{"id":58429,"date":"2025-01-30T20:06:42","date_gmt":"2025-01-30T20:06:42","guid":{"rendered":"https:\/\/peraltafinancing.com\/anthropology\/africa-mired-with-debt-it-can-never-repay-perspectives-in-anthropology\/"},"modified":"2025-01-30T20:06:42","modified_gmt":"2025-01-30T20:06:42","slug":"africa-mired-with-debt-it-can-never-repay-perspectives-in-anthropology","status":"publish","type":"post","link":"https:\/\/fivemor.com\/?p=58429","title":{"rendered":"Africa mired with debt it can never repay \u2013 Perspectives in Anthropology"},"content":{"rendered":"<p> <br \/>\n<\/p>\n<div>\n<p>Written by Jehron Muhammad<\/p>\n<p>After slavery, African descendants were forced into sharecropping. Small country merchants took the place of plantation owners and used debt rather than the whip to keep the Black man picking the necessary cotton for the world economy.<\/p>\n<p>Just as the revitalized southern cotton barons and their northern affiliates trapped African descendants under a new form of slave labor, the World Bank along with the International Monetary Fund (IMF) have trapped countries in Africa and other regions in the Global South with unpayable debt, according to Geopolitical Economy Report by Ben Norton.<\/p>\n<p>Debt as a form of imperialism went global, as mentioned in David Graeber\u2019s 2011 book \u201cDebt: The First 5,000 Years.\u201d He frames the IMF as the world\u2019s debt enforcers or \u201cThe high-finance equivalent of the guys who come to break your legs.\u201d In his book, Graeber explained how modern-day capitalism encourages the debt that saddles underdeveloped Global South countries, including nations in Africa.<\/p>\n<p>\u201cUnlike advanced (Western) economies, which have highly developed local-currency bond markets (financial market where participants can issue new debt), African countries are subject to prohibitively high interest rates and often cannot borrow from international investors in their own currency (the \u2018original sin\u2019 of sovereign-debt markets).<\/p>\n<p>Instead, over 80 percent of African countries\u2019 external debt is denominated in dollars or euros, which heightens their vulnerability to monetary-policy changes by a handful of systemically important central banks\u2014and thus to a \u2018debt doom loop\u2019 that only exacerbates their debt burdens,\u201d economist Hippolyte Fofack recently wrote in Project Syndicate. Fofack is a former chief economist and director of research at the African Export-Import Bank and is currently a research associate at the Harvard University Center for African Studies.<\/p>\n<p>If you stand Africa\u2019s increasingly seen as unsustainable economic death doom loop burden side-by-side with America\u2019s growing national debt\u2014which has surged to over $34.5 trillion\u2014it begs to question, how long can this go on?<\/p>\n<p>Last year, Mark Spitznagel, co-founder and CIO of the private hedge fund Universal Investments told Fortune magazine that \u201cwhen that rising debt combines with decades of loose monetary policy that lifted asset prices ever higher, growing piles of consumer debt, and businesses\u2019 penchant for leaning on credit during times of stress, it creates a \u2018tinderbox economy\u2019 that could go up in flames in a moment\u2019s notice. It\u2019s the \u2018greatest credit bubble\u2019 in human history.\u201d He warned, \u201cit will have its consequences.\u201d<\/p>\n<p>Though Spitznagel\u2019s focus was the immorality of America\u2019s reliance on debt and the fact that future generations \u201cwill bear the burden,\u201d no mention was made of the fact that when Western capitalism gets a cold, Africa catches the flu.<\/p>\n<p>Graeber in his book explained how modern day capitalism encouraged the debt that underdeveloped Global South countries encountered. This debt crisis for the Global South began after the 1970s oil crises resolution, with OPEC countries, (some reports say with threatened U.S. military intervention a possibility) pouring \u201cso much of their new-found increased oil price riches (called petrodollars), into Western banks that the banks couldn\u2019t initially figure out where to invest it.\u201d<\/p>\n<p>In his 2003 book, \u201cThe New Imperialism,\u201d David Harvey explained, \u201cWith the influx of petrodollars into U.S. banks recentered global financial activity in the U.S. \u2026 coupled with reforms rescued New York from its own economic crisis.\u201d The results, he explained, was \u201ca powerful Wall Street\/U.S. Treasury regime with controlling powers over global institutions (such as the IMF) and able to make or break many weaker foreign economies through credit manipulations and debt management practices.\u201d<\/p>\n<p>Flush with cash, financial institutions like Citibank and Chase Manhattan traveled the world seeking to convince, \u201cThird World dictators and politicians to take our loans (at the time, this was called \u2018go-go banking\u2019),\u201d Harvey continued.<\/p>\n<p>This began with extremely low-interest rates that eventually skyrocketed to upwards of 20 percent, due to tight U.S. money policies of the 1980s and 90s, noted Graeber. This led to Africa\u2019s debt crises. The IMF stepped in to insist that in order to obtain refinancing, poor countries would be obligated to abandon price supports or subsidies on foodstuffs. They were even encouraged to relinquish the keeping of \u201cstrategic food reserves,\u201d and \u201cabandon free health care and free education.\u201d<\/p>\n<p>The tragic results, wrote Graeber, led to the collapse of all the most basic support for some of the world\u2019s poorest and most vulnerable countries. The Geopolitical Economy Report by Mr. Norton also echoes these demands that imposed a series of harsh right-wing neoliberal economic policies as part of the so-called structural adjustment programs.<\/p>\n<p>These policies included \u201cforcing countries to privatize state assets, reduce the minimum wage, cut social services, reduce spending on health care and education (and) privatize all state-owned companies, (as well as) deregulate markets,\u201d the report noted. These are the \u201cfree market fundamentalist policies that are imposed on countries, especially in the global South when they can\u2019t pay back debt to the World Bank or the IMF.\u201d<\/p>\n<p>Mr. Graeber calls these loans \u201cutterly irresponsible.\u201d He wrote that they were made \u201cwith the full knowledge that, once it became known they had done so, politicians and bureaucrats would scramble to ensure that they\u2019d still be reimbursed anyway, no matter how many human lives had to be devastated and destroyed in order to do it.\u201d<\/p>\n<p>According to Fofack, amid increasing financial volatility or the anxiety that fluctuating prices produces, along with supply-chain vulnerabilities, and inflationary pressures, \u201cmany African countries have already adopted difficult and unpopular policies\u2014including removal of government subsidies and aggressive interest-rate hikes, despite widespread poverty and Great Depression-levels of unemployment\u2014in a bid to escape the debt doom loop and foster macroeconomic stability.\u201d<\/p>\n<p>A case in point is Nigeria. With 218.5 million people, it is Africa\u2019s most populous nation state, with unemployment currently hovering at 30 percent. According to Fofack, \u201cThe central bank recently raised its main lending rate by 400 basis points, to 22.75 percent, to bolster (Nigeria\u2019s currency) the Naira and tame inflation, stoked by exchange-rate pass-through resulting from the Naira\u2019s sharp depreciation against the dollar.\u201d<\/p>\n<p>\u201cThis exchange-rate depreciation\u2014which increases debt-service costs\u2014has been further<br \/>exacerbated by capital outflows, with investors chasing higher relative returns following interestrate hikes by the U.S. Federal Reserve,\u201d Fofack noted.<\/p>\n<p>During a forum sponsored by The World Bank Live, Andrew Dabalen, a chief economist for the Africa region of the World Bank, spoke of the \u201cfragility\u201d of Africa\u2019s economic plight.<\/p>\n<p>\u201cThis is where the fragility comes, and there are three reasons why it\u2019s very fragile. One is many countries still carry very high levels of debt. Debt service costs and liquid and cash flow problems are massive. Just to give you a marker, last year, on average, African countries spent 46 percent of their revenues on servicing debt. That puts a lot of squeeze on public finances to finance education, health, infrastructure that we needed \u2026 . That is still a problem that has not been resolved. Second, alternative sources or supplements, finances that usually could supplement public finances when they are not available,<br \/>are drying up.<\/p>\n<p>For example, the FDI, which will not add to any debt, foreign direct investment, which will not actually add to any debt for a country, has been declining, and it continues to decline. There\u2019s no end in sight in a turnaround,\u201d Dabalen explained.<\/p>\n<p>Moreover, the continent has long suffered from a chronic infrastructure deficit that has impeded structural transformation to sustain heightened exposure to global volatility and narrowed governments\u2019 capacity to crowd in private capital to diversify the sources of growth and reduce the imbalance between debt and exports, added Fofack.<\/p>\n<p>The tragic results led to the collapse of all the most basic support for some of the world\u2019s poorest and most vulnerable countries, wrote Graeber.<\/p>\n<p>The Geopolitical Economy Report by Ben Norton echoes demands that imposed a series of harsh right-wing neoliberal economic policies as part of the so-called structural adjustment programs.<\/p>\n<p>These policies include \u201cforcing countries to privatize state assets, reduce the minimum wage, cut social services, reduce spending on health care and education (and) privatize all state-owned companies, (as well as) deregulate markets,\u201d the report noted. These are the \u201cfree market fundamentalist policies that are imposed on countries, especially in the Global South when they can\u2019t pay back debt to the World Bank or the IMF.\u201d<\/p>\n<\/p><\/div>\n\n","protected":false},"excerpt":{"rendered":"<p>Written by Jehron Muhammad After slavery, African descendants were forced into sharecropping. Small country merchants took the place of plantation owners and used debt rather than the whip to keep the Black man picking the necessary cotton for the world economy. Just as the revitalized southern cotton barons and their northern affiliates trapped African descendants [&hellip;]<\/p>\n","protected":false},"author":1,"featured_media":58430,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[11767],"tags":[4373,3735,11265,32930,13658,32931],"dealstore":[],"offerexpiration":[],"class_list":["post-58429","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-anthropology","tag-africa","tag-anthropology","tag-debt","tag-mired","tag-perspectives","tag-repay"],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v26.4 - https:\/\/yoast.com\/wordpress\/plugins\/seo\/ -->\n<title>Africa mired with debt it can never repay \u2013 Perspectives in Anthropology - Som2ny Network<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/fivemor.com\/?p=58429\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Africa mired with debt it can never repay \u2013 Perspectives in Anthropology - Som2ny Network\" \/>\n<meta property=\"og:description\" content=\"Written by Jehron Muhammad After slavery, African descendants were forced into sharecropping. 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