Debt in an Absolutist Kleptocracy: A Zairean Case Study
| Author | Trevor W Parfitt |
| DOI | 10.1111/j.1467-9256.1986.tb00157.x |
| Date | 01 February 1986 |
| Published date | 01 February 1986 |
| Subject Matter | Article |
DEBT
IN
AN
ABSOLUTIST
KLEPTOCRACY:
A
ZAIREAN
CASE
STUDY
TREVOR
W
PARFITT
The growth
of
Third World debt has stimulated a voluminous literature much
of which focusses on the thesis
of
the debt
trap
as elaborated by Cheryl Payer
(1974).
Northern creditors enables the latter to impose exploitative conditions
on
their loans and aid.
Fund
(IMF),
which will only assist debtor states
if
they agree to implement
a
'stabilisation programme'. These programmes comprise 'austerity' measures, such
as curbs
on
government spending, wage retrenchment
and
the abolition of price
controls, together with further conditions, such as the abolition
or
liberalisa-
tion
of exchange controls, devaluation of the exchange rate
and
greater
hospitality
to
foreign investment. Payer argues that these austerity measures
are designed
to
enhance the profitability of private capital
at
the expense of
the proletarian and peasant, whilst the abolition
of
exchange controls
and
encouragement for foreign investors are intended to optimalise the gains of
metropolitan capital
from
this enhanced profit rate.
Payer argues
that
the financial dependency of Southern states
on
their
In
particular, she focusses
on
the International Monetary
Recent analysts have taken issue with this viewpoint. Thorp
and
Whitehead
(1979,
pp
8-9)
point out that the
IMF's
bargaining
,position has weakened
in
the 1970s,
at
least with regard to the richer
Latin
American states, due to the
willingness
of
private banks to lend to such countries.
suggested that
a
dose
of
austerity could benefit certain Third World countries
by curbing the wastefulness of inefficient
and
over-manned state and para-
statal bureaucracies.
In
this paper, we shall assess the relevance of these
respective analyses to the case of Zaire.
It
has
also been
The Origins
of
the
Zairean
Debt
Zaire is
a
huge country, which possesses large stocks of valuable raw
materials, notably copper, cobalt,
uranium
and
other valuable metals. According
to such indicators Zaire should be
a
rich country,
and
yet
it
has
the fourth
largest debt
in
Africa behind Nigeria, Sudan
and
Ivory Coast.
In
1982, the total
Zairean debt (including undisbursed loans) stood
at
we1
1
over
$4.5
bi
11
ion
(World Bank Debt Tables,
1983-84
edition, 1st supplement,
1984).
Much of this
debt
had
been contracted from private banks
on
non-concessional terms
during
1973-75
when Zaire still
had
a
good 'credit
rating.
Wood (1981,
p
2) notes
that
the terms agreed for Zaire were considerably worse
than
those agreed for loans
in
30
other countries. The terms for Zaire (other countries
in
brackets) were:
interest rate
6.9%
(2.6%),
maturity
14.9
years
(30.7
years), grace period
4.4
years
(7.8)
and
grant
element 20.6% (57.2%).
Why is Zaire
so
badly
in
debt despite
its
mineral wealth?
In
part Zaire
was a victim
of
declining commodity prices, especially
that
of
copper, which
slumped from its peak of $1.40 per pound
in
April
1974
to the mid-sixty-cents
range
in
1976.
One can also point to such factors as the closure of the
Benguela
Railroad
because of
the
Angolan conflict
in
1975-76, the
Shaba
Wars
of
1977
and 1978, rizing
oil
prices
and
the effects of the world recession.
However, one must also note the misconceived development policy, which
puts
an
emphasis
on
expensive
and
unproductive prestige projects.
During
1973-75
Zaire
contracted
$2.6
billion
in
loans to finance ambitious ventures such
as
the Maluku
Steel
Mill
and
the Inga-Shaba powerline (Wood,
1981).
The latter project
contributed to
a
total Zairean current capacity of 1,75Omw, of which only 350mw
To continue reading
Request your trial