-million shillings ($6,3-million) in monthly salaries paid to ministry of health employees who never show up for work.
Critics question whether the money saved on debt relief will ever reach those who need it.
Angola, for example, qualified for debt relief under an earlier international effort, but was never able to collect because the government refused to open its books to international scrutiny.
Human rights groups have alleged high-level corruption in Angola, oil-rich but struggling after years of civil war.
Angola, though, is among the countries that have applauded the British debt initiative.
Bastos de Almeida, the Angolan finance ministry spokesperson, said in an interview on the eve of the G7 meeting that while Angola has oil resources to meet debt payments, the payments are “a great burden” that divert resources from needy areas.
The debt-relief plan “would help us redress the balance of our spending in favour of key social sectors, such as health and education, and economic regeneration”, Almeida said, adding that servicing Angola’s $10-billion debt devours almost 20% of the annual state budget of about $12-billion, while education receives 7,14% and the health sector gets just 4,97%.
Irungu Houghton, a Kenyan who advises Oxfam on Africa, played down the threat of the government’s squandering or stealing money saved through debt relief. He cites Malawi and Uganda as countries that benefited from earlier debt-relief programmes and spent the money saved to fight Aids and other health problems.
“In fact, contrary to the concerns of the G7 sceptics, the practice has been that where there has been debt cancellation — with the appropriate programmes — it has gone directly to boosting access to health and access to education,” Irungu said.
“In many cases, the debt that has been incurred, the principal has actually been paid back. We are talking about debt servicing, we are talking about the interest,” Irungu said.
In 2002, the world’s poorest countries paid $100-million a day to their rich country creditors, more than they spent on health, a group of international aid agencies said in a briefing paper released ahead of the G7 meeting.
In the same year, the countries received only $17-billion in aid, Britain’s Oxfam, Actionaid and the Catholic Agency for Overseas Development said.
Rich countries can find the money to finance debt relief, aid workers said, noting that Iraq’s debts totalling $31-billion were cancelled in one day in November 2004. That is more than all the debt relief granted in the past five years under the World Bank and International Monetary Fund’s initiative for heavily indebted poor countries.
Much of the poor countries’ debt dates back to the 1970s and 1980s, when they borrowed to fund domestic projects on the back of the commodity price boom — believing that high prices and export earning would be sustained, the World Bank says.
Oil-price shocks during that time, which caused recessions throughout the world, combined with high interest rates and low commodity prices, hit borrowing countries especially hard, according to the World Bank.
In a speech in London’s Trafalgar Square on the eve of the finance ministers’ meeting, former South African president Nelson Mandela called on the developed world to “end to the debt crisis for the poorest countries” to combat poverty. Mandela was to meet on Friday with the finance ministers. — Sapa-AP
Associated Press writer Casimiro Siona contributed to this report from Luanda, Angola