Comments: The Most Reverend Njongonkulu Winston Ndungane
- Ke-young Chu, Sanjeev Gupta, and Vito Tanzi
- Published Date:
- May 1999
It is a distinct honor and privilege for me to have been invited to respond to papers delivered by Aníbal Cavaco Silva and Alberto Alesina. I have come from Cape Town, the most beautiful city in the world, which is at the southernmost tip of the continent of Africa—a continent that is experiencing a reawakening in which its people are determined to take their destiny into their hands. I come to this conference as a church leader whose jurisdiction covers countries like South Africa, Mozambique, Lesotho, Swaziland, Namibia, Angola, and the island of St. Helena.
As you can see, most of the countries I have mentioned have just emerged from struggles—in some instances, from wars of liberation. These countries are now engaged in a new form of struggle: nation building. Nation building encompasses the major demands of reconciliation, reconstruction, and development. As others at this conference have mentioned, and as I have seen, nation building involves a precarious tension between working for good future results and simultaneously meeting the pent-up needs and expectations of people who for too long have done with too little. This tension is being worked out in fragile, new democracies, whose leaders have hitherto been freedom fighters, and who are now having to learn new competencies in order to guide their nations’ fiscal, monetary, and social programs in a complex world. My perspective on issues of economic policy and equity is no doubt influenced by this background.
In the introduction to his paper, Cavaco Silva says, “over the past twenty years, many European countries have experienced increases in income inequality, in the number of people suffering from poverty, and in social exclusion.” In developing countries, the magnitude of the problem of poverty is breathtaking, especially when compared with industrialized countries where a small percentage of their population is poor.
A white paper released by the British government last year, entitled “Eliminating World Poverty: A Challenge for the 21st Century,”1 says that some 1.3 billion people continue to live in extreme poverty, on less than the equivalent of $1 a day. Most of these people live in developing countries; about 70 percent of them are women.
As Sen and others have confirmed, equity cannot be reduced to the single issue of income. The same British study reveals that more than 800 million people in the world are hungry, and the number may well exceed one billion by the year 2020. Many more are malnourished. The world’s population of underweight children below 5 years of age is expected to grow from 193 million today to 200 million by 2020, with most of the deterioration in Africa. Every year, 8 million children die of diseases linked to impure water and air pollution, 50 million children are mentally and physically damaged because of poor nutrition, and 130 million children—80 percent of them girls—are denied the opportunity to go to school. All this in a world in which one-fifth of its population enjoys 85 percent of the world’s income.
It would seem imperative, therefore, that any policies we design to address issues of equity be targeted toward the excluded, the marginalized, and the vulnerable. They should be focused toward the creation of an asset base for the poor, which includes land, housing, water, electricity, education, and health care.
A major factor contributing to poverty in the developing countries is the repayment of international debt. According to figures supplied by the World Bank, Jubilee 2000 Coalition’s latest report notes that Africa owes $227.2 billion to creditors, or about $400 for every person in Africa.
Africa is not intrinsically poor. It has vast natural and human resources. Yet Africa is thought of as being financially poor. Nevertheless, World Bank figures illustrate that in 1996, Africa transferred $14.5 billion of its precious financial resources to OECD countries. This equals the amount spent in Africa on education, and twice the amount spent on health care.
In 1996, the countries of sub-Saharan Africa paid their creditors more in debt service than they received in loans. For every dollar Africans receive in aid from industrialized countries, they repay $1.30 in debt service. In other words, the money is on a perpetual merry-go-round. It is not used for development. The poor do not benefit. Charity is not charity at all.
Contrary to general assumptions, therefore, the rich are not aiding the poor. The poor end up paying the rich. These enormous debts, and the way in which they divert money and resources from other, more productive development in Africa, lead to unhealthy relationships of dependency between African governments and their creditors.
These observations lay the groundwork for a decision that, I believe, the international community has a moral imperative to make—now, without delay. That decision goes beyond debt rescheduling to the outright cancellation of these debts. The reasons for this unusual and necessary action are several:
- To give these developing countries a fresh start, a real opportunity to begin a new era of development;
- To release government resources, which can then be used for human development and economic growth; and
- To give new governments a chance to take responsibility for moving forward, taking initiative and not passively depending on outside aid. In this respect, I take note of Alesina’s remarks on the negative effects of aid, to the effect that “most foreign aid has been wasted, has increased government consumption rather than investment, and has not promoted the adoption of ‘better’ macroeconomic policies.”
What I am saying here is that debt cancellation—far from being an unjustified and wasteful handout—is really a case of the adage that it is good to give the hungry some fish, but it is much better to teach them how to catch fish. Releasing funds presently tied up in debt repayments will enable debtor countries to use this money to fish for themselves. There is overwhelming evidence for this expectation from the National Poverty Hearings in South Africa, where the poor are saying loudly and clearly: We do not want handouts. We’ve got hands, we’ve got brains: give us the capacity to work out our existence.
For debt cancellation to work, we need a strict and neutral arbitration and monitoring process that operates according to an agreed international set of principles and protocols. As I envision it, this Mediation Council would function like an international bankruptcy court. Its purpose would be to provide a way to give “bankrupt” developing countries a fresh start and prevent borrowing countries from falling into an abyss of unrepayable foreign debt. At the same time, it would be the Mediation Council’s responsibility to give due regard to the interests of creditors.
Alesina’s reference to “rampant corruption and bureaucratic inefficiency” on the part of governments needs to be addressed. Indeed, many mistakes have been made by governments of both the industrialized and developing world in sorting out economic relationships. Oft times this has resulted in harsh words and punitive actions, best exemplified in the minds of some by unrealistic interest rates. What has been lacking are attainable incentives to persuade both industrialized and developing countries that a new economic relationship can be forged—one that is productive and sustainable, and in the interests of all, not just a few.
An integral element in meeting such an objective is to ensure good governance. The primary responsibility of governments is to promote the common good of all their citizens. This includes establishing and living by a rule of law, defining responsibilities, and protecting rights.
It should be said that international organizations share the same basic responsibility in their role as global governments of special interests. Good governance must have at its core a number of objectives, among which must be the following:
- Accountability to all stakeholders for decisions made and actions taken;
- Transparency and openness, particularly in matters that affect the public interest;
- Programs that are efficient, encourage business initiatives, and stimulate growth;
- Recognition of global interdependence, namely, that actions of one government or governing agency impact on others in the world, not just on immediate subjects; and
- Promotion of a stable and sustainable environment for living, to ensure a civil society that recognizes its sociopolitical and economic responsibilities and subscribes to a high standard of moral behavior.
Policies for Equity
In a world in which we are increasingly interdependent, any policies aimed at achieving equity need to recognize our mutual responsibilities for one another’s well-being. We have become more aware that we are all members of a world community—a global village. We are increasingly aware that we are part of a social structure that is no longer confined by geographical and national boundaries, but is wider and more international in character. This is reflected in the various international conventions and instruments that have been designed to regulate our lives. It is therefore my belief that a framework should be designed for a global security network, with the fundamental objective of protecting and improving the quality of life for everyone. It is imperative that conditions be created to allow every person in the world access to the basic necessities, such as shelter, clothing, food, health care, education, and clean water. This is quite possible. We possess the resources and technology. All that is required is the political will and economic commitment.
Based on what I have heard of people’s needs during the National Poverty Hearings in South Africa, the following emerge as areas worthy of serious policy attention:
- Building the asset base of poor people, including access to land, decent homes, and basic human needs;
- Stimulating economic activity through targeted interventions, including housing subsidies, and training programs, for community building; and
- Carefully designing social safety nets, including innovative, direct cash transfers to help alleviate need and simultaneously stimulate local economic initiatives.
I am acutely aware that there are those wedded to the economics of the industrialized world who would argue that the answer is to leave matters to market forces alone. Market forces have their place, as we have seen in countries like Uganda and Botswana; but in these countries, market forces are channeled to run in harmony with the norms and values of the cultures in which they operate. It is a pipe dream to believe that Western-style markets can operate constructively, willy-nilly, in cultures that do not truly understand them. In any event, they have been shown, in many different parts of the world, not to be the panacea that market purists dream of. They have caused hardship and inequity, time and again, leaving the poor poorer and the rich richer and able to control and manipulate the lives of those less fortunate than they. Market forces are as likely to result in unacceptable social outcomes, because of their very commitment to promoting the well-being of those who already have plenty, not to overriding even the most despicable political policy or ruling despot.
The thought with which I would like to conclude is that our primary concern must be for the enhancement of the quality of people’s lives. This is an undertaking that can be done only by the mutual will and commitment of all institutions and interests, by developing and industrialized countries together. And we need to recognize that what we are doing is constructing not merely a global economy but a world community.
I have a dream: The Third Millennium for the Third World. Help us to realize that dream.