The United Nations Conference on Trade and Development, UNCTAD, is calling on creditors to cancel sub-Saharan Africa's multibillion-dollar debt. UNCTAD says this huge debt has strangled the continent's growth prospects for the past two decades. The UNCTAD report says, even if all of Africa's debt was paid off, the continent still would not be able to reach the goal of cutting poverty in half by 2015. The vast majority of people in Africa live on less than one dollar a day.
One of the authors of the report, Kamran Kousari, says Africa will need to achieve a minimum annual growth rate of seven to eight percent to be able to reduce its level of poverty.
"Even if all of the debt were to be written off, all the outstanding debt were to be written off, this would represent less than half of the total resource requirements of Africa," he said.
The report says that, between 1970 and 2002, Africa received about $540 billion in loans and paid back nearly $550 billion, or $10 billion more than it had borrowed. The report says the situation in sub-Saharan Africa is even worse. Although these countries have repaid more than 90 percent of what they borrowed, they still have a remaining debt of $210 billion.
The report rejects a commonly-held view that Africa's debt was caused by irresponsible and corrupt African governments. It considers this only part of the problem. It says global economic shocks, dependence on a handful of export commodities, poor reform programs and the actions of creditors have added to the debt crisis.
Mr. Kousari says, if Africa is to get its financial house in order, it must pursue policies of prudent debt management, economic diversification and sustained economic growth.
"Equally important is the need for much-higher levels of market access and a major reduction of agricultural subsidies in the OECD [Organization for Economic Cooperation and Development] countries," he said. "There is a need for strengthened institutions in Africa and these institutions have been weakened through 20 years of structural adjustment programs. In short, the multi-faceted problems of Africa require comprehensive and coherent solutions, at both the international and national levels, of which a permanent exit solution to the debt overhang is an essential element."
The UNCTAD study finds that a debt-relief initiative which was launched in 1996 has had little impact in reducing debt in 42 of the world's poorest countries, 34 of which are in Africa. The report says Nigeria, Egypt and South Africa carry the highest debt burden. African countries with the lowest debt are Equatorial Guinea and Comoros.