The African debt problem : financial shackles to Africa's development process

UNITED NATIONS

ECONOMIC AND SOCIAL COUNCIL

Distribution: Limited 24 May 199?

Original: English

United Nations

Economic Commission For Africa Second African AfrtcarvAmerican Summit

"Bufldng a Bridge of Togetherness"

Ubrevie. Gabon 24to28May 1993

The African Debt Problem: Financial Shackles

to

Africa's Development Process

TABLE OF CONTENTS

Page I. Introduction 1

II. Africa's Development Challenges as It faces the XXI Century 2

III. The Debt Problem in a Historical Perspective 3

IV. Africa's External Debt Profile and Composition 5

V. Debt Relief Measures and the African Debt Burden 8

VI. Unfettering Africa's Financial Shackles 12

I. INTRODUCTION

The fears of the International fi nancial system collapsing because of the debt crisis of developing coun tries have subsided. After a decade of crisis, stagnation, and painful eco nomic and political sacrifices, some ofthe most heavily indebted develop ing countries, particularly in Latin America, seem to have been able to survive the debt-related problems of the 1980s and resume some meas ure of economic and social develop ment. But, is the debt crisis really over? The answer depends to whom is the question addressed. From the part of the creditors, the debt "crisis"

Is no longer a crisis per-se but a nagging problem on their balance sheets that no longer threatens their systemic viability. Conversely, from the point of view of many African countries, the debt issue remains a vivid crisis threatening their very ex istence and the future of generations

to come.

For most African countries the debt crisis continues to hamper their economic growth and exert a heavy burden on those that bravery con tinue to service their debts. Many are thus forced to earmark a large proportion of their scarce foreign ex change earnings to service debt at an enormous economic, social and po litical cost

The debt problem debilitates the socio-economic fabric of many Afri can countries through a forced re

trenchment of general budgetary ex penditures and the curtailment of essential imports. As a result many African countries have had to reduce sharply their expenditures on eco nomic infrastructure and social services, including those in health and education. Essentially, African Countries have had to divert their attention from the Important task of promoting socio-economic develop ment to dealing with problems of economic stabilization, aimed solely at strengthening their debt repay ment capacity.

This paper attempts to address Africa's debt problem from an Afri can perspective. Chapter two over views the current situation of the development challenges facing Af rica in the threshold of the XXI cen tury. Chapter three, seeks to place the African debt problem in a histori cal perspective. Chapter four analy ses, both graphically and statistically, Africa's external debt profile and composition. Chapter five, reviews the various measures utilized by the international commu nity in their attempt to provide relief to the debt burden of developing countries. Finally, chapter six at tempts to summarize the necessary conditions, from an African perspec tive, to assist the region move be yond the debt crisis, in a path of economic and social development.

II. AFRICA'S DEVELOPMENT CHALLENGES AS IT FACES THE XXI CENTURY

Africa Is facing the threshold ofthe XXI century with uncertainty and trepidation. The development chal lenges the region has to surmount are indeed formidable. Africa's rate of population growth is the fastest in the world at 3.2 percent per- annum.

At the same time, the region exhibits one of the highest rates of infant and maternal mortality. This is not so difficult to understand since the re gion has also one of the lowest rates of immunizations against childhood diseases and one of the highest rates of child malnutrition, as witnessed by the high incidence of children suffering from underweight wasting and stunted growth. This problems are further compounded by the low ratio of physicians per capita and limited access to safe water supplies and sanitation.

Africa is facing the future without the means and capacity to property train Its youth. Primary school en rolment rates are very low in com parison with other developing regions. In addition, lack of funding for the construction of educational infrastructure and the'training and funding ofteachers means that there are too few schools available result ing in severe overcrowding. Conse

quently, illiteracy rates of people aged 15 years and over is about 51 percent.

Economic infrastructure in the form of roads, sea and fluvial ports, air terminals, electricity, telecom munications, and other forms of in frastructure are ruefully inadequate.

The existing stock of economic infra structure Is inexorably deteriorating as funds for maintenance and repair become scarcer. Without the neces sary economic Infrastructure Africa will be relegated in the community of nations and left unable to reap the fruits of development.

Sub Saharan Africa's annual per- capita income (GNP per capita) Is one of the lowest of the world at US$360 in 1990. However, there are wide variations among individual coun tries. Annual GNP per capita in

1990 ranged from $77 in Mozam

bique to $4,541 in Seychelles.* Nev

ertheless, a very large proportion of the population lives below the abso lute poverty line, having to spend more than half their income on food.

Therefore, as the region faces the threshold of the XXI century, it is severely handicapped in its develop ment efforts.

Source: "African Development Indicators. "UNDP-The World Bank, Table 2-17, p.32, April 1992, Washington. D.C.. USA.

III. THE AFRICAN DEBT PROBLEM IN A HISTORICAL PERSPECTIVE

Hie African debt problem did not

start In the decade of the 70s or in

the 80s as it is commonly thought.

Its roots He deeper, further in the past of colonial times. We will not

make an in depth analysis ofAfrican colonial economic structures, as the

topic is beyond the boundaries and

scope of this paper. However, we

must point out certain charac teristics ofAfrica's productive struc

tures after independence which planted the seed for Africa's debt

problems of today.

Typical of most colonial empires,

practically all aspects ofAfrica's eco nomic activity were exclusively ori ented towards serving the needs of

the colonial powers. Therefore, all the physical Infrastructure, commu

nications, banking and other related

facilities In Africa were geared to fa cilitate the exploitation of Its natural and human resources for the benefit of the colonial masters. Africa was purposely made dependant on the production of primary products to feed the hunger for raw materials from the factories and industries of the colonial powers. The develop

ment ofAfrican industry was actively

discouraged, as competition with the

centres was to be avoided.

It is not surprising, therefore, that

with the advent of Independence Af rica was physically, technologically and politically unprepared to face normal International economic ex

changes. Furthermore, having been accustomed to have all its needs for manufactured goods pro vided by the colonial powers, there

was an Ingrained imitative con sumption pattern among African consumers. Thus, soon after Inde

pendence, the few African entrepre neurs daring enough to compete directly against European manufac tures often faced Insurmountable technological and financial barriers in International markets and con

sumer taste barriers in their own

domestic markets.

It is often argued that most African

governments have a tendency for corruption. On this point we must

argue that the colonial legacy of gov

ernance was not exemplary and pris

tine at all. Not surprisingly, Africa had more than its share of corrup tion and Improper personal self en richment to the detriment of its population. However, in most cases, these corrupt African leaders were aided and abetted by either for mer colonial powers and or Industri alized countries supporting their

own economic and political Interests and agendas.

Present day perceptions of the Af rican debt problem are quite diverse.

Most people agree however, that the

problem is without a doubt the most

resilient and pervasive roadblock to

African economic and social develop

ment as the region faces the thresh-

old of the 21th Century. Hie rea sons for the apparent intractability of the African debt problem are var ied and depend greatly from the per spective of each particular analyst

To some, the African debt problem is purely endogenous to the region as a result of misguided domestic and international economic policies and rooted deeply in the conglomera tion of political and sociological ills of the African region. For an ana lyst with this perspective, the only solution to the problem must come from within the region and the rem edy must necessarily entail heavy doses of rigid structural adjustment and the "rule of the marketplace."

From this perspective, the African debts were legally assumed by inde pendent states and thus are an obli gation that must be met.

To others, the problem is a natural consequence of centuries of colonial exploitation, both of human and natural resources, which left the continent physically and technologi cally unprepared to face the external world once the colonial yoke was removed. From this vantage point the only fair solution should neces sarily be the repudiation of the con tinued "unjust plunder" of the region. Therefore, calls for an out right cancellation ofAfrican external debt as a form of "belated compensa tion" for the ravages of colonialism are often heard from this quarters.

Both sides have valid arguments.

Thus, the principle of co-responslbil- ity must be applied here. It is true that African countries borrowed heavily and did not plan carefully their future stream ofincome to serv ice their obligations. However, the lenders were overly eager to advance loans without a careful analysis of the potential capacity to repay of their clients. If both sides made errors in judgement, the burden should not be carried by one party alone.

The factors which gave rise to and fuelled the African debt crisis during the 1930s are now well known.

Briefly stated, African countries bor rowed heavily during the 70fs.

buoyed by the high level of commod ity prices and the eagerness of com mercial lenders to unload their surplus petro-dollar liquidity. As the terms of trade shifted precipi tously against most African coun tries, many continued to borrow heavily in the belief that the terms of trade would eventually turn around.

However, the rise in foreign interest rates during the early part of the 80s dealt them a severe second blow in creasing the external debt burden of most African countries beyond their capacity to service their external ob ligations and forcing them to build up substantial arrears which were capitalized.

IV. AFRICA'S EXTERNAL DEBT PROFILE

The African external debt profile is better understood against the back ground of Africa's general economic performance. During the entire

decade of the 80s the region's GNP stagnated in nominal terms. A few

countries managed to achieve mod est increases in GNP. while others suffered precipitous declines as a result of drastic drops in their earn ings from exports of goods and serv ices. At the same time, Africa's

external debt grew dramatically and

nearly tripled from US$110 billion in 1980 to about $282 billion in 1992.

This dramatic growth in Africa's ex ternal debt occurred mainly during the middle of the decade as a conse quence of declining commodity prices and the consequent drop in

exports of goods and services. ( See

Figure 1)

A number of other factors also contributed to the sharp increase of

Africa's external debt stock in the

1980s and to erode the capacity of

marry African countries to meet their external obligations and accumulate arrears. These factors included, as stated earlier, the progressive de cline in Africa's terms of trade un controlled fluctuations in exchange rates of major currencies in which Africa's debt is denominated, re

2 ■■■>:< Africa Recovery, Afdi A

scheduling and refinancing of debt which capitalized interest rates and arrears (seeTable 14). falling real net

resource flows and a general unfa

vourable international economic en vironment in which African

countries had to operate.

Against this background, Africa's debt rose sharply during the 1980s as did the associated debt service payments which more than doubled from $13,689 million in 1980 to

$27,319 million in 1992. The world's poorest continent came to spend four times more on debt serv

icing than it did for all health serv

ices provided to its six hundred million (600) people.

As Africa's debt grew, its composi tion and structure changed drasti

cally. (See Tables 1 and 2) Hie

share of private debt (guaranteed and nonguaranteed), which used to comprise nearly 52% of total African debt fir 1680 fell to 35%. while the share of public and publicly guaran teed debt (official bilateral and mul tilateral and private) grew from 48%

in 1980 to 65% in 1992. Within the

latter category of debt, that 6wed to official creditors sustained the fast est growth due to the retrenchment of private lending to the region and larger bilateral lending by industrt-

Tmri>rf<mMif tn rwrtnpment, Africa

Afrlca Recovery. *f*r*n nrf*

Recovery Unit/CPMD. Department of Public Information, United Nations. New York.

1993.

allzed governments and their agen cies, (see Figure 2)

Therefore it Is to be expected that, of the total official debt of African countries, the greatest share was that due to bilateral lenders (see Ta bles 4-6), which In 1991 comprised 68% of the total official lending to Africa. The remainder 32% was provided by multilateral lenders, (see Tables 7-10). About 50% of official lending to African countries was made on concessional terms, with Sudan and Mozambique the largest beneficiaries In Sub Saharan Africa and Egypt In North Africa.

Eventhough only 27% of public and publicly guaranteed (PPG) debt ofAfrican countries Is due to private lenders (see Figure 3), these type of lenders take nearly 56% of African debt service going to PPG sources.

(See Figure 4) This means that more than $12 billion dollars are devoted to service $62 billion of pri vate debt while only $10 billion serv ice more than $169 billion of official debt. This Is mainly due to the fact that more than half ofAfrica's private debt Is held by only two countries:

Algeria ($20 billion) and Nigeria($14 billion). In spite of the serious stag nation of its exports of goods and services, Algeria has regularly serv iced its external debt at a great eco nomic social and political cost and it is the only African country, with a substantial stock of external debt that has not built up arrears.

As stated earlier, the largest por tion of Africa's external debt, which is public and publicly guaranteed. Is owed to Official lenders, which In

turn are themselves composed of Multilateral and Bilateral lenders.

In 1991 Multilateral lenders held nearly 22% of Africa's total external debt to the tune of US$62,775 mil lion dollars. They are composed of international lending Institutions such as the World Bank, the Inter national Development Association, the International Monetary Fund, the African Development Bank and other international lenders.

Bilateral lenders In 1991 held41%

of Africa's total external debt, or US$105,088 million. Bilateral lenders are simply sovereign govern ments or their representative agen cies. Due to the large weight of bilateral debt in terms of proportion of Africa's total external debt, it is important to examine it in greater detail. Percentages for total Africa mask significant variations at the country level. For most Sub Sana- ran countries, bilateral concessional loans are a high proportion of total borrowing. Nigeria's bilateral bor rowing, on the other hand, while substantial enough to reach 40% of total external debt, is entirely on nonconcessional terms. With the exception of Algeria, North African countries rely substantially on bilat eral borrowing, neaity evenly split between concessional and noncon cessional terms.

From the debtor side, we can see that more than 60% of bilateral debt is held by only seven African coun tries: Egypt, Nigeria. Morocco, Zaire*

Algeria, Tunisia and Zambia, (see Figure 5) Tndeed these group of countries also has more than 55% of Africa's total external debt. Like-

wise, the four North African coun tries and Nigeria account for 73% of total African debt service payments in 1991. Three countries, particu larly Zaire. Egypt, and Zambia have:

accumulated substantial principal and Interest arrears on their external debt

From the creditor side, the major ity ofAfrica's bilateral debt Is heavily concentrated on a few lenders. In 1991, more than 55% ofAfrica's total bilateral debt of US$115,075 billion dollars, was concentrated in the hands of France ($23 billion). Ger many ($13 bllHon). USA ($12.6 bil lion), and Japan ($9.5 billion), (see

Figure 6) Nearly half of France's bi lateral lending to Africa is concen trated on the seven African countries mentioned above. The amount of lending concentration is much higher in the cases of Germany the USA and Japan, (see Figure 7)

Africa's multilateral debt has a clearer composition. The large ma jority of Sub Saharan countries re lies heavily on multilateral concessional lending, particularly from IDA credits. A few countries like Botswana and Liberia relied more heavily in noneoncessional multilateral borrowing.

V. DEBT RELIEF MEASURES AND THEIR IMPACT ON AFRICA

A number of initiatives have been announced during the past years to assist developing countries in deal ing with the debt problem. The most important to date have been:

The Baker Plan (1986). the Toronto Agreement (1988). and the Trinidad and Tobago Plan (1990). During the later part of 1991, some improve ments were made on the broad out lines of the Toronto Agreement, resulting in the "Enhanced Toronto Terms." The Bretton Woods institu tions have also initiated schemes, such as the World Bank's Special Programme of Assistance (SPA) and the IMFs Structural Adjustment Fa cility (SAF) and the Enhanced Struc tural Adjustment Facility (ESAF) for countries implementing approved economic reform programmes.

The Baker and Brady Plans were designed to provide debt relief to heavily-indebted middle-income countries and arose out of the fear that the debt problems of the se verely indebted middle-income countries, could result in the col lapse of the international financial system. These debt relief initiatives utilized a market-based case-by- case menu of options approach ne gotiated between the debtor countries and their Paris Club Bank Advisory Committee.

The Toronto Agreement, the Dakar Plan, the Netherlands Plan, and the Trinidad and Tobago Plan

and the "Enhanced Toronto Terras"

are initiatives that have tried to deal with debt problems of the low-in come countries. The Paris Club in troduced in September 1990. the so-called Houston Terms. In Af rica, these were applied to Cote d'lvoire, Cameroon and Morocco.

The major innovation of the Houston Terms is the provision for debt con versions of up-to 10% of debts out standing on non-ODA debt.

The Toronto Plan was agreed at the Summit of the leaders of the Group of Seven (G7) industrialized countries, held in June 1988 in Toronto, Canada. They agreed that nonconcessional bilateral debt of low-income countries could be re scheduled through the Paris Club under a menu of options that would include concessional terms. From this menu, creditors could choose between partial cancellation, ex tended maturities, and concessional interest rates to provide debt relief to developing countries undertaking IMF approved structural adjustment packages.

Under the Toronto terms, all re scheduled concessional debt was to be repaid with an extended maturity period oftwenty-five years, including a grace period of fourteen years.

Moratorium interest charges were to be at least as low as the rates of the original loans. The Toronto Accord was labelled as a milestone and a

breakthrough in dealing with the

debt problems of low-Income coun

tries, because it officially sanctioned the principle of debt cancellation for nonconcessional bilateral debt

The Netherlands Plan was an

nounced in 1990 at the Second Con ference on Least Developed Countries held in Paris. France, and called for a complete and collective cancellation of the official bilateral

debt of the heavily indebted coun

tries on the condition that they im

plement economic adjustment

policies. However, this proposal

did not find acceptance among major official creditors.

TheTrlnldadandTobagoPlanwas

announced ly Mr. John Major, at the

Commonwealth Finance Ministers

meeting held In Trinidad and Tobago

in 1990. It was intended as an im provement on the Toronto Agree ment. In a nutshell, the proposals

contained In this plan suggested that the whole stock of eligible noncon cessional bilateral debt be resched uled in one go Instead of repeated

annual reschedulings. Addition

ally, it proTios«3 that the amount of

debt cancellation be increased to two

thirds. Furthermore, it suggested

that interest obligations on the re

scheduled debt should £e capitalized durtpgthe first five years, with inter est rates at market terms. Finally,

it proposed that the repayment pe

riod be lengthened to 25 years.

Although the Summit of the group

ofSeven held in London in July 1991

endorsed the application of the Trini dad and Tobago terms, these were not implemented by creditors. In

stead, the majority ofmembers ofthe

Paris Club agreed in December 1091 on the less ambitious "Enhanced

Toronto Terms" which contain provi sions for a fifty percent cancellation of debt payments due within a con

solidation period, for low income Af

rican countries pursuing IMF approved structural adjustment policies.

Since January 1980 until Novem ber 1992. thirty-two African coun tries have undertaken multilateral

debt relief agreements with official creditors at the Paris Club for a total

of 121 rescheduling operations.

During that period a total of $81,994

million was consolidated and re scheduled. Spine countries such as Senegal. Togo and Madagascar

have had a large number of resched ulings. However, the largest amounts rescheduled with the Paris Club have been executed by Egypt ($33,727 mill.). Nigeria ($13,693

mill.) and Morocco ($7674 mill.).

The largest single operation for Af

rica was done with Egypt on May 25.

1991. This rescheduling consoli

dated $28.164 million under highly

concessional terms, which catted for

debt reductions with the potential to reduce the net present value of scheduled debt service payments by 50 percent.

The renegotiation of commercial

debt occurs within the framework of

the "London Club." Between Janu

ary of 1980 and November 1992. 19

African countries had undertaken multilateral debt relief agreements with commercial banks at the Lon

don Club for a total amount restruc tured of $27,834 million. During

9

that period, the largest amounts re negotiated with commercial banks

were done by Nigeria ($15,723 mill.)

and Morocco($6,146 mill.).

In order to avoid the "free rider"

problem, which often plagued com mercial rescheduling operations, a menu approach was developed in 1987 which included debt reduction options as an alternative to con certed lending. Other alternatives were securitized claims and debt-eq uity swaps. In 1989. the then US Treasury Secretary, Mr. Nicholas Brady, announced that the US gov ernment would support voluntary debt and debt service reductions (DDSR's). The World Bank and other multilateral lenders also agreed to provide DDSR options.

The World Bank established the Debt Reduction Facility for IDA

countries only and contributed $100

million to begin operations.

The first African countries to benefit from the Debt Reduction Fa cility were Mozambique and Niger.

The latter bought back $108 million of its commercial debt at 82% dis count utilizing $10 million from the Facility and the rest from from Swiss and French grants. Mozambique bought three quarters of its comrrer- dal debt ($123 mill.) at a 90% dis count using an IDA grant and other grants from other sources. More recently, in January 1992, Nigeria offered 60% face value for $5,338 million of its commercial debt. The creditors accepted the offer for 62%

of the amount for a buyback, and the remaining 38% in a debt-reduction bond.

There have been a number of in itiatives for swapping debt for a vari ety of instruments. The most common swap proposals have been:

debt-for-bonds, debt-for-equity.

debt-for-nature, debt-for-exports.

and debt-for-development swaps.

African countries have participated and benefitted from debt-for-nature- swaps (madagascar, Zambia, Ghana and Nigeria) and debt-for-develop ment swaps (Sudan and Madagas car).

Notwithstanding these initiatives, the debt burden of most African countries still remains unsustain able. This is hardly surprising given that participants in Paris Club debt negotiations verify the fact that their primary concern in the negotia tions is to come up with the most advantageous schedules for repay ment of debt. The development concerns of debtor countries are not considered.

Additionally, the debt crisis con tinues to have the added adverse impact of discouraging foreign direct investment in Africa. As the World bank correctly observed "[t]he reduc tion of debt obligations in line with ability to pay removes the debt over hang distortions affecting both the country and foreign investors and makes possible faster economic growth on a sustainable basis."

3 World Debt Tables, 1992-1993: Volume 1. Analysis and Summary Tables: p. 11. The

Africa's Official debt to multilat

eral and bilateral creditors is the

largest component of her total exter

nal debt, as we have seen earlier.

While the multilateral creditors may

be restricted in their options for debt relief, due to concerns regarding the impact this measures may have on

their financial ratings, the bilateral creditor governments have much more room for manoeuvring. The cases of Egypt and Poland are \1vid proof that when there is political will there is away to address the problem in a substantially meaningful way.

World Bank, 1992. Washington, D.C..-USA.

VI. UNFETTERING AFRICA'S FINANCIAL

SHACKLES

The view of African countries is

that the african debt problem Is a

multidimensional problem which re quires an integrated and compre

hensive rather than a piece-meal

approach. In their opinion a compre

hensive solution would invariably have to include: a significant reduc tion in the continent's external debt stock, a reduction in the original contracted interest rates, lengthen ing of the maturity spread, net real

resource flows and measures to im

prove Africa's terms of trade.

As early as 1984 the African Min

isters of Finance meeting In Addis Ababa, Ethiopia, for the Regional

Ministerial Conference on Africa's

External Indebtedness adopted the

Addis Ababa Declaration on Africa's

External Indebtedness in which the

burden of the debt problem was rec

ognized and a call was made far

"support by developed countries and

international financial institutions."

4

The Addis Ababa Declaration was

further endorsed by the Heads of

State and Government ofthe Organi

zation of African Unity. Later, the same body, adopted the Africa's Pri ority Programme for Economic Re covery (APPER), which highlighted,

among other issues, the need to ad

dress the African debt problem within the framework of promoting economic recovery in Africa. In adopting APPER African countries recognized the shared responsibility between debtor and creditor coxui- tries in dealing with the problem.

They stated:

"We recognize that the external debts are obligations that our member states have individually contracted, and which they have to honour.... We call for an International Conference on Africa's Externallnaebtedness to be convened as a matter of urgency to provide a fonim for International creditors and African borrowers to discuss Africa's external debt with a view to arriving at appropriate emergency, short-, medium- and long-term solutions to alleviate

the problem."*

Tfac United Nations Economic Commission for Africa. Ihr ArtfiiH Ahaba Dfflianrticn OQ

. adopted by the African Ministers of Finance at their Regional

hld Addi Abb Ethiopi mcr- fa^f-. adopted by the

Ministerial meeting on Africa's External Indebtedness held in Addis Ababa, Ethiopia from 18 to 20 June, 1984. United Nations Economic Commission for Africa. Document E/ECA/CM. 11/5 Annex I.

Organization of African Unity. Afrira'a Priority Programme for Ffrmnmfc Recovery

In 1987. African countries adopted the "African Common posi tion on Africa's External Debt Cri

sis," where they again called for the

convening of an International Con ference on Africa's External indebt edness. They stated that

The problem of indebtedness

is historically linked with that of

development; its solution lies primarily in Africa's ability^ to engender real development/'

The world continues to be shocked

\sy the vivid and horrifying images of hunger and deprivation in many countries of the African continent.

These human faces of African chil dren are continuously calling to claim a future. This future will be denied to them if the region contin ues to be shackled with the unbear able burden of their external debt.

Only a modest amount of actual debt relief has been granted to some African countries so far. The sheer magnitude of the problem still per

sists, which means that more than

palliative measures need to be un dertaken urgently if the region is to be prevented from falling further be hind.

In the UN-NADAF report, the Sec retary General of the United Nations estimated that for the African region to grow by at least 6% per year, a minimum of US$30 billion a year in net Official Development Assistance was required for 1992. and this amount needed to grow by 4% per annum thereafter.

However, some economic projec tions indicate that the African conti nent will instead continue.to make large international net transfers of resources (defined as Gross Dis bursements minus Principal and In terest Repayments) to service their Public and Publicly Guaranteed debt In 1991, the continent trans ferred to the latter category of credi tors (both private and official), the amount of $4,649 million. It is pro jected that as gross disbursements

decline over the years and debt serv ice increases, by the year 1995 the net transfers of resources from the region will increase by $21,521 mil lion and decline somehow to

$14,824 million by the year 2000/

As the prospect for increased flow of resources look rather bleak, the hopes for a positive resolution of Af- tAPPERJ. 1986-1990, adopted by the Twenty-First ordinary session of the assembly of the Heads of State and Government of the Organization of African Unity (OAU) held to Addis Ababa. Ethiopia. 18 to 20 July. 1985.

Organization of African Unity. African Cnmmnn Pnwltfcm nn Africa's External Debt

phm». adopted by the Third Extra-Ordinary Session of the Assembly of Heads of State and Government of the Organization of African Unity held In Addis Ababa. Ethiopia. 30

November to 1 December, 1987.

Based on World Bank simulations.

13

rica's debt problem depend largely

on the capacity of the region to

"jumpstart" her economic and social engines In order to resume a growth path towards recovery. This task will be difficult at best, given that the current global environment Is char acterized by an acute scarcity of fi

nancial resources for development, intense competition from emerging Newly Industrialized Countries

(NICs) in Asia and Latin America and the focus of world attention centred in the republics of the former Soviet

Union and Eastern Europe. There

fore, Africa needs more than ever to marshall all the forces at her dis posal (her friends, allies, sons and

daughters around the world) to pre vent the marginalization ofher inter

ests.

Some actions can be immediately taken to promote Africa's economic growth and development. First

more efforts should be devoted to

strengthen Africa's human re

sources. Second, the transfer of technology and managerial know- how to Africa should be accelerated through concerted policy efforts.

Third, international trade barriers to

Africa's trade should be reduced or

eliminated.

The United Nations system has an

important role to play in this regard.

The UN Secretary General has on numerous occasions asserted that

for Africa to develop, fresh ap proaches are needed to tackle its

debt burden, achieve regional inte gration and diversify its economies.

The Secretary General observed that under the current pattern of net re source flows, it is the "porr" that

appear to be financing the "rich," a situation which in his opinion Is scandalous.

The UN General Assembly has ob served that a lasting solution to the

debt problem would also require si multaneous and complimentary ac

tions in areas of economic policy that

are mutually supportive. Particu

larly, the Assembly called for effec

tive national adjustment processes

and structural changes; the disman

tling of protectionist barriers and in

creased resource flows. In

summary, they called for coordi

nated policies on the part of indus trialized countries that promote a supportive International economic

environment conducive to sustained

and non-inflationary growth.

Furthermore, in 1988 the United

Nations General Assembly stressed that the debt crisis has a wide impact in an increasingly interdependent

world economy, often with political implications. In a Resolution, the

General Assembly once more em phasized the shared responsibility between creditor and debtor coun

tries in dealing with the debt prob

lems of developing countries as well as the importance of a supportive international economic environ

ment Although this Resolution was

supported by the majority of United

Nations member countries, the

United States voted against the

Resolution and Japan abstained.

The United Nations Economic Commission for Africa has the man

date and the duty to search for and

promote any and all possible venues

available for the solution of the Afri-

can debt problem. There is a con- We are, therefore, always willing to stant effort at UNECA to explore ad- cooperate with our partners in devel- ditional and innovative ways and opment in the difficult task of unfet- means to achieve this objective. tering Africa's financial shackles.

15

ANNEX

GRAPHICS AND STATISTICAL TABLES

fiRAPHICS

Figure 1: African Debt and Economic Performance Indicators Figure 2: Composition ofAfrica's External Debt

Figure 3: AFRICA: Total External Debt from Public and Publicly Guaranteed Sources - Total Official

Figure 4: AFRICA: Total External Debt from Public and Publicly

Guaranteed Sources - Total Private

Figure 5: Africa: Official Bilateral Debt. Outstanding and Disbursed.

1991. by selected debtor country

Figure 6: Africa: Official Bilateral Debt. Outstanding and Disbursed.

1991. by selected creditor country

Figure 7: Selected Creditor Exposure in Africa. Official,Bilateral Debt

1991. by creditor country

TABLES

Table 1: AFRICA: STRUCTURE OF EXTERNAL DEBT - Mill. US$

Table 2: AFRICA: STRUCTURE OF EXTERNAL DEBT - Percentages Table 3: AFRICA'S TOTAL DEBT OUTSTANDING AND DISBURSED Table 4: AFRICA'S TOTAL BILATERAL DEBT

Table 5: AFRICA'S BILATERAL CONCESSIONAL DEBT Table 6: AFRICA'S BILATERAL NONCONCESSIONAL DEBT Table 7: AFRICA'S TOTAL MULTILATERAL DEBT

Table 8: AFRICA'S MULTILATERAL CONCESSIONAL DEBT Table 9: AFRICA'S MULTILATERAL NONCONCESSIONAL DEBT

Table 10: AFRICA'S IMF CREDIT

Table 11: AFRICA'S PRIVATE GUARANTEED DEBT

Table 12: AFRICA'S PRIVATE NONGUARANTEED DEBT

Table 13: AFRICA'S SHORT TCRM DEBT

Table 14: AFRICA'S INTEREST AND PRINCIPAL ARREARS Table 15: AFRICA'S GROSS NATIONAL PRODUCT

Table 16: AFRICA'S EXPORTS OF GOODS AND SERVICES Table 17: AFRICA'S TOTAL DEBT SERVICE

Table 18: AFRICA: RATIO OF TOTAL DEBT SERVICE TO EXPORTS OF GOODS AND SERVICES

Tablel9: AFRICA: RATIO OF TOTAL EXTERNAL DEBT TO GROSS NATIONAL PRODUCT

18

African Debt and Economic

Performance Indicators

81 82 83 84 86 86 87 88 89 90 91 92

ToUl Dab*

Exports of 0*8

ToUl D«bt Sarvtca Arraara on LDOD

3ouro»:Th« World Bank

FIGURE 1

Composition of Africa's External Debt

Billions US$

81 62 63 84 66 68 87 88 89 90 91 92

Guaranteed Official 6SS53 Guaranteed Private GH3 Nonguarant. Private Uae of IMP Credit ORB Short Term

Source: The World Bank

FIGURE 2

AFRICA: Total External Debt from

Public and Publicly Guaranteed Sources Millions of US dollars, 1991

■* ,«

fit. Concuss.

5594G 33%

Source: The Worid Bank

AFRICA: Total Debt Service going to

Public and Publicly Guaranteed Sources Millions of US dollars, 1991

Other Private 56%

Source: The World Bank

FIGURE 4

Africa: Official Bilateral Debt

Outstanding and Disbursed, 1991

Billions US$

Debtor Country

45.887 6.194 2.944 3.16 3.831 10.482 14.749 27.628

1R.OA S Zaire CD Zambia H Tunisia ES Algeria IB Morocco S3 Nigeria

AFRICA'S BILATERAL DEBT, 1991

By Creditor Country, Millions US$

Others 35660

France 23264

Germany 13136

Italy 5675 UK 6689

Japan 9480 USA 12567

Total:115,O75

Sourc*; Th« World Bank

FIGURE 6

Selected Creditor Exposure in Africa Official Bilateral Debt, 1991 Outstanding and Disbursed

BillionsUS$ FranceGermanyUSA CreditorCountry

Japan

ID Zambia K! Tunisia K Algeria £8 Morocco E2 Nigeria

Egypt FIGURE7

TABLE1 -MillionsofUSdollars ANGOLA BENIN BOTSWANA BURKINAFASO

BURUNDI CAMEROON CAPE

VERDE CENTRALAFRICANREPUBL CHAD COMOROS CONGO,PEOPLE'SREPUBLK COTED'lVOIRB,REPUBUC0 DJIBOUTI BQUATORIAL

GUINEA ETHIOPIA GABON GAMBIA,

THE

GHANA GUINEA GUINEA-BISSAU KENYA LESOTHO LIBERIA MADAGASCAR MALAWI MAU MAURITANIA MAURITIUS MOZAMBIQUE NIGER NIGERIA RWANDA SAOTOMEPRINCIPE SENEGAL SEYCHELLS SB2RRALEONE SOMALIA SUDAN SWAZILAND TANZANIA TOGO UGANDA ZAIRE ZAMBIA ALGERIA EGYPT,

ARABREPUBUCOF MOROCCO TUNISIA

L-J 82 28 89 <9 554 3 17 42 21 352 351 ^{14 30} 261 103 32 633 600 58 422 4

S79 318 ^Iu2 452 403 39 0 42 413 51 9 221 16 103 400 1361 65 1033 155 123 685 778 15 1239 7732 3557 nu

2378 460 80 ISi 173 1136 42 203 105 43 1554 _20S4 75 "68

BJLfc

1S69 795 54

604 1087 178 1128 48 409 839 210 1377 1034 "3i3 2332 150 915 153 ³⁶ 712 74 226 824 2913 120 215! 200 374 1717 1724 816 871 13890 4965 256-1

1 31 9 30 2 205 1 28 34 0 135 355 5 13 IS 173 0 119 116 5 20ft 2 5ft 68 4f-fi1IL 8 54 Tt G 70 21 ^{1 4} ₁₆₉ ⁴ 47 9 1298 34 96 210 83 1662 327 83 1973 3704 166 218

Tiitnri 4|Al Mm

m 155 45 ⁴⁴ 0 1407 8 65 39 3 1104 2418 0 55 7 1096 19 67 390 85 198 13 ⁸⁰ 922 68 42 186

MuL 6i 705 390 I383S ! 20 571 5 137 313 2S69 11 1418 280 270 4478 1220 91 2960 13938 5518 _598

£gD£BH fQfift 0 S4 34 133 55 235 17 42 75 21 50 96 2 ² 306 22 36 182 63 29 296 39 ³⁷ 162 IT**■v 166 108 34 0

114 131 9! 11 190 3 40 ₁₄₉ 415 31 337 100 64 206 49 3 14 1901 90 95

mri 36 557 139 561 675 366 ⁸⁷ 486 381 102 173 380 100 61

nt Mvfc

1262 29

205 1791 759 265 1722 282 ¹⁷⁹ 1302 107S 949 531 77 472 676 ICl 624 89 1224 25 175 743 ₁₇₀₂ 53 1727 580 1287 1488 891 180 l« 137S 52" 3681

JfaKsosaaauL 13 36 50 24 40 245 0 35 14 0 90 493 0 17 in 32 21 202 102 ¹ 588 6 183 107 123 46 ⁸⁰ 146 u

45 440 ^{14 0} 213 2 81 28 ₆₅₀ 37 365 52 112 501 795 Q 270 1135 1090 338 mm

m 6■-i )

60 249 88 93 1173 11 59 37 IS 407 3022 0 22 95 442 56

1114 123 20

taw 1450 491 5871 2121 237j 741 1441 2171 2091 119 3856 13 2 515 21 112 1731 11151 65| 384 108 492 1070 1545 548 3€05 20871 51111 26031

■rnruc 36 118 8 20 8 825 D 43 53 0 653 3080 5 7 49 955 24 130 159 36 860 !l 156 323 ^10? 36 134 141 0 128 3279 8 0 452 0 HI 28 529 24 256 415 250 1582 639 Sp

13539 2152 3879 1249

ftirsw 3965 12 23 6 7 1066 2 21 15 0

758 2992

0 18 35S 694 ¹⁴ 215 98 31 785 28 196 232 51 12 73 126 438 17 14486 3 0 144 29 93 36 1583 5 249 54 232 872 492 J>69

20009 4860 4586 1281 *mm

03 73 4 35 12 449 ⁰ 25 11 i 246 1473 7 57 228 23 141 71 ⁵ 1075 S 81 244 24 65 7! 0 464 4650 26 0 228 59 53 47 910 15

390 113 64 326 673 90 2325 4292 928 316

m 405 57 7 76 13 1131 9 49 29 13 750 8051 21 26 174 787 3

418 170 ⁷⁴ 1731 4 538 205 34 79 330 197 543 302 1252 ^{52 16} 357 47 547 346 5725 4 530 134 175 10S1 1407 ^{82^5} 11M4 441f 512 JfifiEJ

5■9 424 133 330 166 2513 21 195 228 ⁴⁴ 152S 5848 32 76 804 1513 137 1407 1110 134 3449 71 685 1223 821 732 844 0 863 8934 190 23 1473 84 435 660 5163 206 2476 1045 695 4960 3261 786 19359 209k3 9710 3,52,7

d

m 1300 543 956 961 6278 158 ^Xg4 606 175 4744 18847 197 249 3475 3842 351 4209 2626 653 7014 ⁴²³ 1989 3715 1676 2531 2299 99! 4700 1653 34497 845 164 3522 201 1291 2435 15907 258 6459 1356 2830 10705 7279 28636 40571 21219 8296

TABLE

AFRICA: STRIKTTiTttK OF EXTERNAL DEBT -fecentage of Total

BENINBOTSWANABURKINAFASOBURUNDICAMEROONCAPEVERDECENTRALAmiCANREPUCHADCOMOROSCONGO,PEOPLE'SREPUBCOTOD'lVOIRB.REPUBLICDJIBOUTIEQUATORIALGUINEAETHIOPIAGABONGAMBIA,THEGHANAGUINEAGUINEA-BISSAUKENYALESOTHOLIBERIAMADAGASCARMALAWIMALIMAURITANIAMAURITIUSMOZAMBIQUENIGERNIGERIARWANDASAOTOMEPRINCIPESENEGALSEYCHliLLSSIERRALEONESOMALIASUDANSWAZILANDTANZANIATOGOUGANDAZAIREZAMBIA

ALGERIAEGYPT.ARABREPUBUCOFMOROCCO

TABLE3 AFRICA'STOTALDEBTOUTSTANDINGANDDISBURSED ANGOLA BENIN BOTSWANA BURKINA

FASO BURUNDI CAMEROON CAMVERDE CENTRALAHUCANREPUBLIC

CHAD COMOROS oongo,

people'srepublicof cotbdtvoire,republicof Djibouti equatorialguinea ethiopia GABON GAMBIA,THE GHANA GUINEA GUmBA-BISSAU KENYA LESOTHO LIBERIA MADAGASCAR MALAWI MALI MAURITANIA MAURITIUS MOZAMBIQUE NK3BR NIGERIA RWANDA SAOTOMEPRINCIPE SENEGAL SBYCHELLS SIERRALBONE

SOMALIA SUDAN SWAZILAND TANZANIA TOGO UGANDA ZAIRE ZAMBIA

59 424 133 330 166 2513 21 195 228 44

1326 5848 32 76^- ₈₀₄

1513 137 1407 1110 134 3449 71

6S5 1223 821 732 844 46? 0 863 8934 190 23 1473 84 435 660 5163 206 2476 1045 695 4961 3261

111 492 158 328 179 2548 39 234 210 54 1497 6651 30 92 1138 1135 176 1546 1352 141 VM 83

813 1577 812 835 973 545

0 1022 12136 197 34 ₁₆₇₀ 37

563 1056 6192 185 2622 969 729 5087 3621

195 672 203 352 227 2717 59 252 177 68 1957 7862 33 117 1239 1000 207 1475 1348 158 3451 121 902 1923 857 879 1151 584 0 958 12954 218 37 1861 51 617 1222 7216 199 2915 956 893 5078 3688

370 712 226 39S 301 2739 72 258 178 85 2016 7820 46

122 1386 ⁹¹⁴ 212 1650 1330 186 3715 135 1005 2043 885 992 1296 ⁵⁶¹ 82 950 18540 242 43 2078 55

637 1410 7600 235 3136 915 1012 5321 3781

928 679 261 410 348 2722 77 265 165 104 2052 8107 86

116 1524 920 230 1941 1240 243 3571 136 1076 2129 876 1244 1338 549 1365 956 18537 291 53 2203 71 616 1498 8612 192 3385 807 1065 5275 3793

2489 817 ^{334 511} 455 2940 100 347 191 133 3031 9745 ¹⁴⁴ 132 1874 1207 ²⁴⁵ 2227 1455 308

> 4181 173 1244 2472 1018 ¹⁴⁶⁸ 1502 629 1714 1208 19550 367 62 2563 98 723 1639 9127 ²³⁸ 3752 9*0 1225 6171 4617

2826 947 387 640 570 3703 119 467 242 166

3484 U0S7 125 159 2221 1940 270 2726 1756 336 4670 195 1438 2926 1161 1756 1768 671 3329 1448 23473 452 76 3224 148 859 1800 9870 278 4295 10G9 1400 7190 5732

1146 513 828 769 4032 138 625 325 203

4288 13554 183 196 2715 2543 327 3262 2064 437 5730 256 1685 3578 1373 2067 2044 814 4051 1697 30656 606 92 4035 175 1018 2009 11563 ³⁰⁸ 5142 1239 1917 8752 6620

5061 1065 502 845 801 ₄₂₂₀ 134 677 362 199

4088 13994 185 211 2985 2799 321 3048 2256 455 5757 285 1664 3579 1365 2039 2070 860 4197 1742 31247 654 103 3897 171

1023 2086 11933 265 5409 1229 ¹⁹⁴⁶ 8549 6839

6767 1185 513 717 889 4790 137 723 376 174 4241 15684 180 227 3030 3181 341 3296 2167 500 5783 325 1695 3426 1424 2145 2044 835 4498 1587 31977 644 130 3286 170 1093 2159 13844 270 5349 1186 2231 9202 6716

8185 1225 516 834 905 5990 153 766 SOS 185 4811 18079 210 238 3263 3641 352 3761 2479 596 7006 390 1867 3633 ¹⁵⁸⁴ 2432 2207 946 4740 1827 34557 736 146 3737 199

1177 2366 15340 ²⁵⁷ 6129 1287 2637 10215 7260

8775 1300 543 956 961 6278 158 884 606 175 4744 18847 197 149 3475 3842 351 4209 ²⁶²⁶ 653 7014 428 1989 3715 1676 2531 2299 991 4700 1653 34497 845 164 3522 201 1291 2435 15907 258 6459 1356 2830 10705 7279

56 im wis mm m m «2 201 ma 234 2*7 3SK 3299 446 4538 TNI too nx 51! 2W9 4931 U39 WBI 2M0 KB 5236 m 31MB 942 m #19 217 1448 2545 _HXJ9 ²⁹⁴ 014 U40 3084 nrn