- By Joe Inwood, Newsnight and Nkechi Ogbonna in Lagos
- BBC News
Image source, Foer Diaso
Friends of a doctor who died in Nigeria because the elevator in the hospital where she was staying fell on nine floors while she was inside, were not surprised by a new study revealing that the country spends twice as much on repaying debts as it spends on health and education combined.
A major new report from the One Campaign, an anti-poverty group, focuses on the huge amount of private loans that African countries have to service, often at the expense of development.
It is not possible to draw a direct causal link between Nigeria’s debt crisis and the death of Dr Fwire Diyasu last month, but every dollar spent on debt servicing cannot go to critical infrastructure.
Dr Diaso was just two weeks away from completing her training at Lagos General Hospital when she died.
She had repeatedly complained to management about dilapidated infrastructure, power outages and lack of funding at one of Nigeria’s major public hospitals. She knew it was costing patients’ lives. She had no idea it would cost her as well.
“I remember her smile, she was the happiest person in the world,” her friend and colleague Dr. Joy Ifobukhan tells us. “She really loved her job and loved taking care of people.”
Dr Diaso suffered severe shock after the elevator fell, but he might have survived if the hospital’s oxygen supply and other facilities had been working.
“I think funding was a major issue both at our accommodation and the hospital in general. We complained to the management but the response we would receive was that they did not even have enough funds to electrify the hospital, let alone spend money on doctors’ residences.”
It’s just one example of a health care system in crisis. In 2018, Nigeria spent $5.9bn (£4.7bn) to repay loans. This year, it is expected to spend $8.4 billion. This compares to just $2.2 billion for education and $1.4 billion for health care.
The One Campaign report estimates that the poorest countries are paying 500% more in debt than they need to.
The organization, which aims to reduce poverty especially in Africa, includes people such as former US Treasury Secretary Larry Summers, former British Prime Minister David Cameron and former META President Sheryl Sandberg on its board of directors.
It is led by Gayle E. Smith, a former advisor to three US presidents, who also ran US development spending. She says the situation now is likely to be bigger than the debt crisis of 2005.
“This means that more countries are simultaneously heading into crisis,” says Ms. Smith, warning of the economic and political consequences. “I think this will have greater ripple effects, if you look at the number of countries at risk.”
While the situation has been getting worse for a few years, the report says that rising interest rates in the United States have exacerbated the problem.
Higher interest rates cause the value of the dollar to rise, which in turn causes the value of currencies such as the Nigerian naira to fall. Since most external debt is denominated in dollars, this immediately exacerbates the problem.
Moreover, there is an established relationship between the interest rate offered by the Federal Reserve, the US central bank, and the interest rate that commercial lenders will offer to other countries.
Add to this the high rates of inflation around the world and the lack of funding from lenders such as the World Bank.
“For the first time in 25 years we have seen an increase in extreme poverty,” Ms Smith says of the impact we are already seeing.
“We have seen a significant negative impact on health, education and the progress that has been made over the years.
“If you’re spending more than 90% of your budget on debt servicing, there’s not much left to do. So breaking this cycle is almost impossible.”
The report calls for a massive increase in lending by the World Bank, the International Monetary Fund and other global lenders.
There is no doubt that global institutions are not the only bodies calling for reform.
“If you don’t deal with issues related to corruption, we will talk a lot and not act,” says Sam Chidoka, a good governance expert in Nigeria.
He is concerned that the benefits of any debt reduction will not be passed on to the people.
“There’s no shame in borrowing. It’s what you do with the money you’ve borrowed. Was it used to make the country more productive or are we borrowing to finance lifestyles, fly private jets, and run large convoys for government employees?”
The issue of corruption is one that the report does not address directly, but it is not one that Ms. Smith avoids.
“There is no doubt that there is a need for transparency regarding the funds provided. Politics and governance are an issue, but they are not.” the problem.”
Many people will remember the Make Poverty History campaign launched in 2005, and for good reason. The report’s authors helped establish that global movement, which saw a historic agreement reached on debt. Although this had a lasting impact, things may be worse than they were before the agreement was signed.
Image source, Getty Images
“Overcoming poverty is not a charitable gesture,” Nelson Mandela said at a “Make Poverty History” rally in 2005. “It is an act of justice.”
After “making poverty history,” Africa’s external debt fell to just over $180 billion. Now, it stands at $645 billion, with private loans making up a much larger percentage of the total.
“We’re not talking about the need for global philanthropy,” Ms. Smith says.
“It is in the interest of Europe, the United States, Canada and the entire G7, as well as the G20, to see Africa develop.”
This argument that it is a matter of enlightened self-interest rather than goodness is central to this report.
Highly indebted economies fail to help tackle climate change or provide opportunities for their young people, who then look for opportunities in Europe or elsewhere.
This exodus has already been evident in Nigeria’s healthcare system, with many young doctors seeking opportunities abroad due to poor wages and conditions. According to Dr. Ifobukhan, her friend Dr. Diaso was one of those who did not want to leave.
“And then this incident happened where we clearly see someone dying because of poor funding for facilities, no infrastructure or emergency responses.”