Zambian campaign calls for 'conditionalities from below'

In the wake of the Cologne debt initiative, the Zambian Jubilee 2000 campaign has prompted debate about the utilisation of resources released by debt cancellation. In an article in the Times of Zambia below, on 12 August, Peter Henriot condemns linking of debt cancellation to structural adjustment. He suggests instead a number of possible options to ensure that people of Zambia could exercise proper control of their resources.

Zambia is one of the few countries that is likely to benefit from the Cologne Debt Initiative agreed in June 1999. Current estimates are that Zambia's debt service may be halved. However this will still mean that Zambia will spend as much on debt service as on health and education combined. There has also been strong criticism of the Cologne Debt initiative for tightening the links between debt relief and structural adjustment policies (SAPs) - economic policies imposed by the IMF which have adversely affected the poor.

Will debt relief benefit Zambia's poor?

By Dr. Peter Henriot, Times of Zambia

It now appears that Zambia is going to be receiving some debt cancellation, some relief from the heavy burden of servicing our immense US$ 6.5 billion. How much? How soon? And under what conditions? These are certainly the key questions being asked these days by Zambian citizens, members of non-governmental organisations, business people, and government officials.

Answers to the first two questions are still very much up in the air. We really don't know how much debt relief is going to come to Zambia from the bi-lateral and multi-lateral donors. Some projections are for under one billion US dollars and others go as high as three to four billion US dollars. That is quite a difference!

How soon debt relief will come is anyone's guess, since some initial trickles are already evident (e.g., last week's actions by the British government). But when the IMF talks about “speeding up the process,” the years go by for two or three or more!

The crucial question for everyone, of course, is what conditions are going to be laid out by the donors before substantial debt relief is granted. Adherence to strict regimes of the Enhanced Structural Adjustment Programme is neither a viable nor ethical set of conditions. Not viable, because ESAF is a recognised failure; not ethical but ESAF hurts those who are already hurting, the poor who are the majority of Zambians.

It seems that the only effective and equitable condition that should be imposed is the one that everyone -- donors, people in the North, and ordinary people in Zambia -- is talking about these days. Plain and simply, this is the condition that any debt relief must benefit the poor!

Benefit the Poor through Poverty Eradication

The central thesis, therefore, for any debt relief must be: resources freed up through cancellation of debt must be oriented toward serving the needs of the poor. Debt relief of itself will not solve the problem of poverty in Zambia or in any heavily indebted poor country. But without debt relief, no solution is possible. It is a necessary first step, a step that must be accompanied by (1) external measures including increased aid, more fair trade, regulated investment and overall reform of the international economic order; and (2) internal measures such as integrated policies of poverty eradication.

We need to make a very clear distinction. Eradication of poverty goes beyond mere alleviation of poverty. The alleviation approach includes welfare assistance, safety net programmes, emergency support for those most impoverished (e.g., elderly, handicapped), etc. The eradication approach includes enhancement of peoples' productive capacity, development of social capital through education and health services, employment generation, agricultural productivity, etc.

Resources for serving the needs of the poor in Zambia obviously must go for both alleviation and eradication efforts. But much more important in the long run are eradication efforts that build a solid basis for the future. These efforts are central to people-centred development that respects human rights, the environment, and participatory and sustainable progress.

Of great importance to donor agencies and to citizens in indebted countries alike is the concern that resources freed up by significant debt relief will in fact go towards the eradication of poverty. This means that basic human needs of people must take precedence over repayment of debt. And it means that everyone concerned can be very confident that the money newly available does not go to the purchase of Mercedes Benz for party leaders, building political re-election campaign funds, or projects that benefit only a very few Zambians.

Effective Debt Mechanisms

How can this principle of meeting the needs of the poor be assured to operate in debt cancellation schemes that Zambia may be entering into over the next few years? The CCJP/JCTR Debt Project, which includes the Jubilee 2000-Zambia Campaign, has been studying the various approaches that can be used. In the new few months, the further design of these approaches, though a co-operative effort involving civil society, Parliament and Government, is number one in our list of priorities. We believe it should be number one on the list of everyone committed to effective and equitable debt cancellation!

There are four approaches, all interrelated, that move toward the assurance that debt relief benefits the poor.. The first three have already seen some initial practice in Africa, and the fourth is a proposal gaining wider international support. All are premised on the requirement for “conditionalities from below,” not “conditionalities from above. This simply means that the conditions for meeting the needs of the poor should be set by local people and institutions within the debtor country, not only by outside creditors imposing their preferred prescriptions.

Here is a brief description of the four approaches. Obviously, much more work must be done to make them realities that affect Zambia. But it is encouraging to note that this work is already going on in civil society, in academic circles, and in wider international fora.

1. An official tripartite “debt management mechanism”

This arrangement would include representatives from civil society (e.g., churches, trade unions, women's groups, non-governmental organisations, etc.), elected members of Parliament, and agents of relevant governmental ministries (e.g., finance, social development, agricultural, etc.). Such an official “task force” would be charged with monitoring debt negotiations for new loans and cancelling of debts, and with overseeing the direction of freed-up resources toward poverty eradication. The purpose of such a

mechanism is to assure transparency, accountability and participation in the process of debt relief that does indeed serve the needs of the poor. This would also assure local ownership of debt negotiations, since wider public debate and decision-making would be possible through greater information sharing.

Such a mechanism is already operating in Uganda. Beginnings of it are occurring in Tanzania and South Africa. In Uganda, just in the past few months, six major loan and debt actions taken by the Government were reversed by the Parliament because they did not meet the requirements of being committed to poverty eradication. Surely Zambia could put something in place such as this mechanism. The proposal has been widely talked about in civil society and concrete recommendations will be made within the next few weeks.

Creditors would then have the right to place only this condition on debtor counties seeking relief: establish such a debt management mechanism that includes a poverty eradication fund. It is increasingly evident in the international campaign for debt cancellation that more and more governments in debtor countries recognise the necessity of such an open and accountable process if they are to expect any effective debt relief. What about Zambia?

2. An independent “social audit mechanism”

This arrangement, based in civil society organisations, would publicly review national budget allocations and performance in relationship to meeting the needs of the poor, making appropriate recommendations to the relevant ministries and to the Parliament. Such a social evaluation of the national budgetary process and content has in fact been done for the past three years in Zambia through the offices of the Catholic Commission for Justice and Peace. This has meant that significant public attention has been focused on government priorities and the actual fulfilment of specific commitments made by the Government. Joined to the CCJP's “Structural Adjustment Monitoring Project” (evaluating the impact of economic reforms on the poor), this mechanism involves wide sectors of the civil society, engages ministries and members of Parliament, and publicises both within and outside the country the impact of budgetary decisions on the poor.

Plans are in place to refine further this “social audit mechanism” so that it looks very closely at the budgetary consequences of debt relief for Zambia. Working in conjunction with the “debt management mechanism” described above, this would be another effective step to assure that resources that become available through debt cancellation do in fact meet the needs of the poor. And it would also provide significant information to the “debt arbitration mechanism” that is being proposed as a fourth way of promoting poverty eradication.

Again, key to the operation of this mechanism is the involvement of civil society and the opening up of a transparent and accountable process of preparing, implementing and evaluating the national budget for Zambia.

3. A bilateral “counter-part funds mechanism”

This arrangement would be set up between donor countries and debtor countries, to assure that resources freed because of debt cancellations were directly providing for social needs. This might be the establishment of a fund whereby a creditor would contribute an amount equal to the cancelled debt and a debtor would contribute counter-part funds in the local currencies. Or it might take the form of “debt swaps” or similar legal arrangements. Switzerland has experimented with such a mechanism in recent years here in Zambia on a fairly minor scale and this experience could be utilised in further efforts on a larger scale. Several other donor countries are considering the approach.

One proposal currently being discussed between some bi-lateral donors and the Government of Zambia is to have funds freed up through debt cancellation put towards a variety of programmes directed to the prevention and treatment of HIV/AIDS. Given the enormous social and economic impact of HIV/AIDS in Zambia today, such an approach deserves close consideration. But key to this specific proposal, as well as to any other proposals under this “counter-part funds mechanism,” must be the assurance that the local civil society is involved in the arrangement. Otherwise, it would be a case of “conditionalities from above,” i.e., outside dictation of social policies.

4. An international “debt arbitration mechanism”

This arrangement would move debt negotiations out of the asymmetrical and unequal relationships between creditors and debtors into a more fair and positive set of relationships. Some internationally institutionalised arrangement (similar to a United Nations-sponsored court) would promote both more transparent negotiations of debt relief and future debt agreements and also provide more surety that national resources previously drained away to debt servicing are properly redirected to eradication of poverty.

Such a neutral arbitration process would be grounded in the commitment to promotion of human rights through conditionalities that encourage people-centred development. It would be more respectful of national sovereignty than the current heavy-handed pressures exercised by some donor countries and institutions. When Zambia negotiates with the World Bank, the IMF, or some large donor such as Japan or the United States or Great Britain, it does so from a position of comparative weakness. This does not assure that true justice will be the outcome of such negotiations.

Realistic Possibilities

There may be some who would argue that the four mechanisms proposed here to insure that debt relief goes toward poverty eradication are unrealistic in the current economic and political global context. But I would simply ask: is it any more realistic to think that the status quo can continue, with poor countries like Zambia taking more and more of their scarce resources away from human development in order to meet debt service? Is it any more realistic to think that the current arrangements of debt relief -- with negotiations from greatly unequal positions, conditions imposed from outside without local ownership, and failure to meet truly effective and equitable relief through half-measures -- is likely to turn around an international debt situation that is economically untenable, politically destabilising, socially harmful and ethically unacceptable?

Debt relief that does benefit the poor in Zambia is not only necessary, but it is also possible. Creditors should exercise the political will to co-operate with forces of civil society within Zambia to make that possibility a reality.

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Dr. Peter Henriot, a political scientist and a Jesuit priest, is the director of the Jesuit Centre for Theological Reflection in Lusaka. He is the coordinator of the CCJP/JCTR Debt Project. 7 August 1999

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