Can Africa Get Out Of Debt?

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The sound of shuffling feet announces her entrance as dozens of youngsters rise from their seats to chant in unison: "We welcome our headmistress." Jane Kansiime, who runs the Kamwokya primary school in the Ugandan capital, Kampala, silently reviews the students, who stand politely at attention, five to a bench. Most wear the navy-and-turquoise school uniform, but other colors speckle the crowded classroom: a yellow shirt, a red dress, a white blouse. "We are not rigid here, as long as a child can come," says Kansiime, 40. "It's not the clothes that make the child learn."

Six years ago, before Uganda became the first country to have its debt burden eased under a World Bank–administered initiative, classrooms like Kansiime's were half empty. Parents couldn't afford the $40-$50 annual tuition. Then the World Bank program, called the Heavily Indebted Poor Countries initiative, reduced Uganda's loan payments on the condition that the savings be channeled into health care, agricultural development and free primary education.

Over the past few years, debt relief has been touted by everyone from Irish rock star Bono to boxing champ Muhammad Ali as one of the best ways to help lift the world's poorest countries out of poverty. According to the World Bank, even nations in the hipc program — which was extended last week — pay on average more than 12% of their revenues each year to creditors from the developed world. Loan repayments often exceed spending on health care and education, and governments continue to sink deeper in debt simply by paying interest on their loans. Last week Bono was at Britain's Labour Party conference in Brighton, where Chancellor of the Exchequer Gordon Brown pledged $180 million a year to the cause for the next 10 years. Bono said that reducing Africa's burdens "is not just heart; it's smart." In Washington last week, Finance Ministers from the G-7 nations met to discuss debt relief, and this week Prime Minister Tony Blair goes to Addis Ababa, Ethiopia, for a meeting of the Commission for Africa, which is examining ways to reduce poverty, including debt relief.

The industrialized world is finally waking up to what debt relief can do for the developing world. Thanks to lighter debt burdens, Burkina Faso has slashed the cost of AIDS drugs; Mozambique has vaccinated half a million children against easily preventable diseases and electrified rural schools and hospitals; Tanzania has built 32,000 new classrooms and hired 18,000 more teachers; and Uganda has filled schools like Kansiime's by abolishing tuition fees. But in Africa, such limited relief may not be enough. Despite $29 billion in write-offs so far, the countries in the hipc scheme still collectively owe an estimated $90 billion to Western countries and organizations like the World Bank and the International Monetary Fund.

To many Ugandans, debt relief seems to be working. The hipc program cut Uganda's loan payments by up to $90 million a year. The resulting windfall was used to hire hundreds of teachers and build new schools and health facilities. Enrollment in the nation's primary schools jumped from 5.3 million in 1997 to 7.6 million last year. Immunization rates for tetanus, whooping cough and diphtheria jumped from 49% in 1998 to 83% this year, and the HIV infection rate was halved over the same period. "We've turned around a lot of things here," says Francis Omaswa, director general of Uganda's Health Services.