Africa's heavy debts leave it on a precipice
Black Africa's economic and political state is more dangerously precarious than at any time in the first 25 years of the continent's independence. What makes the situation even more worrisome is that all the economic indicators point to further decline.
During three months of travel from the deep south of the continent up to the edges of the Sahara, this correspondent found most African leaders filled with pessimism, even despair.
''Even if the world financial crisis were to end tomorrow, our situation in the developing world would remain hopeless unless there were to be a basic change of attitude in Western attitudes to trade and aid,'' the president of one radical black African government said. ''And if there isn't, very few of the present governments, including my own, will survive this decade. We will rightly be accused of having made promises that have not been fulfilled.''
While black Africa certainly faces immense challenges, some economists also point to some international trends that could alleviate their plight. Most African nations are oil importers, for instance, and the current decline in world oil prices provides at least some fringe relief. Faint signs of economic recovery in the Western world also provide some grounds for hope that African exports may eventually revive.
In the interim, the economic blizzard has hit countries equally hard, irrespective of political systems or foreign ties. Free-enterprise countries - often cited as models in the West - such as Ivory Coast, Kenya, and Nigeria, have suffered as badly as socialist or Marxist countries like Tanzania, Mozambique, and Zambia.
The Ivory Coast, praised for its achievements as a capitalist paradise, and Tanzania, held up as a model for socialist development, can both expect to end up this year with a downturn of almost 4 percent in their gross domestic product.
At the very best, the continent will register a negative overall growth rate of 1.4 percent in 1983 - as against an average population growth over twice as fast.
To boost exports and gain foreign currency, country after country has been forced recently to devalue its own currency: Kenya and Malawi by 15 percent each , Zambia and Zimbabwe by 20 percent each, Botswana by 10 percent, and so forth.
While devaluation can help to maintain an element of competitiveness in foreign markets, they run the risk of political instability. Besides disrupting domestic and foreign investments, they raise local prices, especially of food and basic household goods, at a time when food subsidies are being withdrawn or reduced to hold down government deficits.
All these conditions are being compounded by the worst drought for 20 years stretching all the way from South Africa through Zimbabwe, Botswana, and Mozambique to parts of Tanzania, Kenya, Ethiopia, Somalia, and across to the Sahel states, which border on the Sahara.
Famine, rather than just food shortages, now faces tens of millions of people - forcing even countries like Mozambique to swallow their pride and launch international appeals for food aid.
Despite all hardships, very few of Africa's 51 independent states have actually defaulted on repayments of their foreign debts. The exceptions are Sierra Leone, Zaire, and Liberia. The latter has defaulted on a foreign debt of has kept all these countries precariously afloat has been the willingness of international lenders (in their own interests as well) to reschedule repayments in hopes of more propitious times ahead.
Oil-rich Nigeria, hit by falling petroleum prices as well as reduced demand for its crude, will be able to sell only about one-third of its oil export capacity. It is having difficulty paying for a foreign debt of $5 billion. Its economic plight is a major reason for its decision last month to expel hundreds of thousands of illegal aliens, mainly Ghanaians and other people from neighboring West African nations and Chad.
Sudan has once again been saved by its Western and Arab supporters, who have given it ''special case'' treatment over its total foreign indebtedness of $7.8 billion.
A consortium of Kenya's supporters agreed last month to provide immediate additional aid funds totaling $130 million to prevent serious cutbacks at a time when the country has not yet recovered from the political effects of an attempted coup last August by members of its Air Force. But this amount is well below half of what the government has asked for to restore confidence in Kenya's shaken stability.
Today Kenya is possibly worse off than its neighbor, Tanzania, since its greater industrial and commercial development means that, if things go wrong, it has further to fall and would probably fall faster.
Meanwhile, Tanzania's immediate outlook remains distinctly unpromising, with exports covering barely 40 percent of the import bill, foreign debts near $1 billion, and payment running $320 million in arrears.
At a time when the need for foreign loans of all descriptions is greater than ever, there is a significant decrease in what is available for African borrowers. Commercial banks and the Eurodollar market are hard to entice; the amount of aid from government institutions has been seriously cut back; and interest rates have gone up.
In fact, the rating of African countries on the international loan market is rather good, and its calls on it relatively small.
The latest survey by the Organization for Economic Cooperation and Development emphasizes that most developing countries are honoring their financial agreements. The trouble lies with two categories - the very poorest of African countries (whose indebtedness in any case is not large) and a small number of newly industrializing countries - such as Argentina, Brazil, South Korea, and Mexico.
Mexico alone has an indebtedness of almost $60 billion, as compared with the
What is significant about Africa's foreign indebtedness is not its size, but the rapidity of its growth - from under $20 billion in 1975 to almost $45 billion in 1979 (reflecting the impact of the rise in oil prices), to $56 billion in 1981, and $66 billion in 1982.
The continent now faces a sharp reduction in the availability of further loans at a time of its greatest need for economic growth. To pay back loans, African nations will need to earn more from exports. But this can not occur, analysts say, until industrialized nations revive their economies and increase their imports.
The United States, for example, has imposed its own sugar quotas on Swaziland and Malawi. Botswana, struggling out of centuries of poverty, has had a 25 percent cut imposed on its diamond exports, which are crucially important for its foreign exchange earning.
Developing countries have imported less from the industrial countries in the last two years, thus contributing further to unemployment and recession.
The situation echoes a point made by the Commission on International Development Issues, chaired by former West German Chancellor Willy Brandt, at its recent meeting in Ottawa:
''In this crisis, the fate of the rich and the poor countries, the industrial and agricultural communities, is inextricably linked. If the [poor countries], which buy 30 percent of the exports of the United States alone, cannot find more resources, the (rich nations) will be unable to revive their industries.
''By the same token, unless the industrial powers attempt to reflate their economies, the exports of the developing world will continue to languish without market.''