New Internationalist

A Pound Of Flesh

Issue 310

new internationalist
issue 310 March 1999

A pound of flesh

Joseph Hanlon reports on how local people have wised up to a huge international hoax.

We walk into a crowded waiting room with patients clutching their x-rays, and ask the first three people how much they paid. All three paid the right amount. Then we ask if they have a receipt; only one does. That means hospital staff pocketed the 30,000 meticais ($2.50) each from the other two.

It is a small mark of the corruption and poor care that patients now face in the Maputo Central Hospital, the largest and most modern in Mozambique.

I am accompanied by Dr João Alexandre, head of the x-ray section of the hospital’s emergency room. ‘Today we will have to stop all x-rays except the most urgent, because we have run out of the fixer used on the x-ray film after development,’ he admits. ‘And that creates the conditions for petty corruption – late at night, a small amount of money will convince a technician that your case is one of the most urgent.’

Wages are low. A senior nurse in the central hospital earns 700,000 meticais per month (under $60) which is not enough to provide basic food and clothing for her family. The United Nations estimate of the household poverty line for Mozambique is $75 per month.

‘But it is not just salaries; it is the lack of materials. There are no gloves, and nurses know that in a country with a high incidence of aids, they are risking the lives of their patients – and endangering their own. People become nurses because they want to help. But they become demoralized because they don’t have the conditions to do their job. They reach a level of despair where they lose all professional pride; corruption and an animal spirit takes over,’ explains Otilia Pacule, a 33-year-old economist and the co-ordinator of a national group campaigning for the cancellation of Mozambique’s debt.

Dr Alexandre agrees with her. ‘With no x-ray, it is harder to diagnose. But what is the point of diagnosing, when you know there are no medicines for treatment?’

Pacule gets angry about hospital staff demanding bribes: ‘It’s immoral. But people in hospital are sick and vulnerable; they are afraid to refuse and afraid to denounce corruption.’

Even Otilia can remember a time when the Central Hospital was not like this. After independence in 1975, the transformation of the health service to one providing better care for all was seen as a real triumph. The World Health Organization cited Mozambique for special praise.

But for Pacule, the key to the problem does not lie with the Central Hospital. ‘The problem is our huge foreign debt. We have such a tiny health budget because we pay so much debt service.’

Mozambique’s past
The reasons for the debt go back a long way. Mozambique is famous for its beautiful Indian Ocean beaches and luscious prawns, but until 1975 when the Front for the Liberation of Mozambique (FRELIMO) finally won its 13-year war for independence, it was a colony of fascist Portugal.

The newly independent country did not have an auspicious start. Its two biggest neighbours, Rhodesia and South Africa, were still ruled by white minorities. When in 1980 Rhodesia won independence as Zimbabwe, the two countries helped the African National Congress to fight for majority rule in South Africa. The apartheid state fought back in the most brutal way, waging a war against Mozambique that did an incredible $25 billion in damage; a million people died and a third of all Mozambicans were forced to flee their homes. South Africa directly attacked social facilities, backing the Renamo guerillas who destroyed half of all schools and health units – even massacring patients as they lay in their hospital beds. Factories, railways and bridges were destroyed, crippling the economy.

The crisis was made worse because the United States and the West backed apartheid South Africa as an anti-Communist bastion during the Cold War.

When apartheid ended in 1992, South Africa stopped waging war on Mozambique. But the country had been forced to borrow huge amounts of money for importing oil, food, clothing and arms to fight the war. Much of the support given to Mozambique to help it defend itself against apartheid was called ‘solidarity’ but it was often loans rather than aid.

The crunch came in 1991, when the International Monetary Fund (IMF) said that the Mozambican Government had to reduce its spending. Since the IMF also said Mozambique could not decrease the repayments of its debts, the only cuts left were civil-service salaries and consumables like x-ray film fixer. Nurses and teachers started slipping below the poverty line and began to look for other sources of income.

By 1992, the debt had mounted to more than $7 billion. Since then Russia and many European countries have cancelled some of this, but over $5 billion remains. Each year, Mozambique is supposed to pay $350 million in debt service – that is, interest on the outstanding debt and some repayments of the debt itself (principal repayments). In reality, it pays less than a third of this – and the unpaid money is added on the total debt.

The debt trap
Clearly, the country is caught in a trap from which it can never escape. And it is not alone – all of Africa is caught in a similar vice caused by wars, falling prices of exports, and foolish economic policies imposed by the IMF and Western donors. For most of Africa, debt is all that is left of the Cold War – the people of DR Congo, for example, are now expected to repay $13 billion which was lent to Mobutu. The West knew he would build palaces and put the money in Swiss banks, but Mobutu was a Cold War ally. Now Mobutu is dead and the Cold War is over, but the bill still has to be paid.

The recognition that much of Africa’s debt is unpayable caused the international community to agree, for the first time ever, that some debts could be cancelled. In 1996 the World Bank and IMF agreed the Heavily Indebted Poor Countries (HIPC) Initiative. It is a slow and ponderous process involving an army of accountants, but on 7 April 1998 the Bank and Fund agreed with other creditors that more than $2 billion of Mozambique’s debts should be cancelled in mid-1999. Mozambique is, so far, the biggest beneficiary of HIPC debt cancellation.

The World Bank issued a press release saying that the deal would ‘free budgetary resources and allow Mozambique to broaden the scope of its development effort.’ Suddenly, there seemed to be hope for Mozambique’s schools and hospitals.

But on 4 December 1998 Deputy Finance and Planning Minister Luisa Diogo told a shocked parliament that ‘the HIPC Initiative will not produce any significant impact on the volume of future [debt service] payments’. After HIPC the country will still be paying back $100 million a year; just $10 million less than the $111 million it has been able to pay, she said. This is unlikely to release many budget resources for health or development.

HIPC turns out to be a cruel hoax – an accounting trick. The World Bank and IMF agreed to cancel only that part of the debt that Mozambique was not paying in any case – that part which was being ‘rolled over’ each year. HIPC only cancels the uncollectable debt.

The $100 million per year that Mozambique continues to spend on debt service is more than the Government’s current spending on health and education combined. Donors do top up that money – and the World Bank lends Mozambique an extra $25 million a year for health, forcing Mozambique into a deeper debt trap as it struggles to repay its old debts.

But the reason that there is no fixer for the x-ray films in the Central Hospital, the reason for the lack of medicines, and the reason for poverty wages for senior nurses and technicians is that each day Mozambique’s Government pays $275,000 in debt service, while it pays only $100,000 per day for the entire health service, of which less than $20,000 goes to the three biggest hospitals.

Bringing pressure
Initially the Government and most Mozambicans thought there was nothing to be done. But in 1996 several local civil-society groups – trade unions, student groups, peasant associations and development charities – came together to form the Mozambican Debt Group. At first, says Pacule, people did not link the low wages to the foreign debt; they did not understand that there was enough money to pay a living wage, but that debts were being paid instead. And the Government was distrustful about civil- society involvement in what had always been seen as a Government matter. ‘But when discussions on HIPC started, we made it clear we were not against the Government,’ says Otilia Pacule, sitting in her small basement office. Regular meetings with the Minister and Deputy Minister of Finance and with Central Bank officials followed.

In 1996 the Debt Group and Deputy Minister Luisa Diogo shared a radio phone-in programme on debt. By 1997 the Group was getting front-page headlines in the local press. Meanwhile, an international movement for debt cancellation had been launched. It is called Jubilee 2000, and aims to make the year 2000 a true jubilee year by cancelling the debts of the poorest countries. Jubilee 2000 campaigns now exist in 38 countries, North and South. A major target are the leaders of the seven most industrialized countries (the so-called G8). When they met in Birmingham, England in May 1998, they were greeted by 70,000 people holding hands to form a human chain symbolizing the chains of debt. This international grassroots protest has had a dramatic effect. It forced the G8 leaders to discuss debt in Birmingham. And Germany, the host of the June 1999 G8 summit in Cologne, has already promised new initiatives on debt.

In Mozambique, it meant that people realized it was possible to ask for more debt cancellation. Parliament has now called for total and unconditional cancellation of foreign debt. In a short time, debt cancellation has switched from being an impossible dream to something which poor-country governments actually think is a practical possibility, and which rich-country governments can no longer ignore.

But winning the battle for recognition of the problem is only the first step to winning the war. Recognition of the problem does not buy fixer for x-ray film in the Maputo Central Hospital. A lot of campaigning is still needed to convince the leaders of the rich world actually to cancel the debt.

Joseph Hanlon is a writer on Mozambique and author of ‘Peace without profit: How the IMF blocks rebuilding in Mozambique’. He is also a policy advisor to Jubilee 2000. Jubilee 2000, PO Box 100, London SE1 7RT. Tel: +44 171 401 9999.
e-mail: mail@jubilee2000uk.org
Web site: www.jubilee2000 for local action details.
The May issue of the NI will focus on debt.

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