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CUTS-ARC
SOUNDS
Promoting
South-South Civil Society Cooperation
Issue.
No.
4
of 2004
A
quarterly
E-Newsletter Published by CUTS-
Africa Resource Centre, Lusaka, Zambia
No. 3 of 2003
No.
2 of 2003
No.
1 of 2003
No.
5 of 2002
No.
4 of 2002
Vol. 1 No. 3 - June
2002
Vol. 1 No. 2 -
June 2001
Vol. 1 No.1- April 2001
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same. Please do let us know to make the necessary changes
EDITOR’S NOTE
Africa’s Debt Repayment is
Unfortunate Economics
The laws of economics follow that scarce resources
should flow to those who are without any. Yet Africa, which owes the world’s
two thirds of total debt – over US$300bn -, has only five percent of the
developing worlds’ income. An average African country spends three times more
on servicing its debt to wealthy nations and institutions than on basic social
services where millions of people lack access to primary education,
preventative health care, adequate food and safe drinking water, etc. Africa
has become the centre stage in the struggle for human and economic rights.
However, debt struggle is not the only example of unfortunate economics.
Commodities produced from Africa’s ‘abundant’ resources sell at ridiculously
low values. Transnational corporations in wealthy nations then resell these at
prices many times greater than what is paid to producers.
As African countries have been encouraged to diversify away from agriculture,
international prices for export commodities have also recently taken a plunge.
According to a recent World Bank Report, the average price of robusta coffee
fell from US$0.87 a kilogram (kg) in January 2004 to US$0.81 in February. The
price of cotton (A-index) declined from US$1.67 a kg in January to US$1.63 in
February. A-Memphis cotton also fetched a lower price in February (US$1.62 a
kg), compared to US$1.7 a kg in the previous month. This means that prices
paid to poor farmers in the south are increasingly becoming unsustainable.
Couple this with the over US$6bn in cotton subsidies paid to farmers in the
north which have ruined livelihoods of over 10 million African farmers who
directly depend on cotton farming. The question that begs an answer is how
does Africa pay all its external debt?
Further, the Bretton Woods institutions have also increasingly been
channelling investment flows into speculative and purely “extractive”
activities, away from productive uses, a shift that has caused countries to
experience more debt burden. It is, hence, not difficult to succumb to
increased dependence. Africa is home to the world's gravest health crises–
including the HIV/AIDS pandemic– and chronic famine. Sub-Saharan poverty is
rising and nearly half of the African population lives on less than US$1 a
day. Only 16 percent of African roads are paved. Less than one in five
Africans uses electricity. Yet Africans constitute 10 percent of the world's
people. How can Africa continue repaying its external debt burden? What type
of economics exists here?
Editor
ACTIVITY REPORTS:
WSF Conference in Mumbai
Consumer Unity and Trust Society–Africa Resource
Centre (CUTS-ARC) participated in the World Social Forum (WSF) held in Mumbai,
India from 17th to 21st January, 2004. CUTS-ARC’s objectives in participating
in the workshop included disseminating outputs of the research, capacity
building and advocacy work it has been doing in southern and eastern Africa
since 2000, and networking with civil society groups pursuing south-south
cooperation in trade, and to explore possibilities of collaboration and
further the cause of WSF.
Among the most illuminating workshops was the Workshop on Globalisation in
which speakers included celebrated economists such as Joseph Stiglitz, Samir
Amin, Antonio Tujan, etc. Here, speakers argued that agricultural
liberalisation, structural adjustment policies of the World Bank and
International Monetary Fund, and abandoning of social safety nets by
governments along with changes in labour laws were the main reasons for
increasing poverty with the advent of globalisation since the early 1980s.
The workshop on Food Rights, Trade and Food Security in Africa focused on the
impact of trade liberalisation on food security in African countries. The
speakers argued that liberalisation of agriculture and the withdrawal of
subsidies and government support in extension and marketing resulted in
farmers switching over to cash crops from food crop production. This is a
major reason for the decline of food production and resultant high prices,
which has endangered food security in West African countries.
The issue of making trade fair was discussed in a workshop where the subject
of rigged rules in the international trading system and its implications for
the poor countries was discussed. It was recommended that trade rules be
reformed and the scope for cooperation between southern and northern countries
widened. The workshop also focused on the issues that came up at the WTO
Cancun ministerial, especially on agriculture.
NEWS
BRIEFS
IMF Admits Failing Africa
In a working paper published in Washington, two of the International Monetary
Fund’s (IMF) researchers have shown that its programme to relieve some of
Africa's poorest countries of their debt burden may not produce a sustainable
economic situation. The IMF's initiative for Heavily Indebted Poor Countries (HIPC)
initiative which was launched in 1996 with the simple aim of cutting the
mountain of debts that countries had run up and encouraging states to increase
their spending on the poor–on badly needed policies aimed at building schools
and paying teachers–now shows that the performance of half a dozen HIPC
African countries including Mozambique, Tanzania, Ghana and Cameroon are
estimated to be unable to raise enough revenue to pay for the spending
programmes the IMF is calling for.
The report however, recommends that only raising taxes or getting more foreign
aid will allow Africa's poorest nations to escape swinging back into
unsustainable debt levels. Additionally, even the World Bank in Africa
admitted that efforts to privatise state enterprises and improve their
performance have yielded meagre results. This is underscored by the United
Nations under secretary- general Mark Brown’s comments that the international
lending institutions must acknowledge the failures of the privatisation
process in Zambia. The assumption that investors with adequate financial
resources do exist and were simply waiting for the government to get out of
the way has proved to be a fleeting illusion.
(Source: BBC, 21.10.03, & TP, 11.03.04)
Africa's Debt - Who Owes Whom?
Africa is home to the world's gravest health crises–including the HIV/AIDS
pandemic–and chronic famine. Even though Africa has only 5 percent of the
developing world's income, it carries about two thirds of the debt–over
US$300bn. Because of this, the average African country spends three times more
of its scarce resources on repaying debt than it does on providing basic
services.
In addressing Africa's struggle for relief from its onerous external debt,
advocates of global justice have raised a critical question: Who owes whom?
For example, Uganda was the first country to complete the debt relief
programme, but as coffee prices plummeted it has seen its debt increase again–
demonstrating that the current relief efforts are not sufficient.
Mozambique, with a history of apartheid-caused war, was forced by loan
conditions to cut support for an infant cashew roasting industry that could
have helped stabilise the economy when the raw cashew prices collapsed. South
Africa has US$25bn in foreign debt that is considered sustainable even when it
is one of the most unequal countries in the world with 20 percent of adults
HIV infected. A large percentage of the debt is odious and illegal with an
estimated US$11.7bn from interest on loans from the apartheid era. Democratic
Republic of Congo was promised 80 percent debt relief (US$10bn) but it is one
of the strongest cases for full cancellation. Former dictator Mobuto Sese Seko
who assassinated the country's elected leader was granted loans that
disappeared into foreign banks, with few traces.
(Source: www.afsc.org/Africa-debt.)
International Commodity Prices Drop
World market prices of most major commodities dropped last February 2004
compared with the previous month. The decrease was due to the low demand for
the commodities alongside increased high supplies to the market. On the other
hand, the price increase for tea and Arabica was attributed to high demand
that was compounded by low supplies.
COMESA Seeks Extra Time before AGOA II
The Common Market for Eastern and Southern Africa (COMESA) is lobbying for a
two-year extension of the first phase of the African Growth Opportunity Act.
The three-year-old AGOA agreement gives African countries until September 2004
to stop using materials from third party countries and start utilising locally
produced cotton for the manufacture of textiles and garments destined for the
American market. A key requirement for AGOA II is that the beneficiaries
source raw materials locally. The US Congress wants the period extended by two
years, but the World Trade Organisation has contested this
(Source: TN, 10.02.04 & USDS, 12.03.04)
EVENTS AND ANNOUNCEMENTS
Afro-Asian Seminar
CUTS Centre for International Trade, Economics & Environment (CUTS-CITEE), in
association with partner organisations, will organise this event in New Delhi.
The seminar will take stock of various aspects of the multilateral trading
system, which are of special interest to developing countries in Asia and
Africa. It will also discuss concerns and necessary actions of civil society
organisations, governments and other stakeholders for achieving better
coherence between the multilateral trading system and national development
strategies, provide networking platform to civil society organisations and
others to discuss issues of mutual interests, and build partnership between
and among different stakeholders, as well as adopt the Afro-Asian Civil
Society Statement for taking the Doha Development Agenda forward and develop
research agenda and advocacy inputs for civil society organisations and
others.
(For details write to cutsarc@zamnet.zm
lusaka@cuts.org)
PUBLICATIONS
Investment Policy in
Zambia—Performance and Perceptions
Despite all the efforts in terms of structural adjustment and additional
foreign investor incentives, Zambia has not been a favourable FDI destination.
What are the reasons for this trend? What should be the contours of a workable
and development oriented FDI policy for Zambia? The report is part of the
Investment for Development (IFD) project coordinated by Consumer Unity & Trust
Society (CUTS). It aims at creating awareness about the investment
policymaking process in Zambia by examining facts, figures and also
perceptions of stakeholders. The question that the report tries to address is
whether the current investment framework and legislation is sufficient to
attract FDI, and if not, what additional measures need to be put in place?
(For details write to: cutsarc@zamnet.zm
lusaka@cuts.org)
Investment Policy in Zambia–An Agenda for Action
CUTS-ARC published a concise reader-friendly research and advocacy document as
part of the IFD Project. The aim of the document is to create awareness and
build capacity on investment regimes and sets action points for various actors
on investment policy in Zambia. The report takes into consideration
stakeholder’s views on foreign direct investment, including poor interest of
investors, inadequate infrastructure and skilled personnel as well as setting
an agenda for action by government, inter-governmental organisations and civil
society.
(For details write to: cutsarc@zamnet.zm
lusaka@cuts.org)
Competition and Consumer Protection Scenario in Uganda
This is a well-researched case study of the competition scenario in Uganda. It
presents the reader with thought provoking anti-competitive practices while
giving solutions through actions dutifully being carried out by the Consumer
Education Trust (CONSENT) in order to protect consumers. Read about collusive
tendering, bid rigging, exclusive dealing, predatory pricing, entry barriers,
misleading advertising and other practices of cartels in sectors such as
telecommunications, water, electricity etc., that will transform you from a
passive consumer into an active consumer activist.
(For details contact: cutsarc@zamnet.zm
lusaka@cuts.org
or consent@yahoo.com)
Why is Competition Law Necessary in Malawi?
Read about what happens when a country does not have a consumer protection law
and the only protection is found in laws that neither reflect the times nor
proper enforcing mechanisms. What happens when privatisation is carried out
without an established competition and fair trading commission? This study
researched by the Consumers Association of Malawi (CAMA) brings to the fore
Malawi’s anti-competitive practices and answers these and many more questions.
(For details: cutsarc@zamnet.zm
lusaka@cuts.org or
cam@malawi.net)
(For further
information please visit: www.cuts-international.org )
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