Committee for the Abolition of Illegitimate Debt

These outflows are of serious concern, given inadequate growth, high levels
of poverty, resource needs and the changing global landscape of official
development assistance. Although African economies have been growing
at an average of about 5 per cent a year since the turn of the century, this
rate is considered encouraging but inadequate. It is, for example, below
the double-digit growth that has propelled transformation in parts of Asia.
Further, the benefits of this growth have mostly been confined to those at
the top of the income distribution and it has not been accompanied by an
increase in jobs. Aside from the equity Equity The capital put into an enterprise by the shareholders. Not to be confused with ’hard capital’ or ’unsecured debt’. issues that this raises, it also means
that this growth may not be sustainable due to possible social unrest. The
global commodity super-cycle that has contributed to Africa’s growth is
coming to an end, while macroeconomic factors such as debt reduction
might be a once-off effect.

Poverty remains of serious concern in Africa in absolute and relative terms.
The number of people living on less than $1.25 a day in Africa is estimated
to have increased from 290 million in 1990 to 414 million in 2010 (United
Nations, 2013). This is because population growth outweighs the number
of people rising out of poverty. Moreover, 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. per African was around
$2,000 in 2013, which is around one-fifth of the level worldwide (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.

http://imf.org , 2014).
Poverty in Africa is also multidimensional, in the sense of limited access to
education, healthcare, housing, potable water and sanitation. This situation
puts the loss of more than $50 billion a year in IFFs in better perspective.

The resource needs of African countries for social services, infrastructure
and investment also underscore the importance of stemming IFFs from
the continent. At current population trends, Africa is set to have the largest
youth population in the world. By 2050 the median age for Africa will be
25 years, while the average for the world as whole will be about 36 years
(United Nations Population Division, 2012). Infrastructure constraints also
act as a brake on growth, just as do the low savings and investment rates
of the continent. In 2012 gross capital formation rates in Nigeria and South Africa were 13 per cent and 19 per cent, respectively, as compared to a rate
of 49 per cent in China and 35 per cent in India (United Nations Statistics
Division, 2014; World Bank World Bank
WB 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.

, 2014). Yet Africa is estimated to need an
additional $30–$50 billion annually to fund infrastructure projects (Foster
and Briceño-Garmendia, 2010; African Development Bank, 2014).

The Panel considered that when these needs are coupled with the changing
landscape of official development assistance ODA
Official Development Assistance Official Development Assistance is the name given to loans granted in financially favourable conditions by the public bodies of the industrialized countries. A loan has only to be agreed at a lower rate of interest than going market rates (a concessionary loan) to be considered as aid, even if it is then repaid to the last cent by the borrowing country. Tied bilateral loans (which oblige the borrowing country to buy products or services from the lending country) and debt cancellation are also counted as part of ODA. Apart from food aid, there are three main ways of using these funds: rural development, infrastructures and non-project aid (financing budget deficits or the balance of payments). The latter increases continually. This aid is made “conditional” upon reduction of the public deficit, privatization, environmental “good behaviour”, care of the very poor, democratization, etc. These conditions are laid down by the main governments of the North, the World Bank and the IMF. The aid goes through three channels: multilateral aid, bilateral aid and the NGOs. , Africa cannot afford to
remain sanguine about the problem posed by IFFs. Current developments
in the global arena in fact make the challenge posed by IFFs more acute.
The resources that Africa receives from external partners in the form of
official development assistance are stagnating due to the domestic fiscal
challenges of partners, who in response are seeking to reduce such
expenditures. Africa will therefore need to look within the continent to
fund its development agenda and reduce reliance on official development
assistance.

IFFs are also of concern because of their impact on governance. Successfully
taking out these resources usually involves suborning of state officials and
can contribute to undermining state structures, since concerned actors
may have the resources to prevent the proper functioning of regulatory
institutions