198/YOUR MONEY OR YOUR LIFE!
Specific Features of Sub-Saharan Africa's Foreign Debt in
the 1990s
Unlike most Latin American and Southeast Asian countries, sub-
Saharan Africa (excluding South Africa, Cote d'lvoire and Nigeria)
no longer has access to financial markets. Bank loans are few and far
between, accounting for only 2 per cent of the region's total debt
load. Furthermore, by 1996, 98 per cent ofthese loans were made to
South Africa. Foreign financial markets are at best uninspired by the
public bond issues of the region's governments. Such bonds account
for only 2 percent of sub-Saharan Africa's foreign debt-with 90 per
cent of this tiny investment in bonds going towards four countries,
with South Africa again in the lead.
Another indicator of the lack of financial market interest in Africa
is the low level of portfolio investment (especially with respect to the
purchase of company shares). Such investment is barely more than
FDI, and 89 per cent of it went to South Africa in 1996.
In recent years, private banks have been reimbursed by the debtor
countries in question and by the governments of the North, who hold
almost half of sub-Saharan African debt (not including South Africa,
which is still in the banks' good books). The international financial
institutions (World Bank, IMF, African Development Bank) hold
more than a third of this debt. The poorer an African country is, the
more its debt is held by the international financial institutions (Ms).
For example, 79percentofBurundi'sdebtisheldbyIFIs; 81 percent
of the Rwandan debt; 77 per cent of the Central African Republic's
debt; 61 per cent of Guinea Bissau's and 7 7 per cent of Uganda's debt
(Alibert, 1996). Aside from a few exceptions, sub-Saharan Africa's
debt is held by the Ms and the governments of the North (especially
the former colonial powers). The Ms, especially the World Bank and
the IMF, take in more from African countries than they provide to
them in loans (UNDP, 1994). The Ms are always the first to be
reimbursed. A significant portion of official development assistance
provided by the countries of the North is used to pay back the Ms.
Aside from South Africa (given the weight of its economy and the
strength of its capitalist class) the region's governments are very
much under the thumb of the IMF, the World Bank and Paris Club.
The Paris Club, which brings together the various lender
governments of the North, gives the World Bank and the IMF a free
hand to determine the policies debtor countries should implement.