More than half of a country’s population is living under abject poverty, lacking access to basic needs such as food, health care, clean water, education or clothing. These are some of the extremes that come with under development, leaving a threat to national peace. Unfortunately, this is the case for most developing countries, especially in Africa.
The idea of debt is an ancient and ongoing one, starting from person to person, all the way to national level. For most developing countries, borrowing is incorporated in national planning to compensate for their limitation in resources. With reference to the analysis of Zambian 2021 national budget by Policy Monitoring and Research Centre, 30.3 per cent of the funds were to be sourced through loans and grants. This just shows its ongoing nature and possible usefulness to those lacking. Debt is not only a developing country phenomenon, as most countries have external debt. However, what brings the focus back to developing countries is the possible implications of such debt while on their route to development.
Most African countries have been striving for development for decades, incorporating different measures to achieve this goal. Institutions such as the International Monetary Fund (IMF) through Structural Adjustment Programmes have given loans to a number of countries, with conditions of policy reforms. Kaiser (2018) states that these programmes are intended for restoring economic viability, though they have often failed. He further argues that this becomes a gateway to restructure entire economies and taking over the micromanagement of many sectors even without a proper understanding. Agreeing with his thoughts further, he specified that one of the core problems with conventional structural programmes was cutting of social spending, pointing out education and the health sector.
These measures clearly show the immediate impact to a struggling population when the government pulls back from certain services and adds a cost. According to Simutanyi (1996), Zambia adopted a systematic structural adjustment programme in 1983 which involved devaluation of currency, decontrol of wages, removal of subsidies on maize and fertilizer, reduction of civil service employment among others. Manufacturing industries were recorded to operate at a loss due to high prices, civil servants demanded a raise in wages, and riots broke out after removal of maize subsidies, leaving 15 rioters dead. Simutanyi further highlighted that the events evoked a cancellation of the agreement with the IMF, but was later inevitable as the international market distanced itself from offering any financial aid.
Debt for emerging markets may seem like the handing over of a country’s power to rule itself. As much as this might not be laid down in black and white, the conditions attached to the loans may suggest so, a stripping off of the power to decide for oneself. The countries become oblivious to their mandate to study their own country’s growth models and reforms, and the approach to attain the next stages of development. Instead, this is decided for them through loan conditions, without thorough assessment of the trickle-down effect. This therefore alters the purpose for a loan because in an attempt to borrow funds, one also borrows an atmosphere to operate them.
Analyzing the thoughts of Oberdabernig (2010), she states that these programmes harm countries in terms of poverty levels and income distribution, leaving only the rich to benefit. she further indicates that according to the IMF, the argument is that inasmuch as the results for poverty reduction might not be evident in the short-run, they definitely surface in the long run. However, with the failure to specify the length it takes to see positive results, there is no telling if poverty reduction in the long run is due to IMF programmes.
Debt repayment is of course an interest of both parties involved, and cannot go without expectations, however to take over economic decisions becomes an overrule. The question this would raise is that if developing countries are considered incapable of thinking for themselves, or if their development status indicates their inability to think themselves to development. This could just be one of the reasons for development stagnation, removing the leaders’ ability for critical thinking, and rendering them to be implementers of predetermined decisions, without considering the country’s development profile and needs. The country’s economists become analysers and projectors of the implications of the decisions taken, and not the cardinal position of helping to decide the direction the country should take.
However, Kaiser (2018) also argues that most of the adverse impacts of the IMF conditions were realized by the institution. Pioneers like the UN Economic Commission for Africa, Oxfam and ILO have proposed alternative adjustment strategies such as; the fund gearing decisions to reduce inequality, developing countries having an inside voice in the IMF, and the IMF taking a step back in its triple role as lender, monopolist of mandatory evaluations and primary author of reform programmes (ibid).
Therefore, when a developing country acquires debt, it comes to a place of pre-existing challenges, and certain conditions magnify these challenges. This leaves the country in a continuous bid to improve the living conditions of its citizens, and possibly acquire more debt. The burden of debt shifts a country’s focus from its needs for development, to the repayment of that debt. When the state of being developing becomes a reason to predetermine how a nation should govern itself, then the term independence loses its meaning. This is not in any way to mean debt is imposed, each nation has the responsibility to acquire and manage debt. However, the process becomes a cycle for under development if mishandled.
References
Kaiser J. (2018). Interfering in national sovereignty. Deutsch: Development and Cooperation
Oberdabernig D.A (2010). The effects of Structural Adjustment Programmes on poverty and Income Distribution. Austria: University of Innsbruck
Policy Monitoring and Research Centre. (2020). PMRC 2021 National Budget Analysis. Zambia: PMRC
Simutanyi N. (1996). The politics of Structural adjustment in Zambia. Institute of African studies: Third World Quarterly vol 17. No.4, pp 825-839
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