Global Policy Forum

By Charlotte Denny

In the rainy season, the fertile red earth around Mpiita primary school turns to sticky mud. When Ugandan farmer Sam Bamugoverere was a pupil there 15 years ago, the school had no classrooms, just trees for the pupils to shelter under. "We would bring a stone to sit on and a banana leaf mat to cover our heads," he says. If it got too wet under the jackfruit tree, the teachers would send them home.

Sam's seven year old son, Tony, started Mpiita school this year, but unlike his father he studies under a roof. The school has eight brand new classrooms built as part of a massive government investment programme in education. Since 1997, Kampala has abolished schools fees, doubled its spending on primary education, and built 10,000 new classrooms. The money has come from the savings the country has made on its bills to foreign creditors.

Uganda is the success story of the debt relief campaign, a country which has made good use of the money it has won back from the west. But now, as the global downturn triggered by the terrorist attacks on New York and Washington threatens to push millions more people below the global poverty line, aid agencies worry that benefits of debt relief have been largely wiped out by a collapse in commodity prices.

Uganda's finance minister, Gerald Ssenduala, says his country needs more help. Since the attacks, however, western attention has been focused on shoring up the economies of key members of its coalition - such as Pakistan - rather than on Africa. Countries have been queuing up to offer Pakistan help with its £26bn of foreign debt, even though the government spends 25% of its budget on the military and just 4% on primary education.

Key ally

But while G7 leaders dither about what to do for Africa, Pakistan, a key ally in the war against terrorism has jumped to top of the debtors' queue. Since September 11, the US has promised Islamabad $1bn in debt rescheduling and aid, while the EU has given it an extra £950m in trade concessions. With aid budgets already stretched, campaigners say the message appears to be that debt relief and trade concessions are no problem to arrange if you are a key US ally.

"The whole thrust of the international aid programmes over the last five years has been rewarding countries which have good poverty reduction programmes," says Kevin Watkins of Oxfam. "Is Pakistan good at reducing poverty? No. Is it corrupt? Yes. Does it have good spending priorities? No."

Uganda would not be receiving any money from the west at all, if its arms budget was similarly bloated. Under a landmark debt deal agreed with lenders three years ago, it has had nearly 40% of its loans written off, but in exchange has agreed to spend the savings on health and education.

Five years ago, the country spent 125bn shillings (£50m) a year on primary education and 180bn shillings on paying back its loans. This year, interest payments have fallen to just over 100bn shillings, and education spending has risen to over 250bn.

But Mpiita school and others like it are threatened by recessionary forces spreading out from the wounded US economy. Even before the attacks on the US last month, Mr Ssenduala was a worried man. The country depends on coffee for nearly 60% of its export earnings and coffee prices, along with most other commodities have been on the slide since the slowdown in the world economy began last autumn. Last week they hit a 30-year low.

"Coffee is the main export for Uganda and because of the drop in price it is now difficult for us to reach this 150% debt sustainability level," Mr Ssenduala says. With export earnings falling, Uganda may be forced to divert money from social services back into paying off its remaining debts.

Uganda is not alone. Despite the grand hopes of an escape from poverty laid out yesterday by Thabo Mbeki and other African leaders, without extra help from the west, the slump in commodity will threaten the economies of coffee producers like Uganda and Tanzania and cocoa exporters like Ghana and Ivory Coast, all of whom owe large sums to the west.

"The problems that poor countries such as Uganda are having with terms of trade prove that the debt sustainability calculations made by the World Bank and IMF are entirely spurious," says Christian Aid's head of policy, Mark Curtis. "They fail to take into account the kinds of shocks in commodity markets we are seeing at the moment."

Extra help

Oxfam says Tanzania, Uganda and Zambia may all need extra help this year because the export earnings projections on which their debt write-offs were based have proved hopelessly optimistic. Uganda, which does have the kind of anti-poverty programmes held up as a model by the west, could definitely make good use of the kind of money Washington is throwing at Pakistan.

"We would like to be able to stand on our own but we have not been able to win the kind of investment we need," says Mr Ssenduala. "When you are a beggar you become a nuisance."

FAIR USE NOTICE: This page contains copyrighted material the use of which has not been specifically authorized by the copyright owner. Global Policy Forum distributes this material without profit to those who have expressed a prior interest in receiving the included information for research and educational purposes. We believe this constitutes a fair use of any such copyrighted material as provided for in 17 U.S.C § 107. If you wish to use copyrighted material from this site for purposes of your own that go beyond fair use, you must obtain permission from the copyright owner.