Africa (Poverty)

Part of the debate – in the House of Commons at 3:01 pm on 30 June 2005.

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Photo of Ann McKechin Ann McKechin Labour, Glasgow North 3:01, 30 June 2005

It is a pleasure to follow Mr. O'Brien, who made a thoughtful speech.

Our debate will rightly concentrate on the statistical evidence of the need to address Africa's poverty, to release its potential to grow and flourish, but as the Commission for Africa report correctly states:

"We have to remember that behind each statistic lies a child who is precious and loved. Every day that child, and thousands like her, struggle for breath—and for life—and tragically and painfully lose that fight."

I have had the opportunity to visit Africa only since I was elected, and I have witnessed the outstanding beauty of the continent and the warmth of its people, but I recognise the scale of the challenge that they face and their overwhelming desire for a better future. I am sure that Mr. Robertson will remember our visit to Rwanda. I shall never forget the scenes at the genocide site and the gacaca trial that we attended.

Last September, I visited Zambia on a British Council parliamentary exchange and followed the hon. Regina Musokotwane around her constituency in the rural south. We visited two schools. One had been opened by the state government, after the local community had waited almost 30 years; the other was built by local people themselves with supplies from a US charity. They had no money for a qualified teacher. They had no power or even a water borehole, and the school could offer only a basic syllabus for the first two years of primary education. The people were incredibly proud of their achievement—rightly so; but at the same time as my visit, the World Bank and the International Monetary Fund were insisting on a nil budget deficit to enable the Zambian Government to reach the heavily indebted poor countries completion point. As a result, 5,000 qualified teachers had no job and the World Bank representative in Zambia was informing politicians that they should stop criticising his institution.

As the commission's report points out, debt relief is key to achieving the millennium development goals not only for the current HIPC group, but also for many other nations in sub-Saharan Africa. Was the meeting of G7 Ministers earlier this month what the Chancellor described as "a historic breakthrough" on the issue of debt? On certain key criteria, we can definitely say yes, but with the caveat that the fight to establish fully adequate debt relief has still some way to go.

I am chair of the all-party group on debt, aid and trade—formerly the all-party group on HIPC—and our group has long argued the justice of granting 100 per cent. debt relief to the world's poorest nations. I pay tribute to my predecessor as chair of the group, Julia Drown, the former Member for Swindon, South, for her marvellous work in pursuing that campaign. The decision taken at the meeting to grant 100 per cent. debt relief not only on the interest, but on the debt stock, for the world's 18 poorest countries, with another nine to be added in the next couple of years, was welcome.

The US Administration changed stance by agreeing to include International Monetary Fund debt as well as World Bank debt in the deal. That is significant because IMF debt is extremely onerous and constitutes half of all debt service obligations to the main multilateral institutions. The agreement to replenish the funds of the international financial institutions rather than reducing the amount available for grants was also significant. That news, when added to the recent announcement by EU states that they will effectively double their aid to Africa over the next five years and set a timetable to reach the target of 0.7 per cent, is a leap forward. I am sure that the private Member's Bill being promoted by my right hon. Friend Mr. Clarke, who is not in the Chamber, will help us to ensure that we reach that target.

This in itself is not however sufficient to allow Africa to meet its millennium development goals. Let us not forget that that was what the international community solemnly promised to achieve more than five years ago. We must go a great deal further and acknowledge now that such additional effort is achievable, rather than a pipe dream. Just last year, the international community cancelled $30 billion of debt owed by Iraq, which is more than has been delivered to the entire African continent over the past 10 years.

Even at this late stage, the G8 summit should next week consider extending the remit of the G7 debt proposal. The original HIPC list was drawn up in 1996 on a rather flimsy analytical basis and excluded key states such as Kenya and Angola. Kenya's total debt is $5.5 billion and 70 million Kenyans live on less than $1 a day, yet the World Bank considers its debt sustainable, despite the fact that 32 per cent. of its national budget is spent on servicing the debt, which is more than the amount spent on health and education combined. According to a debt sustainability analysis by the Jubilee debt campaign, Kenya needs total debt cancellation if it is ever to realise its millennium development goals. Some Kenyan politicians have suggested that the country is being penalised for keeping up debt payments. Debt relief seems to remain as elusive as ever for such nations.

It has been calculated that 35 non-HIPC, low-income countries warrant immediate 100 per cent. debt cancellation just so they can have a chance of meeting their millennium goals. To be fair, the UK Government have recognised that fact by agreeing to write off their share of multilateral debt for the world's poorest nations.

This month's agreement cancels only 10 per cent. of the debt owed by all 62 states with the lowest incomes which need 100 per cent. cancellation. The deal will amount to $1 billion per year for the next 40 years. That is $40 billion in nominal terms, but it is perhaps more accurately described as a net present value of $17 billion.

I know that the US Administration was reluctant to accept the sale of IMF gold reserves to fund debt relief and that an alternative decision was reached, but given that we in the UK accept the case for using the IMF's vast undervalued gold resources for the further extension of relief, will my right hon. Friend the Secretary of State continue pressing the point in the international community that we should give more relief and that we have a method of expanding debt relief? The undervaluation is estimated at $35 billion, so surely it is unreasonable to offer the people of Africa less relief from odious debt than what is offered to the current Iraqi Administration.

I welcomed the deal on Nigeria that was reached this week at the Paris Club. Will my right hon. Friend indicate the total amount of relief that will be granted to Nigeria as a result of the initiative?

I turn quickly to the conditionality that surrounds debt relief. Although I fully accept that we must show that relief is genuinely used properly and specifically for poverty eradication, I argue that multilateral institutions must accept responsibility for the many mistakes that they have made in the past by imposing inappropriate economic policies that were not focused on poverty reduction. I welcome the paper by the Department for International Development and the Treasury on conditionality, which acknowledges that fundamental changes must be made.

I am worried that those states that have still to reach the HIPC process—there are a number of them—could find themselves in exactly the same position as Zambia last year by spending all their energies on achieving nil budget deficits, rather than employing teachers, who are vital in the fight against poverty. The statement of the G7 Finance Ministers makes no concession on that. Instead, it ambiguously refers to good governance, accountability and transparency as crucial to releasing the benefits of debt cancellation. That appears to be a further test applied to low-income states on top of the already demanding requirements of the HIPC process.

It has been difficult to draw the boundaries between good governance conditions and economic policy conditions, with policy reforms, such as privatisation, sometimes promoted on an anti-corruption basis. Of course, there should be accountability, but as Mr. O'Brien said, if we truly wish to foster good governance and democracy in a genuinely equal partnership with African Governments, we have to allow them and their citizens to make their own economic decisions and to take responsibility. Will the Minister assure me that the Government will press for further relief not to be subject to economically damaging conditionalities?

I congratulate my right hon. and hon. Friends in the Department for International Development on their enormous efforts over the past few months to place Africa at the top of the G8 agenda next week. That is proper and fit. To use a cliché, we are going forward and not back, but we need to maintain that effort so that Africa achieves its full potential, which is what we all desire. I hope that the Minister uses his good efforts to persuade the G8 to go even further next week.