Philippe Tunamsifu Shirambere (April 2011)
- Introduction
In this paper, I try to present a small background of the Democratic Republic of Congo relative to the case which explains the origin of the mismanagement and debt; the second point the WTO and the Millennium Developments Goals and the conditions for reaching the decision point; the third point analyze the impact of debt relief; the fourth point the outcome of the debt relief and the interconnection of the goals, and finally a small conclusion.
- Brief Background of the DRC on the matter
The Democratic Republic of Congo (DRC), former Republic of Zaire, which is located in Central Africa, is one of the big State in the African continent; the third probably, after Sudan and Algeria. The DRC was colonized in two steps; the first was the result of the Berlin Conference where Leopold II, King of the Belgians was allowed to create a personal state as a private property. He nominates the state as the Congo Independent State or the Congo Free State on which he had control from 1885 to 1908.
The second step of colonization start in 1908 when the Leopold II was forced to hand over the Congo Free State, his personal fiefdom, to the Belgian state. The Belgian colonial administration changed the name and the Congo Free State became Congo-Belge or Belgian Congo from 1908 to June 30, 1960 the Independence Day for the Congo. The reign of Leopold II and the Belgian colonial administration wasn’t benefit for the country because all resources were taken to the Belgium. That is why after 75 years ago, at the Independence Day; only twelve people were in under graduate. Thus, the consequence is that, all Congolese leaders haven’t skills to manage the country at that time, which explain political crisis for misunderstanding of the constitutional provisions. For the other side, leaders would like to be like Leopold II; meaning to work on their own benefit.
Indeed, after the Independence, the first Republic from 1960 to 1965 was characterizing by many political crisis between the Prime Minister Patrice Lumumba and the President Joseph Kasavubu. That conflict allowed the General Joseph Mobutu who was the Chief of the army; Armee Nationale Congolaise, to make a coup d’état in 1965, and in 1971 he took the initiative to change the name of State.
During his presidency, Mobutu's regime has been characterized as being corrupt and poorly managed. As a result of these problems, DRC currently exists in a severe state of underdevelopment. This is ironic, because DRC possesses some of the richest mineral deposits in Africa. Because of Mobutu's mismanagement of his country, there was every reason for his regime to collapse. The fact that it has not collapsed can be attributed to the external support that Mobutu has received throughout his reign. In particular, Mobutu has been able to remain in power because of the military and economic support that he has received from France and the United States. Mobutu's corruption can be seen in the fact that he has amassed a huge personal fortune at his country's expense. Although DRC has a foreign debt of more than $5 billion, "estimates of Mobutu's fortune run upwards of $2 billion to more than twice that." Other sources suggest that Mobutu's personal worth is well over $5 billion. Most of this money was gained through corrupt means.
After 32 years of dictatorship of Mobutu’s presidency, the country entered into various armed conflicts which allowed Laurent-Désiré Kabila, spokesperson of the Alliance of Democratic Forces for the Liberation of Congo-Zaire (AFDL), came into power in May 17, 1997 while Mobutu fled to Morocco.
- The WTO and the MDGs and the conditions for reaching the decision point
Indeed, the World Trade Organization (WTO) is the international organization dealing with the global rules of trade between nations. Its main function is to ensure that trade flows as smoothly, predictably and freely as possible, with a level playing field for all its members. It seeks to place developing countries’ needs and interests at the heart of its work programme (the WTO and the MDGs, p. 2).
The States cannot stay closed, that is why they have to be in partnership with others. Because the WTO is a place where member governments go, to try to sort out the trade problems they face with each other, the DRC has been a member since 1 January 1997.
Now the question that I’m asking myself and try to analyze is to know the impact of the Democratic Republic of Congo to be a member to the WTO in the realization of the 8th Millennium Development Goals.
Indeed, there are eight international development goals that all 192 members and a number of international organizations have agreed to achieve by the year 2015 to end poverty: eradicate extreme poverty and hunger, achieve universal primary education, promote gender equality and empower women, reduce child mortality, improve maternal health, combat HIV/AIDS, malaria and other diseases; ensure environmental sustainability and develop a Global Partnership for Development.
Taken account the situation of the DRC, there is a lot to say about the eight goals, but because the main goal that concerns the WOT is the eighth Millennium Development Goals, I will focus my attention on it. MDG 8 is the precondition for all of these goals to be sustainable in the long run. Moreover, the target 15 provides to deal comprehensively with the debt problems of developing countries through national and international measures in order to make debt sustainable in the long term. After 32 years of the dictatorship of Mobutu and 14 years in armed conflicts, the DRC has been contracted many debts which explain its situation to be a Heavily Indebted Poor Country among others 42 countries; meaning eligible for special assistance from the International Monetary Fund and the World Bank.
The majority of WTO members are developing countries; one of the WTO’s main objectives is to ensure that they benefit equitably from international trade along with countries that are better off. A fundamental aim of the Doha Round of trade negotiations is to ensure that developing countries are provided with the trade opportunities that will enhance their growth and development prospects. A successful conclusion to the Doha Round will contribute significantly to the achievement of the MDGs. In helping to attain these goals, the WTO will continue to join forces with other international organizations and other actors to make the achievement of the MDGs a reality. Strong and harmonious cooperative efforts are needed if the MDGs are to be achieved, and the WTO is deeply committed to supporting these efforts (the WTO and the MDGs, p. 13).
In 2003, in the IMF report, a preliminary determination had been made that the DRC could be eligible for assistance under the enhanced HIPC Initiative on the basis of its heavy debt burden, its track record of performance under IDA- and IMF- supported programs, and its status as an IDA- only and Poverty Reduction and Growth Facility (PRGF) - eligible country. Executive Directors also indicated that the I-PRSP provided an adequate basis for concessional assistance from IDAA and the IMF. Most Directors indicated that the DRC could reach a decision point in early 2003, provided that (a) adequate progress continued to be made under the peace process; and (b) the country remained on track with its IDA – and PRGF – supported programs. At that time, the DRC’s demonstrable progress in the areas of peace and economic reform, as well as its heavy debt burden, continue to warrant an early HIPC Initiative decision point. Although the outbreaks of violence imply risks, in the opinion of the IDA and IMF staffs, the DRC has met the conditions for reaching the decision point.
The IMF report provided background information on the DRC’s eligibility for assistance under the enhanced HIPC Initiative, the dimensions of poverty, political and security developments, and the macroeconomic and structural adjustment record, etc.
The Global Partnership for Development refers to the responsibility of rich countries to deliver more effective aid, more sustainable debt relief and fairer trade rules, well in advance of 2015. This partnership is the basis of the 8th Millennium Development Goal.
It has six targets as follow: Develop further an open, rule-based, predictable, non-discriminatory trading and financial system; Address the special needs of the least developed countries; Address the special needs of landlocked developing countries and small island developing States; Deal comprehensively with the debt problems of developing countries; In cooperation with pharmaceutical companies, provide access to affordable essential drugs in developing countries; and In cooperation with the private sector, make available the benefits of new technologies, especially information and communications.
- Impact of debt relief
By being member state, the DRC has taken advantage to deal with the debt issues because on July 1, 2010 the IMF and the World Bank's International Development Association (IDA) have decided to support US$12.3 billion in debt relief to the DRC.
The Press Release No. 10/274 announced that the decisions by the Board of Directors of both institutions will generate total debt service savings of US$12.3 billion, which include US$11.1 billion under the enhanced Heavily Indebted Poor Countries Initiative, and US$1.2 billion under the Multilateral Debt Relief Initiative. Debt relief from the IMF will total US$491 million and from the World Bank’s IDA US$1,832 million, with the remainder expected to come from bilateral and commercial creditors. As a result of this relief, the DRC will no longer face a heavy debt service burden in relation to its revenue and foreign exchange resources. The Boards determined that the country has implemented the policy measures (“triggers”) required to reach the completion point, a stage in which debt relief from both the HIPC Initiative and MDRI becomes irrevocable. The triggers included satisfactory implementation of the country’s poverty reduction and growth strategy, maintenance of macroeconomic stability, improvements in public expenditure and debt management, and improved governance and service delivery in key social sectors such as health, education and rural development.
The same Press Release mention that for the IMF’s Mission Chief for the DRC, reaching the HIPC completion point demonstrates the significant progress that the DRC authorities have made over the past several years in strengthening macroeconomic policy management and performance following a devastating decade-long conflict that destroyed the country’s economic and social infrastructure. The conditions for reaching the HIPC completion point provided the authorities with a policy reform framework that guided their efforts to enhance macroeconomic stability, address weaknesses in public financial management and economic governance, and reform the social sectors. Progress in each of these areas also sets a solid foundation for advancing the country’s development agenda going forward.
The World Bank Country Director for DRC, mentioned the Press Release, recognized that the government’s huge efforts toward reaching Completion Point. This could be a turning point in DRC’s long troubled history. Going forward, strengthening the rule of law, improving governance – especially in the oil and mining sectors – and improving the business climate are essential next steps to benefit the most vulnerable Congolese citizens.
Indeed, the DRC becomes the 30th country to reach the completion point under the HIPC Initiative. The completion point marks the end of the HIPC process for the DRC, which started in July 2003 when the Executive Boards of the IMF and the World Bank agreed that it had met the requirements for reaching the decision point, at which countries start receiving debt relief on an interim basis.
Another advantage for the Global partnership is with the Paris Club which on November 17, 2010 agreed on a reduction of the debt of the DRC in the framework of the enhanced HIPC initiative. As a contribution to restoring the DRC’s debt sustainability, the Paris Club creditors provided a cancellation of USD 7 350 million, fulfilling all their commitments under the enhanced HIPC initiative. Paris Club creditors expressed their concern over the business environment and urged the Government of the DRC to carry out further reforms to improve governance, strengthen the rule of law and fight corruption which are necessary conditions to ensure a sustainable development after the enhanced HIPC initiative. They noted the DRC’s determination to implement a comprehensive poverty reduction strategy and an ambitious economic program providing the basis for sustainable economic growth, including the commitment to improve governance and business environment.
The President Joseph Kabila of DRC was satisfied economically to declare before the congress that 2010 was the year of grace by reaching the completion point under the HIPC initiative with the consequent deletion of over 80% of external debt and on debt relief by the Paris Club. The impact of the Millennium Development Goals show that they cannot be seen in isolation, that is why they are all interconnected. By reaching the completion point under the HIPC initiative and the reduction of the debt of the Paris Club, the DRC has improving some sectors. It means some Millennium Development Goals are ongoing. For that, the Prime Minister of the DRC said that after the cancellation of external debt of the DRC, 200 million U.S. dollars have been allocated to the education sector and 50 million for health.
- Outcome of the debt relief and the interconnection of the goals
The outcome of the debt relief and the interconnection of the goals can be appreciated as follow:
· The DRC’s Constitution provides in the articles 43 and 44 for free compulsory in primary education and eradication of illiteracy. However, since the Constitution was adopted by referendum in 2006, the educational system was primarily supported by the parents. Consequently, the low enrolment and completion rates for children were often tied to the financial hardships of their parents. In 2009, according to the UNICEF report, the Government of DRC allocated around 8 per cent of its gross domestic product to supporting education, which is insufficient to cover all of the country’s educational operating expenses. After the debt relief, I realize that the second goal is ongoing because some classes of primary school are now free according to the allocation of 200 million U.S. dollars in the education sector. This situation can affect the first goal because the parents who had to deal with school fees have to affect their means in other sectors like food which can affect also the goal four. · The allocation of the 50 million for health affects also the 5 to 6 Goals. According to the UNICEF Congo, approximately 554,000 children under the age of five – almost one out of five children in that age group – die each year in DRC. Most of these deaths are due to malaria, acute respiratory infections (in particular, pneumonia), diarrhoeal diseases, measles, HIV/AIDS, anaemia and malnutrition. The Goals 5 to 6 must been affected because the health care are supported by the population and when they haven’t means they cannot do anything but when the government allocate 50 million for health it means that the cost of the health care can be reduced and allow everybody to accede.
- Conclusion
To come up to the conclusion, take into consideration of the debt relief by the IMF and the World Bank, and the Paris Club, I agree that the International trade can lead to economic growth and development, and the WTO is very much at the forefront of efforts to make this happen for developing countries. This, in fact, is what the WTO and the Doha Round of trade negotiations are all about. The economic and developmental benefits brought about by the multilateral trading system can go a long way towards helping countries achieve the goals.
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