Saturday, 2 July 2005

Some facts

While at Hyde Park sinks slowly into the mellow tones of the Floyd (I never got Pink Floyd and I'm afraid I still don't) I thought I'd try and get my arms round some of the underlying issues. Why Africa - What works has a bewildering array of facts about debt in Africa,

In 1980 Africa had a 6% share of world trade. By 2002 this had dropped to just 2% despite the fact that Africa has 12% of the world's population. If Africa could regain just an additional 1% share of the global trade, it would earn $70 billion more in exports each year - more than three times what the region currently receives in international assistance.
In 1970, wealthy nations agreed to a goal of spending 0.7% of GNP on development assitance. In 2003, these countries spent on average just 0.25%; the U.S. gives the smallest percentage of its wealth, 0.15%, to poor countries. (OECD)
Pretty bleak stuff! And more about protectionism
Ghana can export raw cocoa duty free to Europe, but a 25% tariff is imposed if they process that cocoa before exporting it to Europe. It is this processing (tinning, roasting, labeling) which helps a country earn more money and develop its manufacturing base - and which allows its economy to grow. While fair trade could be Africa's ticket out of the vicious cycles of poverty, unfair trade rules like these trap Africa at the gates.
is available at Why Africa - Trade Issues.

The Jubilee Debt Campaign also paints a sorry picture of the action currently taken to support developing countries
'HIPC' - too little, too slow, and with strings attached
  • The Heavily Indebted Poor Countries (HIPC) initiative is the current international debt relief scheme
  • The 'Paris Club' is a group of creditor countries which meet behind closed doors
  • Countries which have received debt cancellation through HIPC -18
  • Total debt cancellation through HIPC [between 1996 - 2005] -$30 billion
  • Debt cancellation granted in one day to Iraq by the 'Paris Club' -$31 billion (Nov. 04)
  • Number of qualified teachers which Zambia was unable to employ because of a public sector wage freeze imposed by the IMF in 2004 as a condition of receiving HIPC debt relief -9,000
Now I'm certainly not an economist but in between the chinks of this I think we might perceive some routes to follow. We seem trapped in a loop of paying aid to service debts while stopping these countries competing in the world market and trading their way out of poverty. The G8 can make the world a more equitable place - it takes courage and risk taking and a change in the current systems that mean our brothers and sisters are starving because they are not part of our "club" and we won't let them join.

And The Who were brilliant - I don't get Floyd but I saw The Who in 1976 in Manchester and seeing Daltrey and Townshend playing again took me back to those halcyon days.

2 careful considerations:

Anonymous said...

Africa is a special case only insofar as the countries have been spectacularly bad at getting out of poverty. Malaysia, India, China, and others have put them selves on better footing by stressing education, rewarding entrepenurial activity, and competing instead of seeking handouts. Aid simply does not work. It has not worked in Latin America, it has not worked in Africa.

Nogbad said...

I think you and I are probably saying the same thing. Aid is being soaked up to service debts. What Africa and Latin America need are ways to trade their way out of poverty and that can't happen until the developed world opens up its markets in a fair way.