We need to assess the public health crisis that is about to explode in the Global South if debt is not outright cancelled. While most Northern countries are in the midst of fighting against the virus, the heaviest impact caused by the pandemic will be on countries in Africa, South & Latin America and Southeast Asia. With many of the Healthcare and social security systems of these countries being ill-equipped to handle the outbreak, the virus will have a devastating effect on the poorest communities. Jubilee Scotland has signed onto a new Debt Jubilee along with 200 other organisations, alling for the cancellation of debt payments paid out from global south countries to the World Bank and IMF during this time. This petition  is one of many calling on the government to take a stance on a pressing issue. It’s estimated by the Jubilee Debt Campaign that over $300 Billion in full debt cancellation is necessary for these countries to fight the virus over the next year. Some payments have been delayed so far, but by merely suspending debt payments, they only defer the problems of these countries for a little while. 

This approach ends up costing creditors nothing, but borrowing countries will have bigger repayments and higher debt risks down the line for many of these countries. Covid-19 has already led to falls in commodity prices and projected increases in borrowing costs in the global south, with limited resources at hand to handle a public health crisis. If these countries have to rely on more outside loans to fight the pandemic they will be stuck in high interest debt traps for decades to come.  One of the biggest risks that these countries are exposed to is the legal challenges that can be brought upon them for failing to keep up their payments. The G20 have called upon private creditors to delay payments, but they are not obliged to. Currently 77 countries are estimated to pay $9.4 Billion from May to December, as part of the G20 deal. Private lenders can sue governments in the UK courts for following the G20’s advice and suspending payments. But the Global South should not be pushed into this by the western institutions who have pledged to help them.

We need your help to call on Chancellor Rishi Sunak, to promote debt relief in these countries that are worst affected by the virus. By signing up to our petition, you help us put across the message that we need real debt cancellation and ways to work out debt in future that doesn’t put human lives at risk. 

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Oxfam International’s Head of Washington DC Office, Nadia Daar, said:

“We commend Congresswoman Maxine Waters, Chairwoman of the HFSC, for advancing this crucial reform agenda at the IFC where the US remains the largest shareholder, and applaud IFC CEO Philippe Le Houérou for his leadership in making these reforms possible. This is a huge step forward not just for the IFC, but for how we understand the role of the private sector in development.”

“This historic decision from the IFC will ensure its investments support improvements in education without excluding children or impoverishing families. Public aid money should not be used to fund corporate-backed private school chains that fuel inequality. Other donor agencies and governments now need to follow suit.”

This freeze is in response to concerns raised by 170 organizations, including Jubilee Scotland who called on the World Bank to end support for these forms of private education that profit on the exploitation of poor children, creating wider inequality. We called for expansions of public education that everyone can access- instead of ‘low-fee private schools’ which exclude girls, impoverished children and paid extremely low wages to under qualified teachers. In Uganda and Kenya, these schools have been accused of refusing to comply with minimum government education standards.

In addition to the freeze the IFC announced an evaluation of its investments in private schools by the World Bank’s independent evaluation group. Oxfam have stated that the COVID-19 Pandemic cannot be used by any donor as an excuse to invest in for-profit education, with the need for these organisations to financing to help countries meet educational needs of millions of children out of school with no access to online classes, tutors or computers.

This move by the bank has been a good start for ending private financing that negatively impacts communities while letting private companies profit. It is time for the UK to take out their investment in these schools that are part of this problem, especially when this investment is supposed to be providing aid.

The Guardian published an article this weekend that focuses on the UK’s current position on this issue.

“The Department for International Development (DfID) has given millions of pounds to low-fee private schools (LFPS) in countries around the world, including Nigeria, Kenya, Uganda, Ghana and Pakistan. It believes the money can help improve the educational prospects of children in places where public-sector schools are poor or lacking.

But the funding, some of it channelled through DfID’s private investment arm, CDC, has proved controversial. Among those that have received UK taxpayer cash are the private school chain Bridge International Academies (BIA) which has also been the recipient of money from Bill Gates and Mark Zuckerberg.”

Bridge International Academies runs low-cost schools with the UK investing £12.3 in the company. Last year a World Bank watchdog, the Compliance Adviser Ombudsman (CAO) investigated BIA’s operations in Kenya and found allegations of human rights abuses, poor working conditions, discrimination, lack of transparency and intimidation, as well as concerns about pay, health and safety and sanitation.

At the time the DFID said they would investigate the situation, something which they are continuing to work on with the WBG. But this should be a sign that the policy of DFID investing aid money in Public Private Partnerships can can lead to situations like this. PPPs and their lack of accountability and transparency have led to fee-paying schools with questionable quality popping up in countries which need to fight for free and universal education.

Linda Oduor-Noah, project manager at East African Campaign for Human Rights commented “We have heard first-hand from other investors that they are keenly awaiting the outcome of the investigation,”she said. “I would like Bridge to respect human rights and I think that no for-profit entity should masquerade as having social agenda, when at the end of the day profit drives all decision making. People involved in the provision of public goods should never endeavour to make profit off the poor.” Bridge Schools have had a researcher arrested and have lobbied the investigation of the issues of their schools. The reseracher they arrested, Curtis Riep made the recommendation to not fund Bridge Schools as they neglect legal standards while driving profit, a clear case of a PPP that starts with an altrustic goal that become consumed by profit margins as time goes on.

As a private company they have produced research and press releases justifying the existence of PPPs that come off as strange and potentially misleading PR moves. In one report produced by BIA about the British public’s support and approval of Privately provided education in foreign countries, they say that over half of people are in support of these type of schools. They’ve done the same for the public opinon of USA citizens, but the reports use leading questions that doesn’t show any transparency of what these private schools actually are like.

These reports don’t talk about the actual work they do, but just dress up some market research, that makes it look like people are in favor of this, but It’s hard to say that the every-man on the street in any English speaking country has enough information to make a valid assessment of the issues surrounding privatization of education in Africa. With statistics that look good, they can claim that people approve of what they do without shedding much light on it at all or twisting figures and claims. They asked people if a social enterprise company like them should run schools that cost parents about $7 US dollars a month, in countries where there is a lack of other schools. Of course this sounds like a great idea when you think about what that amount of money means to you, but this is without mentioning that $7 can be a huge amount of a persons income in these countries. The teachers at these Schools work up to 65 hours per week and only take away $100 per month. In Kenya, sending three children to a Bridge school is estimated to represent almost a third of the monthly income of families living on $1.25 (94p) a day, according to a joint study by Kenya National Union of Teachers and Education International, a federation representing 32 million teachers and support staff. Instead of spending time

The European investment bank financed Bridge International Academies Ltd (BIA) through an equity fund, who became involved in a controversial PPP educational project in Liberia. Indeed, the Liberian government outsourced the lion share of its public pre-primary and primary schools to BIA, but the process was not competitive, local communities were not properly consulted, and there was not full transparency.

This is just one of many providing this form of private-for-profit education, PPPs in Africa that provide public services in a way that makes it harder to make people accountable when they can’t meet standards that they promised. The issues is that many countries can’t offer a full education system alone without some reform of the corruption within their society, in places like Liberia the education system has been broken for years. Private alternatives are marginally better for learning outcomes, but still fail students on basic human rights and protections from abuse.

The steps that the World Bank group have taken are great and hopefully open up a conversation about how to ensure the education in the global south can thrive and not be used as a tool to drive profit. But this is an issue that should be closely watched. While our government uses PPPs to provide part of our education infrastructure with mixed results, handing a contract over to private companies to overhaul a whole system in places like the Global South edges out what the ultimate aim should be in these places – quality universal free education for all children.

This article was initially posted on our Medium.com blog.

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I had noticed throughout the speaker tour that the more confrontational and technical his interlocutors, the more Ardi rose to the challenge, and this meeting was no exception. He refused to be intimidated by the plutocratic architecture of Canary Wharf – ‘the elevator is speaking to us’ he remarked with a smile as we disembarked on the 13th floor of Exchange Tower – and repeatedly brought the discussion back to the core concerns of our campaign.

Ardi stressed the difficulty the people of Indonesia had in finding their feet when around 60% of their taxes went to debt repayments. He did not beg, but stressed the growth of a strong grass-roots movement in his country that was increasingly pushing the Indonesian government to de-recognise it’s illegitimate debts. Within this context I suggested that the Jubilee ‘Lift the Lid’ campaign, with its emphasis on an international and multilateral consensus on odious debts, was worthy of their serious attention.

It’s difficult to gauge how much of this serious attention we got. Certainly the meeting room was stuffed with officials of some seniority, including the CEO – Patrick Crawford. We encountered some of the usual red herrings – including the obligatory statement that it is pointless for the UK to clean up its own act when China behaves in the way it does. We were also told that standards had improved in the last few years, and that no new deals are being made to Indonesia.

While these last statements are possibly true, they are impossible to verify as long as so many ECGD-backed deals remain shrouded in commercial confidentiality. And while it felt exciting to expose this most business-minded of departments to the views of a campaigner from the Global South, it will clearly to be difficult for our campaign to make headway while the accounts of this secretive organisation remain closed to the public. To lift the lid, in other words, it may first be necessary to open the books.

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We’ve long complained that debt relief should not be counted as aid, on the grounds that debt cancellation is not new money going into a country, but old money not leaving the country. It’s a difference that can’t be captured just by looking at the accounting, though: one has to think about the history and ethics of the money. This makes the argument slightly shakey.

But recently we’ve been concerned about it for another reason. According to the international accounting rules for debt cancellation (set by the OECD), cancellation of military debts cannot be counted towards overseas aid targets. The UK has made some fairly significant steps towards reaching the 0.7% GNI target, going from about 0.36% GNI in 2003-04, to 0.51% in 2006-07. We been wondering, though, whether this level has been reached by counting the write-off of military debts towards the 0.7% target – that is, by breaking the OECD rules.

All of the debt cancelled for (or rather: bought back from) Nigeria was export credit debt, that is, old commercial debts that had been guaranteed by the UK and Nigerian governments. On average, around 40% of export credits are for arms. If this percentage held for Nigeria’s debts, then around 40% of Nigeria’s debts should not be counted towards the UK’s 0.7% aid target. This would mean that, potentially, the UK would have to reduce its ODA by £700 million (about 40% of £1.7 billion).

Given Nigeria’s history of military dictatorships, and the vast amounts of money that elites in that country have had for prestige projects, it surely would not be surprising if Nigeria had military debts to the UK.

We asked DFID whether they had gone through Nigeria’s debts before cancellation, and excluded the military debts, but they didn’t have the information. So Gavin Strang MP asked a Parliamentary Question on our behalf, which was answered very promptly, which was great, and the answer came back:

Arms Trade: Nigeria

Dr. Strang: To ask the Secretary of State for Business, Enterprise and Regulatory Reform what proportion of export credit outstanding at the end of financial year 2004-05 for Nigeria was for military goods. [180895]

Malcolm Wicks [holding answer 28 January 2008]: Information on ECGD business supported prior to 1991 is not held on a basis which enables defence to be identified separately from other sectors. ECGD has however supported no defence business on Nigeria since that date. (29 Jan 2008 : Column 202W)

The first part of the answer means that military debts cancellation may have been counted towards the 0.7% target, but that there is no record of what this is. The second part of the question, though, would be great news if true, since it would mean that the Abacha regime received no official military support from the UK. UK arms sales to Africa, however, according to the Observer:

UK arms sales to Nigeria [are] up tenfold since 2000 to £53m, including armoured vehicles and large calibre artillery. (June 12, 2005)

Now, Nigeria is surely a risky market (though markets warmed to it immediately after the debt cancellation); and the Export Credit Guarantee Department exists to support UK exports into risky markets. Furthermore, export credits were being provided well into the 90s for exports to Indonesia, so why baulk at Nigeria?

It therefore seems absolutely incredible that the Export Credit Guarantee Department has guaranteed no loans to Nigeria since 1991. Absolutely, mind-stunningly, incredible. Totally, discombobulatingly, extra-terrestrially incredible. However, there can be no doubt that the answer to the Parliamentary Question is entirely accurate.

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