Uganda and Mozambique: Graduating from Debt Relief?
By William Minter, editor, AfricaFocus Bulletin
Uganda and Mozambique are two stars among the 18 countries set to benefit in 2006 from cancellation of debts to the International Monetary Fund (IMF) and the World Bank. Years of campaigning by African countries and activists around the world finally forced the world’s richest (G-8) countries to opt for “100 percent cancellation” at their summit in Gleneagles, Scotland, in July 2005. While the cancellation needs to extend to more countries, the cases of Uganda and Mozambique also show that the rich countries have much more to do before they meet their obligation to remedy the damages from a grossly unequal world economic order.
Uganda and Mozambique have completed years of compliance with conditions of the Heavily Indebted Poor Countries (HIPC) initiative. Although long in coming, the promised debt relief will now enable them to devote more resources to, among other things, confronting HIV/AIDS and malaria and reducing poverty. This still leaves both countries far short of what they need to save lives and improve living conditions for their people. Ugandans and Mozambicans receive only a fraction of the income and services that people in rich countries take for granted. Both countries remain dependent on new loans and grants and locked into programs that give creditors and donors the upper hand in setting national policy.
Despite the debt relief initiative, the international economic system is still skewed by the accumulated advantages of rich countries and by biased trade rules. The rich countries accept millions of unnecessary deaths each year in the poorer countries, a double standard that is part of the system of “global apartheid.”
Real Benefits, but Massive Shortfall
In January 2006 the IMF canceled all debt incurred by Uganda and Mozambique through the end of 2004, amounting to $126 million for Uganda and $153 million for Mozambique. Cancellation of the far greater debt held by the World Bank—about $3.3 billion for Uganda and $1.2 billion for Mozambique—begins in July 2006. These measures should free up roughly $10 million a year in Mozambique and $50 million a year in Uganda.
Both countries have a good record of directing new funds to priority needs. Civil society organizations in both countries are vocal and active, forcing the governments to focus on results. Mozambique has reduced poverty from about 69 percent of the population in 1996–97 to 54 percent in 2002–3. Uganda has raised literacy rates among youth from 75 percent to 81 percent over the last decade.
Still, Mozambique’s 19 million people have an average income of only $250 a year. Uganda’s 26 million people have only slightly more-- $270 a year. Mozambique can spend only $50 per person on healthcare each year, and Uganda $77, compared to more than $5,000 a year per person in the United States. Uganda has been fighting AIDS for two decades, and Mozambique has an increasingly active AIDS program. Yet more than half a million Ugandans and more than one million Mozambicans are infected with HIV. Inadequate health, education, and infrastructure leave both countries struggling in an ever more competitive world economy.
Still a Stacked Deck
There are many examples of bias in current global economic rules. For example, it is widely recognized that subsidies to U.S. cotton farmers make it impossible for poor cotton-producing countries to compete. But time and again, most recently at the world trade summit in Hong Kong in December 2005, rich countries have failed to take corrective action. Both Uganda and Mozambique grow cotton, but their farmers can’t compete with cheap U.S. cotton grown with advanced technology and bolstered by government subsidies.
Countries like Uganda and Mozambique want to develop industrial production, but they are under pressure to allow free imports of cheap industrial products from the rich countries. In fact, African countries, like countries that industrialized earlier, need the flexibility to protect their industries until they are able to compete.
Ugandans and Mozambicans have the talent, energy, and drive to help their countries succeed. But the countries must have the resources to overcome inherited disadvantages and new threats such as AIDS. Countries with histories of colonialism and post-colonial wars simply cannot address the damages, and the time lost for development, using their own resources alone.
No excuses
Corruption is still a problem in both countries (and indeed in the United States, as recent scandals have demonstrated). War continues in northern Uganda, and Ugandan democracy is threatened by President Yoweri Museveni’s reluctance to let go of political power. But these should not be excuses for international failure to deliver funds to reduce poverty, expand education, and fight disease. Healthy, educated Ugandans and Mozambicans will be better able to resolve their countries’ political problems themselves. Uganda and Mozambique need a predictable flow of resources for development, not handouts dependent on donor whim. They also need the authority to plan the most effective uses of those resources. In theory, a new World Bank poverty reduction strategy process opens a door for borrower countries to have more say in how resources are spent. In Uganda and Mozambique, more than in most countries, that door has been pushed open a crack. But simultaneously the IMF is launching a new monitoring program that mandates macroeconomic policies that perpetuate rather than reduce poverty.
Who Owes Whom?
The current debt cancellation is a beginning, but it is not enough. The debt being canceled this year should have been canceled long ago. It is unlikely that Uganda and Mozambique will be compensated for the staggering debt payments already made. Nor are they likely to receive compensation for damages from colonialism, unfair trading practices, and apartheid-fueled wars. But rich countries still have a duty to pay their fair share so that Ugandans, Mozambicans, and other Africans can overcome the disadvantages of the past and build a new future with equal rights for all.
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