How it is possible for Africa to be a creditor rather than a debtor to the developed countries – Assignment Example
How it is possible for Africa to be a creditor rather than a debtor to the developed countries In the article “Econ-Atrocity: Do the World’s Poor Countries Finance the Rich Ones?” Basole Amit discusses various aspects of how African has suffered significantly from numerous debts from the developed countries, despite submitting more funds to the developed countries. One challenge about the funding is the fact that the loans that the African countries receive from the usually land in the hands of few private individuals who mishandle them sending back the same amounts to the developed countries. In the article ‘Africa’s Debt: Who Owes Whom?’ by Boyce and Ndikumana, a similar perspective is observable stating that despite Africa having numerous resources remains indebted to the developed countries. It is however unfortunate that the debts accumulated by these African nations are mainly controlled by few private individuals who spend most of the loans on travels abroad, resulting in them sending back the funds to the developed nations (Boyce and Ndikumana 6).
From the two articles above, it is evident that Africa has the potential of becoming a creditor rather than a debtor to the developed countries from various perspectives. In the case of Boyce and Ndikumana in their article ‘Africa’s Debt: Who Owes Whom?,’ it is evident that indeed Africa has the potential of crediting the developed countries rather than being a debtor to the same nations. First, in most of the African sub-Saharan states, most of the funds borrowed end up in the control of a few private individuals who still spend the same amounts of money in capital flight charges back to the developed countries (Ortiz 42). Evidence shows that the total amount of capital stock has risen in the past years from $ 187 billion dollars between 1970 and1996, with the amount increasing $274 billion in 2006 (Boyce 338). Compared to the funds that these Sub-Saharan countries have in terms of debts from the developed countries, the funds they remit to the developed nations in capital flights are by far high amounts. One thing that needs to be done is refrain the funds from the control of the corrupt political class who are the private individuals funding the developed countries through capital flights.
In the article “Econ-Atrocity: Do the World’s Poor Countries Finance the Rich Ones?” Basole, a similar aspect of how rich Africa is though what is portrayed is that it is indeed the poorest continent mostly especially those in the Sub-Saharan region. From the evidence, it is ideal that the total funds of in terms of debt that the African nations have accumulated from developed countries are far less than that which they remit to the nations. The unfortunate aspect is that the debts acquired by the developing nations where a majority of the leaders use the funds as personal fortunes, despite the funds being acquired as public funds through the governments (Basole). Through corrupt dealings and mismanagements of the funds, the borrowed funds find their way back to the developed nations through capital flights.
The articles are linked by the fact that they show ideally the similarity in addressing the issue that indeed, Africa has sufficient resources that can be used to credit the developed nations, however, it is only due to the corrupt and mismanagement of the leaders in these nations. If appropriate measures are put in checking the management of funds, it is possible that Africa would have the potential of crediting the developed nations rather than being in debt to the same nations.
Basole Amit, Econ-Atrocity: Do the World’s Poor Countries Finance the Rich Ones? Retrieved from: http://www.populareconomics.org/econ-atrocity-do-the-world’s-poor-countries-finance-the-rich-ones/
Boyce James K. and Ndikumana Léonce, Africa’s Debt: Who Owes Whom? Political Economy Research Institute: University of Massachusetts Amherst, 2002, Print.
Boyce, James K. (1992) “The revolving door? External debt and capital flight: A
Philippine case study,” World Development, 20 (3), 335-345.
Ortiz Isabel, Putting Financing for Development in Perspective: The South Finances the North, IDEAS Network, 2007 http://www.ideaswebsite.org/news/nov2007/Putting_Financing.pdf)