Monday, 02 November 2020_Many nations, with debt repayments due, are faced with a dilemma: pay their debts abroad or concentrate on solving COVID-19 crisis at home?
The unprecedented impact of COVID-19 has resulted in the tragic loss of life of over 1 million souls, yet, for many developing and Global South nations, a huge dilemma exists for which many believe the richer and Global North states are mostly to blame.
The dilemma
The dilemma poor nations are faced with is having to choose between paying back debts or providing much needed healthcare, something that major institutions, such as the IMF, have taken into consideration by asking the lending countries to ease the repayment plans in order for developing nations to concentrate their efforts on problems at home.
I want to finish with the gratitude to the G 20 for exceptionally rapid decision on debt relief for the poorest countries; it would release billions of dollars for them. And that is exactly what we need. Solidarity so we can come through this together.
Kristalina Georgieva, IMF Managing Director
Systemic corruption and mismanagement
Yet, there is a huge problem. In spite of the efforts of the lenders to ease repayments, however big or small that may be, there is the issue of how the money being saved is being spent, with allegations emerging that mismanagement and corruptions means the money is not reaching those whom it should be.
Let’s now take a look at some of the examples of why debt relief could help some of the nations in Africa, in particular when it comes to dealing with the ongoing medical crisis caused by the Coronavirus. Kenya for example, one of the more developed nations in Africa only has 130 intensive care beds for a population of 50 million people, raising the question as to just how bad things must be elsewhere across the continent.
Dire African Straits
A shortage of doctors is also a major problem for African nations, with Tanzania for example having just one doctor per 71,000 people, and Ghana having less than 15% of the number of doctors it needs, yet Ghana is currently paying debts of $36.3 million dollars per week, enough to pay salaries of an extra 1,500 doctors per year!
Taking it one stage further, and nurses are also in dire shortage across Africa, with the Democratic Republic of the Congo for example having half the number of nurses it requires, with the amount of debt being paid back in just four months of the year, enough to employ a further 141,000 nurses per year in the country, figures that I am sure you will all agree, are truly startling.
High interest rates and exploitation
There's no doubt that when it comes to any kind of debt, there's a major common denominator that determines it, namely one rich party will lend to a poor party on the condition of usually high interest rates and some kind of notion of set conditions to pay it back, which for the most part, often sees the party owing money rarely able to fully pay it back, and it's finding itself in a position to be exploited.
One of the most prominent examples of debt is seen in developing nations who have borrowed vast amounts of money from more developed countries, who in turn use the debt to exploit land, resources and people, into paying back the loans. Africa is of course one such place where such debt exists, but how then did African nations find themselves in such a position?
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