CADTM successfully holds Citizen Debt Audit Training in Nairobi

19 August by David Calleb Otieno

A young boy sits over an open sewer in the Kibera slum, Nairobi

The Committee for the Abolition of Illegitimate Debts (CADTM) successfully held a three days training on Citizens Debt Audit in Nairobi, Kenya. The training that attended by delegates from Kenya, Uganda, Tanzania and Burundi was organized by the Kenyan Social Movements for the Abolition of Illegitimate Debts bringing together the Kenyan Peasants League, the Coalition for Grassroots Human Rights Defenders Kenya, Bunge la Mwananchi, the Mathare Social Justice Center and a score of other grassroots groups with support from CADTM. The first two days were dedicated to the Kenyan delegates while on the third day, the Kenyan comrades were joined by six delegates, two each from Uganda, Tanzania and Burundi.

The meeting held at Kangemi informal settlement, which is about 15 kilometers from the Nairobi Central Business District, started with African meditation where a role play was presented to orient the participants about what was expected in the training. The role play was about a tenant who did not have money to pay rent and therefore had to borrow money from a Shylock to pay that month’s rent and also to feed himself and his family and was expected to repay the money within a month. On the second month, the tenant had to borrow from a second Shylock to repay the first Shylock, pay his rent and feed his family. However this time round, his property was attached as guarantee. On the third month he failed to pay his rent, was kicked out and lost his property.

After the African meditation, comrade Broulaye Bagayoko (CAD Mali, secretary of CADTM Africa) presented how CADTM was created, its anti-debt politics, objectives and strategies, the organizational structures of the CADTM international network including the CADTM – African coordination and the larger work done by the network globally including the audit of Rwanda debts in 1996, works in Ecuador, Paraguay and Venezuela in 2008 and citizen’s audits of debt in Greece, Portugal, Spain, France and Belgium between 2010 and 2013.

Comrade Jawad Moustakbal from Morocco highlighted the political and technical charters of CADTM as well as the adopted motions. This was critical given the fact that Kenyan social movements are applying for CADTM membership. After this presentation, two groups were formed with one group focusing on the political charter while the other focused on the technical charter. The purpose of the group work was to look into the charters and propose changes and also to establish how they could inform the Kenyan candidacy. The group work was facilitated by comrade Rachael Mwikali from the Coalition for Grassroots Human Rights Defenders Kenya.

On the political charter, the members proposed inclusion of persons with disabilities, human trafficking and also environmental issues. The group also proposed that representation to the International Council should be changed from continents to countries where CADTM is present and the membership should be expanded to include one youth on top of one man and one woman.

The second day began with the African meditation followed by the recap of day one. With day two dedicated mostly to the roles of citizens in auditing debts, the African meditation featured the tenant going to Grassroots Human Rights Defenders to seek redress and to have his debts canceled since the interest rates Interest rates When A lends money to B, B repays the amount lent by A (the capital) as well as a supplementary sum known as interest, so that A has an interest in agreeing to this financial operation. The interest is determined by the interest rate, which may be high or low. To take a very simple example: if A borrows 100 million dollars for 10 years at a fixed interest rate of 5%, the first year he will repay a tenth of the capital initially borrowed (10 million dollars) plus 5% of the capital owed, i.e. 5 million dollars, that is a total of 15 million dollars. In the second year, he will again repay 10% of the capital borrowed, but the 5% now only applies to the remaining 90 million dollars still due, i.e. 4.5 million dollars, or a total of 14.5 million dollars. And so on, until the tenth year when he will repay the last 10 million dollars, plus 5% of that remaining 10 million dollars, i.e. 0.5 million dollars, giving a total of 10.5 million dollars. Over 10 years, the total amount repaid will come to 127.5 million dollars. The repayment of the capital is not usually made in equal instalments. In the initial years, the repayment concerns mainly the interest, and the proportion of capital repaid increases over the years. In this case, if repayments are stopped, the capital still due is higher…

The nominal interest rate is the rate at which the loan is contracted. The real interest rate is the nominal rate reduced by the rate of inflation.
were high.

After the recap, comrade Sushovan Dhar presented on the citizen’s debt audit procedures including definitions, basic concepts, origins, consequences, objectives, principles, methodology, tools and techniques used in the process. He also defined various categories of debt viz. illegal, illegitimate, odious and unsustainable debts and also touched on the work and lessons from the Truth Committee on the Greek Public Debt. He said that citizen’s debt audit aims at shedding light on the whole debt system and expose the lenders including the preconditions of the debt.

Sushovan stated that illegal debts are those debts whose conditions or process of incurring violates domestic policies or laws, including international laws, while illegitimate debts are those debts whose conditions violate human rights of the citizens, despite the fact that the process of incurring them did not violate the laws and policies. Odious debts are debts that are odious in the sense that the lenders went ahead to provide loans while fully aware that the conditions including the repayment of the loans cannot be done without impinging on human rights, affecting the country’s capacity to provide basic services to the citizens and are mostly incurred by dictatorial regimes – but not only – who incur them to suppress those who fight for human rights.
On unsustainable debts, the participants were informed that debts are considered unsustainable when repaying the debts affects the ability of the borrowing states to fulfill basic human rights like provision of healthcare, education, sanitation and food.

Comrades Ndura Ndambiri, Everlyne Akoth, Maurice Ngesa and David Otieno made presentations on the Kenyan debt system and how they affected various groups of people. Comrade Ndura focused on the Standard Gauge Rail (SGR) that is an infrastructure project that is funded by loans from China where he noted that the loans due to Chinese infrastructure projects are becoming unsustainable as they seem to be inflated. He noted that the SGR has not made profit Profit The positive gain yielded from a company’s activity. Net profit is profit after tax. Distributable profit is the part of the net profit which can be distributed to the shareholders. as was envisaged and that the government had pledged to repay the debts from the taxpayers’ money should SGR fail to make returns by 2020.

Comrade Everlyne Akoth, the Kenyan Peasants League Women League Coordinator, presented how farmers are indebted and how many of them are losing their farms due to the inability to repay the loans. She said that most widows in Migori County are on the brink of losing their land due to this. Maurice Ngesa highlighted how the students are being indebted by the Higher Education Loans Board (HELB) as most of the graduates from the Universities and colleges have been listed by the Credit Reference Bureau (CRB) which he said was a private company contracted by government to recover the HELB loans from borrowers, thereby stigmatizing the students.

Presentation was also made on how the faulty policies of the Kenyan government and the absence of social securities and government schemes are forcing more and more Kenyan women and youths towards micro-finance loans that majority of them are unable to pay. Also the government loans - for example the Kakamega County government loans to women – are often too exhorbitant to pay making poor people lose property and listed by the CRB.

Several teams were formed to spearhead coordination of activities in Kenya including a team to prepare the Kenyan candidacy to CADTM. Other teams formed are a translation team to translate documents in Swahili, a research team to conduct a more detailed audit on Kenyan Debt system among others.

On the third day, the team was joined by comrades from Tanzania, Uganda and Burundi. After a brief introduction from comrade Broulaye on CADTM including the objectives, each country made a brief presentation on the debt situation. Comrade Edwin from MVIWATA, a Peasants farmers movement in Tanzania also a member of La Via Campesina (LVC), stated that each Tanzanian owes about US$ 500 in debts due to increasing crisis. He added that some of the main bilateral lenders from Tanzania were Japan, China, UK, USA and Turkey while multilateral lenders were the IMF IMF
International Monetary Fund
Along with the World Bank, the IMF was founded on the day the Bretton Woods Agreements were signed. Its first mission was to support the new system of standard exchange rates.

When the Bretton Wood fixed rates system came to an end in 1971, the main function of the IMF became that of being both policeman and fireman for global capital: it acts as policeman when it enforces its Structural Adjustment Policies and as fireman when it steps in to help out governments in risk of defaulting on debt repayments.

As for the World Bank, a weighted voting system operates: depending on the amount paid as contribution by each member state. 85% of the votes is required to modify the IMF Charter (which means that the USA with 17,68% % of the votes has a de facto veto on any change).

The institution is dominated by five countries: the United States (16,74%), Japan (6,23%), Germany (5,81%), France (4,29%) and the UK (4,29%).
The other 183 member countries are divided into groups led by one country. The most important one (6,57% of the votes) is led by Belgium. The least important group of countries (1,55% of the votes) is led by Gabon and brings together African countries.
, the World Bank World Bank
The World Bank was founded as part of the new international monetary system set up at Bretton Woods in 1944. Its capital is provided by member states’ contributions and loans on the international money markets. It financed public and private projects in Third World and East European countries.

It consists of several closely associated institutions, among which :

1. The International Bank for Reconstruction and Development (IBRD, 189 members in 2017), which provides loans in productive sectors such as farming or energy ;

2. The International Development Association (IDA, 159 members in 1997), which provides less advanced countries with long-term loans (35-40 years) at very low interest (1%) ;

3. The International Finance Corporation (IFC), which provides both loan and equity finance for business ventures in developing countries.

As Third World Debt gets worse, the World Bank (along with the IMF) tends to adopt a macro-economic perspective. For instance, it enforces adjustment policies that are intended to balance heavily indebted countries’ payments. The World Bank advises those countries that have to undergo the IMF’s therapy on such matters as how to reduce budget deficits, round up savings, enduce foreign investors to settle within their borders, or free prices and exchange rates.

, the African Development Bank and other private foundations. He noted that there was no citizen participation in the process of securing the loans.

Comrade Bosco Kubwayo from Burundi noted that despite the debt relief given to Burundi under the Heavily Indebted Poor Countries Heavily Indebted Poor Countries
In 1996 the IMF and the World Bank launched an initiative aimed at reducing the debt burden for some 41 heavily indebted poor countries (HIPC), whose total debts amount to about 10% of the Third World Debt. The list includes 33 countries in Sub-Saharan Africa.

The idea at the back of the initiative is as follows: a country on the HIPC list can start an SAP programme of twice three years. At the end of the first stage (first three years) IMF experts assess the ’sustainability’ of the country’s debt (from medium term projections of the country’s balance of payments and of the net present value (NPV) of debt to exports ratio.
If the country’s debt is considered “unsustainable”, it is eligible for a second stage of reforms at the end of which its debt is made ’sustainable’ (that it it is given the financial means necessary to pay back the amounts due). Three years after the beginning of the initiative, only four countries had been deemed eligible for a very slight debt relief (Uganda, Bolivia, Burkina Faso, and Mozambique). Confronted with such poor results and with the Jubilee 2000 campaign (which brought in a petition with over 17 million signatures to the G7 meeting in Cologne in June 1999), the G7 (group of 7 most industrialised countries) and international financial institutions launched an enhanced initiative: “sustainability” criteria have been revised (for instance the value of the debt must only amount to 150% of export revenues instead of 200-250% as was the case before), the second stage in the reforms is not fixed any more: an assiduous pupil can anticipate and be granted debt relief earlier, and thirdly some interim relief can be granted after the first three years of reform.

Simultaneously the IMF and the World Bank change their vocabulary : their loans, which so far had been called, “enhanced structural adjustment facilities” (ESAF), are now called “Growth and Poverty Reduction Facilities” (GPRF) while “Structural Adjustment Policies” are now called “Poverty Reduction Strategy Paper”. This paper is drafted by the country requesting assistance with the help of the IMF and the World Bank and the participation of representatives from the civil society.
This enhanced initiative has been largely publicised: the international media announced a 90%, even a 100% cancellation after the Euro-African summit in Cairo (April 2000). Yet on closer examination the HIPC initiative turns out to be yet another delusive manoeuvre which suggests but in no way implements a cancellation of the debt.

List of the 42 Heavily Indebted Poor Countries: Angola, Benin, Bolivia, Burkina Faso, Burundi, Cameroon, Central African Republic, Chad, Comoro Islands, Congo, Ivory Coast, Democratic Republic of Congo, Ethiopia, Gambia, Ghana, Guinea, Guinea-Bissau, Guyana, Honduras, Kenya, Laos, Liberia, Madagascar, Malawi, Mali, Mauritania, Mozambique, Myanmar, Nicaragua, Niger, Rwanda, Sao Tome and Principe, Senegal, Sierra Leone, Somalia, Sudan, Tanzania, Togo, Uganda, Vietnam, Zambia.
(HIPC) initiative where 78% of Burundi debt was written off in 2009, Burundi was still unable to provide basic services to its citizens. He added that domestic debt has increased in Burundi with some of the main lenders being the powerful in government including the Burundi President.

Comrade Simon Ruta from Uganda informed the meeting that the Uganda Debt to GDP GDP
Gross Domestic Product
Gross Domestic Product is an aggregate measure of total production within a given territory equal to the sum of the gross values added. The measure is notoriously incomplete; for example it does not take into account any activity that does not enter into a commercial exchange. The GDP takes into account both the production of goods and the production of services. Economic growth is defined as the variation of the GDP from one period to another.
ratio was at 41% of the GDP and the WB has recently advised the Uganda government to continue borrowing to finance infrastructure projects claiming that Uganda debt was still sustainable. He added that it would take Uganda 94 years to repay all the debts and also linked the Uganda debts to election financing.

Comrade David Otieno, Policy Chief of the Kenyan Peasants League (KPL), said that the Debt to GDP ratio of Kenya is at 57% and is expected to rise to over 60% given the increased borrowing. He added that 66% of Kenyan bilateral debt is owed to China and that the Kenyan total debt stands at KSh 5 trillion compared to annual budget of about KSh 1.3 trillion. He decried the February 2018 issue of Kenyan Sovereign Bond Bond A bond is a stake in a debt issued by a company or governmental body. The holder of the bond, the creditor, is entitled to interest and reimbursement of the principal. If the company is listed, the holder can also sell the bond on a stock-exchange. at the London Stock Exchange (LSE) that the government claimed were oversubscribed and attracting bids stating that it was issued despite warnings from IMF and Kenyan Institute of Public Policy Research and Analysis (KIPPRA) that Kenyan debt was becoming unsustainable.

The meeting resolved to form a Whatsapp group to aid regional communication and a team led by Tanzanians was formed to aid in translating CADTM documents in Swahili.

The anti-debt movement in Kenya and also in the east African region is boldly spirited to take on the challenge. We expect courageous struggles to be launched and resolute battles to be fought against all sorts of illegitimate debt in the days to come.

David Calleb Otieno

Land & Environment Scientist, Economist and Social Science Researcher, Policy Chief of the Kenyan Peasants League (KPL).



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