The media has presented the G8’s L’Alqila summit promise of US$20 billion for
food security and agricultural development in Africa as good news, but a closer
look at the figures shows that G8 countries actually take much more out than
they put into the continent, writes Yash Tandon.
The summit of the world’s richest and most powerful Northern countries that
constitute the G8 took place in L'Aquila,
Italy from 8 to 10 July 2009. In attendance also were the heads of state and
government of a host of other minor or lesser countries, some of whom were
admitted to the inner sanctum of the G8 summit, and some simply hovered around
in the corridors at the call of the G8 waiting to be ‘invited’ for ‘breakfast
meetings’ or press conferences or ‘bilaterals’. At one of these ‘breakfast
meetings’ the G8 broadened their participants to take in the African countries
of Algeria, Angola, Egypt, Ethiopia, Libya, Nigeria, Senegal and South Africa,
as well as the IEA, World Bank, IMF, ILO, OECD, WTO and United Nations and the
African Union Commission’s representatives. At this meeting the G8 graciously
agreed to increase aid to Africa for food security and agricultural development
from an earlier figure of US$15 billion to US$20 billion.
A summary judgement of the G8 Summit (the first for President Barack Obama) must
be that against the multiple crises the world is currently facing, the outcome
of the discussions was a whimper, a puny response to an acknowledgement of the
magnitude of the challenge. It is not surprising, then, that the world media
largely hyped up the promise of US$20 billion
L’Aquila Initiative on
Global Food Safety for Africa [PDF 239.5kb], for there was very little else
that was on show.
So the question is: how significant is the promise of US$20 billion?
To properly appreciate the significance of the US$20 billion envelope, let us
put the facts and a proper perspective to it.
First, it is just a promise. Promises have been known to remain just that –
Second, if past experience is any guide, the money is not likely to be ‘new’
money, but recycled from previous unfulfilled commitments.
Thirdly, the US$20 billion package is for three years; about US$7 billion per
year. This is to be shared between 53 African countries, an average of about
US$132 million per country.
Compare this with the following:
- Between 1990 and 2003, African countries had received US$540 billion in loans
and had paid back US$580 billion in debt and service charges (US$40 billion more
than what they had received), and yet by the end of 2003 US$330 billion debt had
still remained to pay.
- In 2003 alone African countries had paid over US$25 billion in debt servicing
while 2.3 million lives were lost lives because of HIV/AIDS. Many of them spent
more per capita on debt servicing than on health care. For example, in 2002 the
Democratic Republic of Congo – where 1.1 million people live with HIV/AIDS –
spent more than four dollars on external debt servicing for every dollar spent
on health care. And in the same year Angola had paid out US$106 per capita in
debt servicing compared to US$38 per capita on health.
Compare this also with the ‘promise’ made by G8 at the 31st G8 Summit of July
2005 at Gleneagles. The issue that got most media hype on that occasion was debt
cancellation – to write off the entire US$40 billion debt owed by 18 Highly
Indebted Poor Countries (HIPC) to the World Bank (WB), the International
Monetary Fund (IMF) and the African Development Bank (ADB). Four years down the
line, a more sober assessment exposes the scenario of ‘business as usual’. What
are the facts about the much-touted debt cancellation and the ‘road to recovery’
- The US$40 billion debt write-off applied only to 18 HIPCs. How were they
identified, and who selected them? Africa itself had no say in this. They were
selected by the ‘donor community’, not by any agency of Africa, such as the
On what criteria were they selected? These 18 countries were identified as those
that had faithfully followed the IMF/WB strictures on Structural Adjustment
Programmes (SAP – policy prescriptions that demanded pro-cyclical, deflationary,
measures from these countries). The G8 stated that 20 more countries, with an
additional US$15 billion in debt, would be eligible for debt relief on condition
that they met targets on fighting corruption and continued to fulfil SAP
conditionalities and provided they eliminated impediments to foreign private
investments in their countries.
Since the debt cancellation only referred to multilateral institutions, the
crippling bilateral official and corporate debts of Africa still remained
So what did the G8 achieve at the Gleneagles summit?
As far as Africa is concerned, very little. In fact, it was ‘business worse than
usual’. Why? Because of two reasons:
The debt write-off managed to tone down, to neutralise, the pressure from
African civil society on their governments to unilaterally repudiate those debts
that were illegitimate or odious – a technical concept recognised in
international legal practice.
Furthermore, it triggered fresh false illusions in and about Africa. Some people
concluded that this was going to be the turning point for Africa. With debts
written off, Africa was expected now, finally, to get down to using its
resources to develop the economy and look after the welfare of the African
people without the crippling debt burden.
The reality is that Africa is worse off today than in 2005. Currently much of
the blame is put on the financial crisis. In fact, the embedded structured
economic relations between the industrial North and Africa is the root cause of
Africa’s enduring poverty. Through these structures, there is a ceaseless
transfer of net resources from Africa to the North, and this predates the
The neutralising of pressure from African civil society was well calculated.
Taking advantage of the easing of this pressure, the G8 creditor countries now
put pressure on African governments to pay their debts and to conform to IMF/WB
conditionalities. For example, in Nigeria, which is not eligible for debt relief
under the HIPC Initiative, the civil society organisations were putting pressure
on their government to unilaterally cancel all odious external debts, and the
Nigerian parliament was about to move to repudiate these debts. The Paris Club
of rich country creditors called an emergency meeting in September 2005, and
managed to make a deal with the Nigerian government. In the deal, which covered
US$30 billion in debt, Nigeria agreed to pay 40 per cent of the total, or US$12
billion. Nigeria paid the US$12 billion, which it need not have if the
parliament had carried the day. The G8 would have probably imposed sanctions on
Nigeria, but in my view that would have been totally ineffective. In fact, the
West would have lost out both politically and, given the option to go to China,
also financially and commercially.
Out of the Gleneagles promise of rainbow, what Africa lost at the G8, Europe in
particular gained. Above all, from a European perspective the governments were
able to placate their own civil society members that had mounted pressure since
the start of the Jubilee Campaign in 2000 ‘to do something’ to alleviate the
sufferings of the African people. Their champion, Bono, is complaining today
about lack of follow-up to the promises of Gleneagles, but at the time he was a
It might be argued that at least the 18 HIPCs got their multilateral debt
cancelled. Africans should be grateful for this. This is a false argument. Why?
These countries had already paid for these debts many times over not only in
financial terms but also in terms of transferring real resources (minerals,
agricultural products), as well as in terms of profits by Western corporations
as a result of reckless trade and capital liberalisation policies pushed through
as conditionalities of the so-called ‘development aid’.
And secondly, debts are not something that are always expected to be paid off in
certain kinds of transactions, especially when the creditors have already
secured most of what they wish to get out of their debtors. In the United
States, for instance, the Federal Reserve Bank (a bank owned by a group of
private commercial bankers) provides credit to the government (through bonds,
for example), and as long as the government pays the interest, the premium is
simply rolled over and over and never paid. By 2007 the Federal debt stood at
US$8.679 trillion which is never expected to be paid back; the interest the
banks earn is more than enough to satisfy their shareholders. In the same way,
the IMF and the World Bank not only secured the interest on the loans given to
the HIPC countries, but as argued earlier, they also secured huge benefits for
their own principals – mainly commercial banks and corporations. So ‘writing
off’ of US$40 billion debt owed by 18 HIPC countries in Africa was not such a
big deal after all.
What do we learn from this experience? There are two lessons to learn: One, do
take the G8 seriously, but not in terms of what they promise to ‘give’ to
Africa, but in terms of what they intend to ‘take’ out of Africa. Second, Let us
not hitch the African wagon to the G8 engine. What looks like an act of
benevolence and charity is, in reality, an act of creating subtle forms of debts
by which to tie the future of Africa to their single-minded pursuit of capturing
Africa’s resources and Africa’s markets. ‘Development aid’ is, when applied to
the reality on the ground, a contradiction in terms.