The burden of external debt

No other region in the world has suffered as much as Africa from the external debt burden. By the end of 1998, total African debt as a percentage of GDP reached 65.5%, higher than the ratio of 1997. As a percentage of exports of goods and services, it was 303%, compared with 284% in 1997 and 236% in 1996. As a result, the debt service continues to absorb a sizable amount of export revenues. As a percentage of exports of goods and services, the debt service stood at 30.9% in 1998, up from 21.3% the previous year. In 1996, accumulatedarrears on interests and principal payments reached $64 billion, or 27.4% of the continent’s total debt. The debt overhang has an adverse effect on African development. It is "crowding out" investments in education, health and infrastructures.

Falling terms of trade

Africa’s external debt burden is compounded by falling terms of trade. Most African countries rely on a few commodities for exports. Price fluctuations, due to weak demand and an oversupply in world markets, have hurt African countries. It is estimated that the decline in the prices of oil and non-oil primary commodities was respectively 16.4% and 33% from the end of 1996 to February 1999. This translated into cumulative terms of trade losses for all developing countries estimated at more than 4.5% of income in 1997-1998. This was particularly true for African countries. African exports fell both in volume (-1.3%) and in value (-16%) in 1998. This is largely due to a combination of commodity price collapse and a high concentration ratio of African exports, with one or two commodities accounting for more than 50% of export revenues for 39 countries. As a result, Africa has accounted for less than 2% of world trade since the beginning of the 1990s.

Low level of external flows

Official development assistance (ODA) has steadily declined over the last 10 years. Between 1990 and 1999, the cumulative decline in ODA is more than $30 billion and more than 25% in real terms. In 1998, ODA stood at $20 billion, down from the level of the previous year and sharply down from its 1990 level estimated at more than $28 billion. The ratio of ODA to the GNP of major donor countries averages 0.22%, far off the 0.7% target recommended by the United Nations more than a quarter century ago. Net official flows to Africa and other net investments fell by 56% in 1998, from $1.6 to $0.7 billion, according to the 1999 Report of the United Nations Conference on Trade and Development (UNCTAD).

This decline in ODA has not been compensated by an increase in private flows. Rather, the low level of these flows has compounded it. Private inflows to Africa are among the lowest in the world. It is estimated that Africa accounts for less than 5% of private flows to developing countries and for less than 2% of private flows in the world. It has been estimated that net private flows to Africa fell by 20% in 1998. During that year, Africa as a whole received only $8.3 billion in direct investments, down from $9.4 billion the previous year.

The combination of these three sets of factors has resulted in low growth rates and a fall or stagnation in the per capita income. During much of the 1980s, Africa experienced negative real growth. Between 1990 and 1995, the continent’s average growth rate was estimated at 1.1%, the lowest in the world. Between 1981 and 1989, the cumulative decline in real GDP was estimated at more than 21% (Dembele 1999).

As a result, poverty has dramatically increased in the continent. The number of people living on less than one dollar a day was estimated at more than 220 million in the mid-90s. This number has increased in recent years as economic and social conditions continued to deteriorate in several countries, mainly as a result of the debt burden.

These negative trends were aggravated over the past 5 years by the persistence of new threats linked with globalization and its mechanisms (World Trade Organization ; Treaty on Intellectual and Property Rights (TRIPS) ; etc). Questionable macroeconomic policies undertaken under the auspices of the Bretton Woods institutions were seen by most African non governmental organizations as a threat to economic growth, social justice and equity. The World Bank itself indeed recognized that its policies failed to reach targeted objectives since the number of Africa’s poor people has dramatically increased in the past decade.

For all these reasons, many African non governmental organizations have decided to re-examine ODA policies and mechanisms and check their level of transparency, efficiency and fairness to African grassroots communities.

Objectives

 To set up a database of human development indicators for targeted countries ;
 To undertake a survey of official development assistance (ODA) : its origins, its evolution, its current state and prospects. This part will examine the volume of financial resources made available by major donors to targeted countries, the main sectors that benefited from these resources and their impact on the economic and social development of these countries. We consider technical assistance as part of ODA
 To take stock of the state of "development" in targeted countries over the last 30 years. This part will assess macroeconomic policies (monetary, fiscal, trade, financial, social policies) implemented in targeted countries during this period. It will also examine the evolution of these countries’ policies in other key areas, notably in the agricultural and industrial sectors.
 To assess the impact of bilateral and multilateral partners’ policies in response to the economic and social crisis in targeted countries (SAPs and other policies forced upon Africa)
 To formulate a set of criteria against which to assess the effectiveness of external development assistance.
 To examine the role of freedom and democracy as fundamental elements of economic and social development.
 To promote the exchange of ideas, viewpoints, data and free expression among all development partners via AT’s Web site and other communications channels. In addition, think tanks may be set up on the Web site under the supervision of well-known researchers. Research findings may be used for AT’s advocacy activities and disseminated to independent media, human rights groups as well as to other NGOs and civil society organizations in Africa and elsewhere.

Means

 Surveys
 Qualitative studies
 Participatory field studies
 Advocacy