In until “Uganda began to borrow more, above

In this
section I will address the impact of the debt relief initiatives on Uganda and the
Democratic republic of Congo. The overall change in trends and whether these
countries have grown to be reliant on such initiatives. The World Bank has also
mentioned debt relief alone cannot aid sustainable growth, programs looking at
training and education may be more beneficial. “Under
HIPC, 18 countries had their debt levels reduced to half their initial levels,
cancelling $19 billion of external debt. However, in 11 out of the 13
countries, the debt situation has worsened. In 8 countries, debt levels once
again exceed HIPC thresholds”. (A. Weiss, M. 2012)

Uganda, located in east Africa was the first recipient of
the original HIPC initiative in 1998. A population of around 41 million. Debt
write offs and further payments had helped Uganda, “As a result, Uganda’s total debt
outstanding declined from its 1992 peak of 102 percent of GDP to about 12
percent of GDP in 2007”. (Romero-Barrutieta, A. L., Bulír?, A., &
Rodríguez-Delgado, J. D. 2015). Uganda once had a healthy economy in the 20th
century. The economy was going well until “Uganda began to borrow more, above
and beyond its debt service capacity”. Uganda relied too heavily on commodity
exports and up until the real emergence of china this was successful. When
commodity prices fell, most countries in Africa felt the shock.  Uganda had not spent on important areas of
society such as health, education and infrastructure.

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Source: IMF DataMapper

 

D.R Congo had experienced high levels
of real GDP growth in the mid 1980s when they were strong economically. This
coincides with the fall in commodity prices and the globalisation of world
trade. African countries borrowed to facilitate growth, but in fact they fell
into a cycle of borrowing to survive. This lead to dependency on organisations
which may have facilitated exploitation by big lenders.  D.R Congo as many other countries in this
region, have struggled with conflicts and the difficulty of managing natural
resources. With a population of around 78 million, D.R Congo has a sizeable
workforce which should cope with the demands of looking to increase economic
output. The real GDP growth map above also depicts the similarity between Congo
and Uganda in GDP growth. Both countries have received aid and debt relief.

This may have given the respective economies some sort of balance and
consistency without improving the country. Since 1996, D.R Congo has experienced
sharp trends in real GDP growth, whereas Uganda had a more gradual and less
fluctuated trend in GDP growth. DR Congo has underperformed economically and
should be benefitting from large reserves or natural gas and oil. The IMF and
the World Bank give relief and aid to D.R Congo, and to this day the figures
sent have been increasing. Why has the D.R Congo not invested in the natural
resources of the country? The levels of conflict and issues with security have
played a big part in the success of the country. It is very challenging to
build an economy in these circumstances. However, what are the IMF and World
Bank doing to promote growth?

 

“During the
decision point stage of HIPC, the three-year average value for exports earnings
of Uganda for the year ending 2002-03 was projected over one billion dollars
while the actual value only amounted US$726 million, representing a 28%
decline”. (Isar, S. 2012. P9). The common trend amongst African economies is
the difficulty to predict trends and future performance. Uganda has also
experienced conflict and issues with maintaining peace. The value of exports
and income are smaller than it should be which may be attributed to the large
cost of conflict. It costs a lot to maintain conflict and most weapons and
machinery is imported from more developed economies.

 

Uganda and D.R Congo have both fell
victim to China and other countries who have found ways to mass produce
commodities at low prices. Countries in sub-saharan Africa have not been able
to grow sustainably and make the correct decisions to finance development.

Uganda also discovered oil in recent years which should give them hope to
improve. The impact debt relief has
had on Uganda and D.R Congo has been positive. The rate of fertility in D.R
Congo and Uganda would need to fall to cope with the demands of education and
healthcare. The two countries have also borrowed privately which also causes a
conflict of interests. The level of corruption and lack of transparency have
also impacted negatively on the effectiveness of the relief programs.