The Independent, Dec. 18, 1999

HOW DEBT HAS CRIPPLED THE POOREST NATIONS

Gary Finn

BANGLADESH, BOLIVIA, Ethiopia, Jamaica, Nicaragua, Malawi, Mozambique and Tanzania - eight countries which are the antithesis of the wealthy G8 nations, according to the charity Christian Aid.

Arguably the worst-off - although at this level of poverty all seem to be running a dead heat - is Tanzania, the sub-Saharan African county so saddled with First World debt it will never pay off the huge sums loaned to it during the credit boom of the 1970s.

Conservative estimates put Tanzania's debts to the developed world at at least $ 7.9bn (pounds 3.5bn).

Under existing debt service agreements, it hands over one third of all its domestic taxes to lenders in an attempt to pay off interest arrears without affecting the capital sum, which grows each year because it cannot pay off all the arrears.

In a country where the average wage is $ 120 a year, the amount raised in taxes is marginal compared to the UK or Europe. The estimated debt currently works out at around $ 240 per Tanzanian citizen.

Tanzania is viewed as a classic case because it adheres to the model of Third World debt.

During the 1970s, Tanzania was encouraged to take out massive loans on cheap credit from governments and financial institutions on the basis that it would develop an export-led boom through cash crops and natural resources. However, as all other developing countries were also encouraged to do the same, the prices of cash crops and commodities crashed.

This quite conveniently led to cheaper goods for consumers in developed countries but left countries such as Tanzania with unserviceable debts and cash-crops that were no use to feed the starving populations.

The only solution was to borrow more money under the guidance of the International Monetary Fund (IMF) but usually on the proviso that it further opened its internal markets to foreign investment, deregulated to allow easier foreign access and adopted democratic models of government.

Christian Aid estimates that at least $ 6bn of the debt needs to be written off before it can even begin paying for subsistence health care and education or even the most basic of infrastructure.

Current spending levels on health are so low that a child born in Tanzania today is 14 times more likely to die that a child born in Britain.

The crippling debt has curtailed spending, meaning that more than half the population has no access to any sort of health services.

In Britain, pounds 12bn is spent a year on cigarettes and pounds 3.1bn on National Lottery instant scratchcards.

Gary Finn