The Berlin conference (1884), sometimes nicknamed ‘The Curse of Berlin’ has perpetuated the European colonialism of Africa by devising a plan to officially scramble and effectively occupy Africa. The European presence in Africa did, in fact, begin long before the conference was held. The colonial expansion of the Europeans was successful because it was after the industrial revolution and they were able to command much military prowess over the African continent and other non-European states. The period leading up to the industrial revolution, and the 16th and 17th centuries, in particular, witnessed the beginning of the shaping of the African economy by European demand. With the onset of the industrial revolution in Europe, Africa lost its remaining autonomy and was reduced to being a supplier of slave labour for the plantations of America.
The colonial powers justified their colonial expansion as it was their responsibility to help the colonies develop. ‘The White Man’s Burden’, as they phrased it. A philosopher like Ernest Renan has on the contrary said, ‘Colonization is a first-order political necessity. A nation that doesn’t colonize is irrevocably destined for socialism and war between rich and poor.’ Even after the effective occupation came to an end in the 1960s, the European influence continued with economic exploitation and military intervention. Jacques Chirac, the French president(1995-2007), has once said, “We have to be honest, and acknowledge that big part the money in our banks comes precisely from the exploitation of the African continent.” He also added, “Without Africa, France would slide down into the rank of a third world power”
The African continent has passed through three phases of a scramble; Colonial scramble, Cold War scramble and Resource scramble. The scramble for resources is, of course, today’s reality. The Chinese have joined the later phase. The Chinese way is however different. Europeans send troops while the Chinese send businessmen. The Chinese model has consequently made China become the major trading partner for Africa.
The post-colonial economic exploitation and negative trade balance have drowned Africa in the huge debt burden. The debt burden is of course among the myriad of problems the African continent is facing. Upon the attainment of political independence, most African States have continuously been in pursuit of economic growth and development under different administrations. Faced with the economic challenges of low domestic savings and investment, the governments in Africa have had to resort to the fiscal policy option of borrowing short, medium and long term loans from international financial institutions and other economies alike. Years after, a number of these African countries have piled up an unserviceable external debt which consequently has landed them into a sovereign debt crisis.
The literature about the origin of the African debt crisis lists a number of factors as its causes. The oil price shocks of 1973-74 and 1978-79, the expansion of the Eurodollar, a rise in public expenditure by African governments following rising commodity prices in the early 1970s, the recession in industrial countries and the subsequent commodity price fall, and a rise in real-world interest rate are usually mentioned as major factors (Alemayehu Geda, 2003).
The coronavirus (Covid-19) outbreak has on its part brought a considerable economic disruption in the entire world. And the fragile health system and weaker economies of African states would likely to be the hardest hit, relatively speaking. The debt burden has further aggravated the continent’s socio-economic and political problems. International organizations such as UNICEF blame the problem of the external debt for the deaths of hundreds of thousands of children in some African countries. In addition, it pointed out that as countries are diverting resources away from social provisions to repay the debt; those most affected are the poor, especially women and children. This debt crisis has also been a factor behind the political instability in most African countries. The high level of corruption and mismanagement of borrowed public funds by the African political leaders has on the other amounted to an overbearing debt burden for the continent.
African debt, in absolute terms, is actually small by global standards. Trying to repay the debt is however a crushing burden for the African debtors. In other words, Africa’s debt is so modest as to be no threat to anyone except to Africans. As they say, African countries aren’t borrowing too much but they’re paying too much for debt. If the amount of the debt is not that significant for the lenders, what possible reasons do they have not to cancel what Africa owes them? The American-French political scientist, Susan George, explain the leverage that the power of debt gives to the creditors. The first reason for Susan is the lenders will have control over the currency of the indebted nations and are usually instructed to devalue their currencies which make their exports cheaper for the creditor nations. The debt burden enables the creditors to boldly intervene in the macroeconomic policy framing (implementation of structural adjustments programs) and also in the foreign policymaking process. Policies of international trade and foreign direct investments will also fall in the hands of the creditors. Debt makes debtors timid and creditors bold; Economic colonization it is in a nutshell. This is what the creditors are not willing to let go, Susan says.
As Karl von Clausewitz put it in his classic work On War, War is an act of violence whose goal is to force the adversary to do our will. Debt provides a powerful lever for forcing the third-world ‘adversary’ to submit to the will of the creditors.
African leaders have called for more comprehensive debt relief from bilateral, multilateral, and commercial partners asking for a forbearance of interest payments for all African countries for two to three years. They also called for $100 billion in support from donors to address the COVID-19 crisis, of which $44 billion would go towards debt relief. The G-20 has responded, though unsatisfactorily. They agreed only to suspend payment obligations on bilateral debt owned by their least developed counterparts through the end of the year. The goal was to free up more the $20 billion that poor governments could use to buttress their health services.
For the least developed countries in the sub-Saharan Africa that spend more on repaying public debt than investment on public health, the G-20 decision to freeze debt for the short-term won’t be enough, experts believe. Kenya has even rejected the debt suspension proposed by the G-20 saying the terms of the deal were too restrictive. Availing more funds for grants and loans, and permanent debt cancellation should be the policies the international creditors need to follow as part of a plan to tackle the health and economic crises triggered by the coronavirus pandemic and prevent an emerging markets debt crunch.
China should also, play a leading role in debt relief for African countries as it has become a prominent lender to Africa. The Chinese government has to be proactive in coordinating debt relief in the same way they have vigorously facilitated deals with African economies.
Impoverished Africa would become a White Man’s burden in its real sense. Humanitarian crisis consequent of economic contraction and political instability would flood the continent and the problem would then be exported to the developed countries through migration as the Italian deputy Prime Minister Luigi Di Maio has once warned.
As Africa has thus far been doomed to suffer the curse of Berlin, it is time to get drenched by the blessings of the Paris Club and the G-20. Stay Home! Stay Safe!
The Ethiopian Herald May 21/2020
BY WOSSENSEGED ASSEFA
