Sunday, April 23, 2006

Nigeria (almost) debt-free

Many activists (including myself) have argued for a wholesale cancellation of debt owed African countries to the west and to international lending institutions. We've argued that African debt is illegitimate for many reasons and that the cancellation of debt would allow African governments to spend the money on more worthy areas such as health, education and physical infrastructure.

Now, it looks like our theory will be tested for the first time. Nigeria will become the first African country to settle its debts with other countries. The country will make a $4.6 billion payment to the Paris Club of lender nations which, under a negotiated agreement, will cancel the remainder of Nigeria's debts to the group. Nigeria still owes $5 billion to other lenders such as the World Bank and private lenders but it's a far cry from the $35 billion the country owed as recently as the 1990s.

This is certainly a good achievement by the Obasanjo administration. The next step is for it to take steps toward improving governance and fighting corruption so that the extra funds are spent in an appropriate way so as to raise the country's plummetting standards of living.

The country's yearly income has collapsed from US$1000 per person in 1980 to $390, despite being one of the world's largest oil producers.

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