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As the world’s poorest countries continue to see their external debts rise to a situation where debt servicing and interest payments are struggling for attention as with needed investment for good healthcare delivery, road construction, educational development and provision of social amenities.
The majority of us in these countries live far below the poverty line, having to survive on about a dollar a day. Life expectancy has reduced drastically in Third World countries to below 55 years, with many people dying of malaria, which can easily be prevented, and of the scourging AIDS syndrome. People do not have access to basic education, safe drinking water, drugs, justice and they live degrading lives that is not suitable for rodents.
The clamour for cancellation of debts for poor nations is not a bad proposition in itself, but a cursory look should be carried out, to see if it is a viable prescription for Third World counties to actually develop. Feasibility studies must be carried out to find out if debt cancellation and relief would actually make poor countries more prosperous economically.
First, we should consider some facts about debt. Two parties, a lender and a borrower, who agree to an exchange out of rational self-interest, usually facilitate debts. In situations whereby the borrowers investment thrives, the lender will be the happiest for it, through rapid loan repayment and payment of interests. In most cases as it concerns International finance, loan exchange is usually borne out of irrational self-interest. International funding organizations, mostly multi-government subsidized development banks such as IMF, World Bank, and ADB are usually steered out of good intentions, but often times they lend money out to countries unwisely. Borrower nations do not do well, they invest the funds in white elephant projects and so they usually default in the repayment of such loans.
Giving aid without proper assessment would always amount to giving a drug addict a lot of money; you will only end up destroying what is left of his already wasted life.
The major trouble with developing countries that are usually loan defaulters is our leadership. Majority of our leaders are dictators with a network of cronies. We usually claim to run a “democratic” government, but this is usually make-believe as elections are bought, sold, exchanged and coerced. Leaders stay in power by distributing ill-gotten wealth to their narrow circle of party members rather than providing roads, educational facilities and other services that will make the whole society comfortable.
Our leaders extract wealth from the society and use it to terrorize even the poor masses they govern. They receive loans and grants from International agencies and utilize them in building their power base. We also have leaders who are insensitive to people’s plight.
A vivid example occurred in Nigeria, when a serving minister was interviewed late last year. The minister holds an important portfolio, and when asked about the issues concerning how the governments policies has impoverished Nigerians he said,” That is not true. It is only in Nigeria that people do not die of poverty.” He claimed that it was possible to get a balanced meal with less than N20, which is just about 15 cents when converted to dollars.
This is the mindset of our leaders. The indispensable key to development is good governance. We will do better, when we have leaders that will put in place smart economic policies and put many efforts into implementing such policies.
The campaign for unconditional debt relief is not justifiable and it has many flaws.
First, it does not address the fundamental issues that gave birth to poverty and underdevelopment. The root cause is not the debt as it were, it is not the making of an unfair world system neither is it due to exploitation by rich nations and international lending organizations. It cannot be traced to accident of geography or partiality in the occurrence and availability of natural resources, because it can not explain why,
Botswana with its diamonds has achieved rapid economic growth while Nigeria, Sierra-Leone and Liberia respectively with their crude-oil, diamonds and Iron-Ore have a lacklustre economy. I find it hard to understand why Nigeria being the sixth largest oil producer in OPEC and the thirteenth largest producer of the commodity in the world, still battles with a huge debt burden. We have made over a trillion dollars from oil sales since it was discovered in Oloibiri.
Looking at the last quarter century, the aid received by African countries, has grown to an all time high of almost 10 percent. We now have to finance our economy, by solely depending on foreign assistance. Over 10 percent of our Gross Domestic Product is from aid. With these, our government has been able to shy away from its key responsibilities.
Our educational sector and health expenditures are funded by donor agencies. We cannot conduct our own elections and population census without seeking for assistance from the developed countries in terms of financial commitments to these programmes. I even wonder why Nigeria did not request for a World Bank grant to organize the National Political Reform Conference.
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Writer Profile
ADEBARI ADEOLU
ADEBARI ADEOLU
22 YEARS OLD , NIGERIAN,
HOWARD UNIVERSITY
WASHINGTON,DC
USA
STUDENT AND YOUTH ACTIVIST
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Comments
consolidate your debt.. now! LisaO | Apr 27th, 2009
Debt has becoming an increasingly large problem in recent years. There are many companies who offer debt consolidation services. But, those services may not always be the best option and may involve taking out a loan. If debt consolidation is something you're seriously thinking about, there are good and bad ways to go about it. You can get installment loans and find a decent repayment plan for debt consolidation rather than pulling from your retirement and facing the penalties for it. One thing you should not do is to touch your 401K. Those are your retirement funds, and the penalties for early withdrawal are killer. There are plenty of reasonable alternatives to using your IRA or 401K for relief from your troubles.
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