Structural Adjustment Programs
“In theory, SAPs are meant to assist countries to return to economic recovery. In practice, the opposite has happened. SAPs have destroyed any chance to achieve sustainable economic development that would meet national priorities...IMF-World bank reform packages constitute a coherent program for economic and social collapse…They destroy the entire fabric of the domestic economy’” - Herbert Jaunch, Labor Resource and Research Institute (LaRRI), Namibia
To find the multiple roots of the debt problem in Africa, you have to go back to the European colonial administration of Africa. Many of the colonial powers were only in Africa for resource extraction. Because of that, the people of Africa were only trained in one area of work, and adding to that problem, nearly all of the profits of the country bypassed the workers and went directly to the European colonial powers. When the colonial powers left Africa, many of African countries were taken over by leaders that were even more corrupt than the aforementioned colonial powers. They kept exporting products, but they kept all the profit for themselves. This caused great disparity between the ruler's wealth and the common people, causing many of the countries to sink into grave poverty.
After OPEC (Organization of the Petroleum Exporting Countries) began seeing huge profits in the 1970s and began putting the majority of their profits into banks from industrialized countries, the banks began loaning large sums of money to developing countries for the development of manufacturing industries. Due to various reasons, many of these programs failed, and the African countries were stuck with the task of paying off these loans, while most of the loaned money went exclusively to the leader of the country. The loans initially consisted of very low interest rates, but in an attempt to stave off high inflation rates in the 80s, the USA was forced to raise interest rates. After that, the major...
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