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This document is from the archive of the Africa Policy E-Journal, published by the Africa Policy Information Center (APIC) from 1995 to 2001 and by Africa Action from 2001 to 2003. APIC was merged into Africa Action in 2001. Please note that many outdated links in this archived document may not work.

Zambia: Debt Issues

Zambia: Debt Issues
Date distributed (ymd): 000320
Document reposted by APIC

+++++++++++++++++++++Document Profile+++++++++++++++++++++

Region: Southern Africa
Issue Areas: +economy/development+
Summary Contents:
This posting contains a status report from Jubilee 2000 Zambia on the debt cancellation campaign in Zambia. The report raises very substantive issues applicable more broadly to the debt issue worldwide. A parallel posting sent out today contains several documents related to action internationally and in the U.S. on debt cancellation.

+++++++++++++++++end profile++++++++++++++++++++++++++++++

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JUBILEE 2000 ZAMBIA -- WHAT IS THE WAY FORWARD!

By Chrispin Mphuka

Jubilee 2000 Zambia Campaign, c/o JESUIT CENTRE FOR THEOLOGICAL REFLECTION, P.O. Box 37774, 10101 Lusaka, Zambia Tel: 260-1-290-410; Fax: 260-1-290-759; E-mail: phenriot@zamnet.zm; debtjctr@zamnet.zm
Web Page: http://www.jctr.org.zm/jubilee2000.htm

[distributed by ICCAF, an ecumenical organization involved in research, lobbying, and advocacy. Inter-Church Coalition on Africa, 129 St. Clair Avenue West, Toronto, Ontario, Canada M4V 1N5; Tel: 416-927-1124; Fax: 416-927-7554; e-mail: iccaf@web.net; Web: http://www.web.net/~iccaf]

The Jubilee 2000 movement started as an idea some four to five years ago. Some people shunned the idea because they thought it was a silly one, a crazy dream. Others were rather pessimistic, even cynical, and thought that the movement was not going to have any impact. Only two years ago who would have predicted that debt cancellation of poor nations would be top on the agenda for the Group of Seven meeting in Cologne last year? Who would have dreamed that the IMF and World Bank would admit that their policies worsen poverty in poor nations and that a whole new approach to solving the debt problem was necessary? Who would have dreamed that Clinton or Blair would announced a 100 percent debt cancellation for the poor nations?

Yet the worldwide movement of the people, Jubilee 2000, has made all this possible. A silly idea, a crazy dream, is become more and more a hard reality in our world today. Even the Economist-a leading world business magazine-has acknowledged the power of Jubilee 2000. Indeed Jubilee 2000 is a movement with a difference. A difference to change things for the better, especially for the poor of the world, the poor of Zambia!

For those of you who marched with us for the Jubilee 2000-Zambia "Cancel the Debt" Campaign on the 22nd of May last year, I would like to take this opportunity to thank you. Without your efforts Jubilee 2000-Zambia may have not been as successful as it has been. But I also strongly encourage you to continue supporting the campaign. I urge others of you who have not been involved to join the movement because the battle is not yet won.

And that's what I want to speak to you about this morning, covering the following points:

? Recent changes and developments in the debt situation

? Implications for Zambia

? Experiences with the PRGF in other countries so far

? Position of Jubilee 2000-Zambia about the recent changes

? Challenges: Debt Mechanism and civil society participation

? Debt and Beyond -- the issues we must face in the future

? The Way Forward

MAJOR CHANGES DUE TO PRESSURE BY JUBILEE 2000 MOVEMENT

As Henry Northover has explained more in detail, there have been some major shifts in the policies of the World Bank and the IMF -- and many of us believe that these shifts have came about because of the worldwide Jubilee 2000 pressure.

The two key shifts have been (1) the review and redesign of the Highly Indebted Poor Countries (HIPC) initiative and (2) that the Enhanced Structural Adjustment Facility (ESAF) should be renamed the Poverty Reduction and Growth Strategy (PRGF -- Many of us still call ESAF -- SAP! -- you know the old proverb, "a rose by any other name still smells sweet!" or, in the case of SAP, "garbage by any other name still smells bad!")

As Henry explained, after the G7 meeting in Cologne, HIPC was reviewed and the World Bank and the IMF now claim it offers faster, deeper and wider debt relief. But is that true? We see that the "enhanced" HIPC does not offer total debt cancellation. And the process is still tied closely to the those structural adjustment economic "recipes" that have meant very bad meals for the poor!

As regards the second major shift, the proposal for the PRGF, we feel the most significant point to be followed is the call for participation of civil society in an approach that is purported to focus on poverty reduction. But we need to ask questions about whether the design of the PRSP (as Henry explained) will in fact impose another layer of conditionalities to HIPC qualification. (Without wanting to sound like key leaders in the current government, "the goal posts do seem to be shifting very often!)

IMPLICATIONS FOR ZAMBIA OF THESE SHIFTS

What do these shifts mean for Zambia? What do these shifts mean for you and me, the Zambian citizens?

For Zambia a significant proportion of our debt will be cancelled, if we meet the necessary qualifications. Zambia is expected to reach its HIPC decision point by June this year. It may take another year or at least another six months before we reach the HIPC completion point. It is only at the completion point that debt relief becomes available. If all goes well, we might expect over US$ two billion of multilateral debt to be cancelled and over US$800 million of eligible bilateral debt. In addition, Zambia looks forward to the promised 100% cancellation offered by the UK, Canada and USA. Because we owe Japan and Germany more than US $1 billion, we strongly urge these two countries to follow the example of their other G-7 partners and cancel Zambia's bilateral debts.

Now, this picture indeed looks very rosy, very favourable. But let me add at this point two cautions that give the Zambia picture a more accurate report. First, even with the major cancellation of multilateral debt, we still will be heavily servicing the debt --to an estimated US$190 million each year for the next few years -- and this is substantially more than our expenditures on health, education and other social services. Second, the entire cancellation process is dependent upon our completion of the PRSP process -- and we are only now beginning to get that process underway!

EXPERIENCES WITH THE PRGF IN OTHER COUNTRIES SO FAR

As we evaluate the implications for Zambia, we need to put this into the perspective of reviewing the experiences of other countries that are qualifying for HIPC relief at this moment.

Late last year, Mr. Michel Camdessus, outgoing Managing Director of the IMF, announced that Uganda, Mozambique, Bolivia, and Mauritania were to qualify for enhanced debt relief by January 2000. This did not in fact happen.

Uganda, Bolivia and Mauritania qualified early this month, with Mozambique falling out. Uganda and Bolivia reached the old HIPC completion point but have been reverted back to the decision point under the enhanced new HIPC. Despite the glowing newspaper reports you may recently have seen, it appears that these countries may have to wait some time before debt relief is actually in their hands, not simply in others' books. An additional concern is that the funding required for the new HIPC to take place has not yet been fully guaranteed by the larger creditor countries.

Mozambique, one of the poorest countries in the world, fell out of the immediate HIPC relief because it does not have a PRSP in place. They hope to move quickly enough to qualify in June.

POSITION OF JUBILEE 2000-ZAMBIA ABOUT THE RECENT CHANGES

It is important at this point to reiterate that Jubilee 2000-Zambia stays faithful to its original claim: a demand for total debt cancellation for Zambia, not simply trickles of relief. As I have explained earlier, even with HIPC relief, Zambia will still be paying substantial debt servicing in the near future -- denying a future to children without schooling, sick without healthcare, and over 70% of the population suffering from poverty.

The PRGF programme, while the IMF claims it should be a "home grown" programme, is still too much dependent on outside influences. We feel that the IMF has too large a role in approving the Zambian programme. We know that under the former ESAF programme, the IMF's influence was so great that even President Chiluba had to back down from his promise of raising civil servants' salary to K200,000.

We believe that there are better institutions, more qualified, that should have an upper hand in guiding poverty reduction approaches -- for example, UNDP or UNICEF.

As regards our government, Jubilee 2000-Zambia urges that the process of PRSP be begun immediately, so that Zambia does not face any disqualification from its deserved eligibility. As we know, therefore, civil society's participation must be invited readily. Today's conference hopefully will move this process forward.

CHALLENGES: DEBT MECHANISM AND CIVIL SOCIETY PARTICIPATION

We now come to a key point in the Jubilee 2000-Zambia campaign, a point essential to the way forward of guaranteeing that debt cancellation will mean poverty reduction. There is an economic, political and moral demand that whatever savings come from debt cancellation should go towards reduction of poverty in our society. But you and I know very well that we need an effective mechanism in place if this demand is to be met. The Jubilee 2000-Zambia campaign has come up with a very specific proposal, worked on over the past several months with wide consultation. The Debt Mechanism proposal is included in your information pack. As you will see, the proposal we are suggesting is for the establishment of a "Debt Fund Managing Committee" and a "Debt Relief Social Fund."

The Debt Fund Managing Committee is a tripartite steering committee, made up of representatives from civil society, Parliament and various government ministries. It is charged with oversight of the spending of any resources freed up from debt cancellation. The Debt Relief Social Fund is the instrument for this spending, with its total orientation being the reduction of poverty.

This Debt Mechanism meets the requirements of (1) transparency and accountability, (2) wide participation, and (3) poverty orientation. Thus it answers the demands not only of the foreign creditors but, more importantly, of the ordinary Zambian citizens.

As civil society represented here in this Conference, we must look carefully at this proposal, at least in general detail. Is it something you agree with? Is it something you are willing to promote in the political arena? Do you have suggestions about how to go about this important task? In the afternoon, we will have more time to discuss this in groups. Our hope is that in the next few weeks our task will be to build political will for this proposal.

But two very serious challenges face us as civil society. The first is to recognise that the term civil society might be inappropriate for our movement. It may simply be too broad. It includes everybody and excludes nobody. But who should participate in the debt mechanism process? Certainly is should be limited to those groups directly involved in poverty work and with strong grass roots connections. As details become more sharply debated and clearly defined, the participants will be identified in a democratic process.

The second challenge is to recognise that key to civil society's meaningful participation in the PRSP process is its capacity to enter into what at times may be more technical discussions. We cannot only "approve" what others have done -- we must get involved at the outset of the preparation of the papers. Any other way is only "tokenism," "consultation" without any effective power to decide the direction of the programme. The need to build the capacity of civil society is a high priority on Jubilee 2000-Zambia's agenda and we can talk more about that this afternoon in our groups.

DEBT AND BEYOND -- THE ISSUES WE MUST FACE IN THE FUTURE

Our colleagues in the worldwide Jubilee 2000 campaign have come more and more to realise that the problem of debt is actually only a symptom of a much deeper and more serious problem -- the injustice of the overall international economic order. Recent meetings of the South-South summit of NGOs involved in the Jubilee campaign have emphasised that debt is an effect of unfair, inequitable relations between the rich and the poor nations.

We have seen, for example, in the negotiations around the WTO in Seattle and UNCTAD in Bangkok that the entire international economic order must be re-evaluated and re-shaped if the needs of the majority of the global population, the poor, are to be effectively met. We need to put issues like trade on our agenda for the future.

So it is not only the development of an effective debt management system by our government, with meaningful civil society involvement, that will assure that Zambia does not fall into future debt traps. But it is also a positive and necessary move in the direction of Zambia's active role in shaping a just international economic order. We must not attend conferences that shape our future merely as spectators but as competent and forceful agents of change.

THE WAY FORWARD

In conclusion, let us look at the fact that Jubilee 2000-Zambia is now at the close of the second month of the year 2000. Where are we headed in the last ten months? What are our priorities in the immediate future? How can you be an effective participant?

Let me simply list a series of points that we can then discuss more fully. They are needs, challenges, calls for our future as Jubilee 2000-Zambia.

  1. We need more coordination and cooperation among the organisations involved in the campaign. We are a varied and talented group -- working together we can accomplish great things in getting debt cancellation that will improve the lives of our fellow Zambians.
  2. We must intensify our call for total debt cancellation for Zambia, without any conditionalities. As we have said many times before, no conditionalities from above but only conditionalities from below -- that is, the active participation of our own civil society in monitoring debt negotiations and directing debt relief resources toward the needs of the poor.
  3. We are challenged to develop more mass mobilisation of the people from the grassroots in the campaign. We can be proud of the fact that prior to Cologne in June of last year, our campaign gathered 300,000 signatures on our petition, and 45% of these came from rural areas. Using more vernacular outreach (like our radio dramas) and more local presentations (like the popular drama you will see after lunch), we can mobilise more Zambians.
  4. We must lobby government to give us more vital information about the debt situation. We appreciate the presence of the Minister at this Conference and the active participation of government officials. More of this is necessary and as citizens and taxpayers, we expect it!
  5. We need to carry out deeper research on Zambia's debt situation, for example, how it impacts on the poor, how debt benefited our development, what debt was incurred because of the struggle with the Apartheid regime in Pretoria, etc. This research must be oriented toward policy changes and widely circulated among the general public.
  6. We are challenged to strengthen the links with other international organisations involved in the Jubilee 2000 campaign. This includes as a first priority links with groups in the South, especially in Africa. But we are also pleased that so many Northern groups are interested and supportive of what we are doing. Several of these groups are represented here in this Conference today -- and we welcome your cooperation!

Jubilee 2000-Zambia has come a long way in a short time. A silly idea, a crazy dream. But now the reality! Please keep giving us your hard work and dedication -- we have a long ways to go yet. But we are moving and the goal -- poverty reduction in a society of greater justice -- is too great too be slow about. Our best human and religious instincts and values will keep us on the way!


This material is being reposted for wider distribution by the Africa Policy Information Center (APIC). APIC's primary objective is to widen international policy debates around African issues, by concentrating on providing accessible policy-relevant information and analysis usable by a wide range of groups and individuals.

URL for this file: http://www.africafocus.org/docs00/zam0003.php