Appeal: Children in Africa should not starve to repay debt

You can breathe the stench of Zambezi floodwater. You can feel the sweat dripping down the back of your neck as you sit, motionless to conserve energy, in the still stifling afternoon heat of a Tuareg tent near Timbuktu. You can even live for a week in a mud hut in the Ethiopian highlands with a family on the edge of starvation, watching the people eke out the last of their grain.

You can do all these things – and I have done them all, and much more – and still not fully comprehend the enormity of the challenges that face the continent of Africa.

But then you can take the train to Oxford, climb an unprepossessing staircase, pick your way through a labyrinth of corridors, arrive at the desk of Kevin Watkins and begin to understand.

Watkins is the head of research at Oxfam. He is one of the most incisive thinkers and acute analysts in the world of aid and development. But if he has the mind of an economist, he has the sense of moral outrage of someone who has seen children die for the want of the most basic of human requirements – a plain bowl of cereal porridge, a cup of clean water, or the most elementary of medicines that cost mere pence to produce.

The Independent's Christmas Appeal this year is called "Hope for Africa". Most of our reports have come from the front line, examining the vast range of challenges the continent must address on the ground. But it would be misleading to suggest that the problems of Africa are all to be found there in the heat and dust.

Many can be traced to the cool and elegant offices of the International Monetary Fund and the World Bank on either side of 19th Street in Washington DC – and to the decisions made by the Western governments that control them. And it is in this world that Kevin Watkins fights his battles for the poor. Top of his agenda is, once again, the issue of Third World debt.

"The Jubilee 2000 campaign was the biggest mobilisation we've had around a development issue," he says. "We demolished the arguments of the World Bank and the International Monetary Fund on why debt relief couldn't be given. At the G8 in Cologne rich governments were forced to do more. It was an enormous success."

There is, of course, a "but". "The positive side is that, without the debt relief scheme, up to 26 countries would be spending more on repaying debt than they now are," he adds, "but half of the governments in receipt of it are still spending more than 15 per cent of their income servicing debts. And these are countries where a third of the population lives with HIV/Aids; a country like Zambia, with a million Aids sufferers, still spends 30 per cent more on debt repayments than it does on health services."

In 2000 the rich world signed up to a set of Millennium Development Goals. These covered child mortality, poverty, education and other targets. Today, Watkins notes with undisguised disdain, the rich world is as far – if not further – from achieving those as it was three years ago. The burden of debt is a crucial reason.

From the outset the World Bank and the IMF set out with the wrong approach. "Their approach wasn't designed to attack poverty. Their aim was to reduce debt to 'sustainable' levels. By that they meant limiting the percentage of export income which could be spent repaying debt so it was fixed at a level which would not stifle growth and investment," he says. "But they used formulas derived from the debt crisis in the 1980s among Latin American countries with economies much stronger than Africa's."

The approach has been further undermined by the collapse in world prices for Africa's main exports – coffee, cotton, sugar and so on. The IMF is complicit in that, Watkins argues, because in its economic advice to Africa it has consistently overestimated how much money countries could make from their exports.

"They advised every country to do the same thing – boost exports – without taking into account the [effect the] sudden surge in supply would have on world prices," he says. And they have continued to do so. "It's systematic. The Fund has overestimated export growth and therefore underestimated debt relief needs in 24 out of 26 countries."

But he has a more fundamental criticism. "What we are currently arguing with them is that their policy should be turned back-to-front," he says. They should have been asking what level of health and education spending was necessary to achieve the Millennium targets. Whatever was left over could be used to pay debt. "That would probably be between 2 and 5 per cent of government revenue rather than the present 15 per cent."

In the end it is a moral question, one posed three decades ago by the President of Tanzania, Julius Nyerere: "Must we starve our children to pay our debts?" Watkins is clear on the answer. "What type of 'sustainable debt' is it that leaves children out of school, sick people without medicine and governments unable to provide basic services. The rights of children," he says, "must come before the claims of creditors." The IMF has responded by recycling arguments about "moral hazard" – saying it is immoral to allow people to wriggle out of debt, since it only encourages them to run up more.

Watkins replies that moral complicity cuts two ways. "Those who lent were as irresponsible as the borrowers. Those doing the lending knew the cash was going straight into the personal Swiss banks accounts of corrupt leaders," he says. "And I would challenge the idea that these are legitimate debts; they were not incurred by citizens who knew what was going on and could hold their governments to account."

The moral hazard is that economists sitting in Washington lack the honesty to tell a simple truth. "Measured against any moral, economic or social indicators, what the rich world has done on debt relief is a pittance," Watkins says. "And debt is a major cause of death in Africa. That is why something has to be done."