AFRICA ENVIRONMENT OUTLOOK
Past, present and future perspectives

DEBT BURDEN

The persistent dependence on external financing by African countries has made it difficult for them to remain on the sustainable development track. However, many other factors have also contributed to economic stagnation; these include governance, civil strife and disasters. Regional engagement by multilateral financial institutions such as the WB and the IMF comes at a price for recipient countries. Sub-Saharan Africa's total external debt rose from US$176 874 million in 1990 to US$216 359 million in 1999 (World Bank 2001b). Some 48 of the 52 African countries spend about US$13.5 000 million every year repaying debts to rich foreign creditors. The region's massive foreign debt burden has been described as 'a new form of slavery, as vicious as the slave trade' (Colgan 2001). African countries have been receiving financial assistance from the developed countries in order to balance their development budgets in the midst of growing financial difficulties due to poor commodity prices, globalization and other factors (UNDP/UNEP/WB/WRI 2000). For example, sub-Saharan countries exported goods and services worth about US$96 584 million in 1999, while total external debt amounted to US$216 359 million in the same year (World Bank 2001b).

Saddled with heavy debt commitments, many African countries are unable to build and maintain economic reserves. The overall result is: further erosion of regional coping capacities; greater vulnerability to both internal and external stresses and shocks; indebtedness; increasing reliance on foreign aid; and reduced competitiveness in the face of economic globalization. Africa's heavy international debt burden contributes substantially to human vulnerability and security in the region. The servicing of debt consumes resources which could be spent on development, poverty alleviation and increasing coping capacities. Allied with the question of debt is that of SAPs, which often include obligations to reduce state spending, especially on social development and environmental management-a situation which tends to exacerbate the vulnerability of the poor and other marginal groups to environmental, economic and social stresses. Heavily Indebted Poor Countries (HIPCs) in Africa are also increasingly resorting to unsustainable exploitation of the region's natural resource base in order to boost foreign exchange earnings to service debt.

Table 3.5 gives summary data on the situation described in the Box 3.13.

Box 3. 13 Africa's indebtedness

Africa's official debt at the end of 1999 stood at approximately US$170 000 million (WB 2000c). In sub- Saharan Africa, debt service consumes between onequarter and one-third of foreign exchange earnings, diverting resources from productive investments (FOE 2001, Oxfam International 1997). Africa paid back US$1.31 in debt service for every US$1 received in aid grants in 1996 (Jubilee 2000).

Large debt service payments mean that vital social services must be sacrificed to meet debt payments, which makes the poor in HIPCs even worse off and, by implication, more vulnerable (FOE 2001). For example, the United Nations Children's Fund (UNICEF)-which supports calls for the cancellation of debt owed by African countries-says that forest loss in HIPCs was 50 per cent greater than in non-HIPC countries between 1990 and 1995. Sub-Saharan Africa is forced to spend more on servicing its external debts than on the health and education of the region's 306 million children-while child mortality averages one-third more than other regions of the world (IPS 1999). In addition, heavy debt burdens result in increased pressure on the environment because of the growing need by HIPCs to generate foreign exchange to meet debt obligations.

 

Table 3.5 Africa-total external debt
Sub-region Annual average (US$ millions-current prices)
1975-84 1985-89 1999-MR
 
Northern Africa 48 632 102 600 109 804
Western Africa 22 766 58 308 76 661
Central Africa 9 254 19 745 31 854
Eastern Africa 6 042 16 636 25 046
Southern Africa 11 084 26 133 63 237
IOC 1 721 4 350 6 074
 
Total Africa 97 717 228 409 302 655
SSA 54 892 136 754 209 816
SSA Excl. S.A. 54 892 136 751 195025
SSA Excl. S.A. & Nigeria 46 377 110 830 163 455
Source: Compiled from WB 2001

Sub-Saharan African economic and financial problems were made much worse in the 1970s and the 1980s by a combination of: