DeniAfrica

The thrust of DENI is to achieve the following principal benefits for the African countries and their people both at home and abroad:

(a) Free up government funds from debt servicing and apply them to other pressing needs.
(b) Return of flight capital to Africa
(c) Return of talent with managerial skills and technological know-how.
(d) Africa benefits by reducing its external debt.
(e) Africa benefits by reduced demand on its hard currency reserves.
(f) Africa benefits by improving its credit rating and attracting more FDI inflows.
(g) Creation of a new entrepreneurial class of Africans unencumbered with debt.
(h) Generate economic boom and make Africa a world class trading partner.
(i) Private sector becomes the primary creator of wealth, jobs and prosperity.
(j) Private sector becomes the legitimate source of government revenue.
(k) Enhance democratic institutions and foster good governance.
(l) Empowering people means enabling them to pursue gainful economic activities.
(m) Foster respect and protection for individual rights.
(n) Instill the value of merit in the system.
(o) Relief to government from external debt pressures will enable the government to focus on effective governance.

Poverty Reduction
There is no sustainable way to poverty reduction unless Africa widens the base of economic participants. DENI does this well with strategic additionalities as discussed above under the “Growth-oriented method”.
The ingenuity of DENI is to widen the base of Africans participating in the revival and stimulation of their economies. This is a new development paradigm, based on broad participation of the population in market based economic activities. We need millions of entrepreneurs and business owners in Africa not just a handful of millionaires. DENI will bring about the emergence of a flourishing private sector, supportive of government economic endeavors and attention to “good governance” to enable autonomous capital flows through an expanding domestic financial market system.

This is the one crucial difference between DENI and other debt conversion proposals that have gone before Paris Club. DENI calls for people participation - the wider the base of participation the greater the appeal on both sides. To achieve this, DENI limits the amount of participation and also introduces the Investment Club (IC) method. Without a clear indication of benefits accruing to the creditor nations, Paris Club has little enthusiasm for such proposals except to insist on their standard conditionalities namely: Full Democracy, Rule of Law, Good Governance, Transparency, Accountability and so on and so forth.
DENI BENEFITS TO PARIS CLUB MEMBERS

Why does Paris Club find DENI so appealing? It is because DENI is simple yet comprehensive and practical in addressing the multiplicity of Africa’s development problems that they too are concerned about. DENI benefits all sides - creditor nations, debtor nations and a broad base of Africans for whom the loans were intended in the first place. For the Paris Club, DENI promises five (5) major benefits as follows:

(a) Increased menu of options:
It enlarges the menu of options for debt relief. Until now Paris Club had only rescheduling and forgiveness as the two main options with a small window for debt conversion. DENI has now joined this menu as a credible third option, not just for Africa but indeed for all Third World countries overburdened with debt. Incidentally, DENI makes the most sense and is most appealing only in the context of forgiveness. Otherwise, if the African leadership can listen to sound advice, get their act together, put our economies on a growth path and booming, there would be no debt crisis. We would be paying our debts at full value every time the installments fall due and all of us at home and abroad would be happy.

(b) Savings in foreign aid appropriations:
DENI provides long term savings for the West in their foreign aid allocations, meaning if the Paris Club members can enable the African nationals themselves to go home to stimulate their countries’ economies, they don’t have to send as much aid there as before. Nationals investing in their home economies means long-term development because they have a long-term vested interest in their countries, not the temporary interest of relief agencies.

The Paris Club can, of course, refuse to let the nationals do this under DENI. What would then happen is that the degree of poverty will intensify in Africa so much that the countries will go back to Paris Club members, cap in hand, begging for two things (i) unconditional forgiveness of all debt on the one hand and (ii) new and massive handouts for their survival on the other - a very frightening prospect but not entirely unlikely considering the sobering trends in Africa today on all fronts!

• food production is down by 40% and declining
• the population is growing rapidly
• unemployment is high and rising
• the environment is deteriorating
• GNP per capita is declining
• child mortality is increasing
• school enrollment is down and dropping
• infrastructure is decaying
• illiteracy is rising
• political instability is ever present
• already crippling poverty is intensifying

Foreign aid alone cannot and has not worked to reverse these negative trends. Neither can debt forgiveness. Indeed, no amount of foreign aid can do the trick without the motivation of the African people themselves. Were foreign aid alone our problem, Africa would have long developed given the staggering amount of resources we have received over the years.

While economic reform is desirable in principle, DENI enthusiasts believe that what needs to be transformed is the people, meaning individuals or groups of individuals, not abstract entities such as sectors or institutions. Africans in America are convinced that DENI as a people driven program (not mass forgiveness) is the best instrument to bring about desirable and lasting change in Africa as whole. People are more frugal with their own money than they are with (say) aid money, government money or employer’s money.

(c) Increase in exports:
DENI provides a unique window of opportunity for the transfer of Western technology and know-how through the return of talent of thousands of African nationals from North America and Europe to their home countries. The African nationals going back to their home countries from the West bring with them their education, their experience, their expertise and their network of contacts developed while they were living and working in the West. It is this quality of people going back to their home countries who will constitute strong trading partners for the West to extend its products in the African economies thereby boosting Western exports to Africa without creating new loans through “Export Credit Agencies.” Thus as DENI takes off, it has the potential to relieve the Western taxpayer of the burden of foreign aid. DENI seeks to replace aid dependency with trade dependency. History has taught us that no nation has ever developed by aid handouts alone. Most successful nations have always relied on trade and commerce. Africa cannot be the exception.

(d) Immigration:
Closely related to item (c) above is the issue of immigration. DENI promotes voluntary migration of African professionals from the West back to Africa where they are solely needed for capacity building. As conditions have deteriorated in Africa, most professionals have migrated to the West, leaving Africa in worse shape than before. This depletion of Africa’s “best and brightest” cannot continue unchecked forever. These professionals need an incentive to return to Africa where they are critically needed for development and DENI is that incentive. Incidentally, this would free up the jobs held by Africans for the indigenous citizens of the Western countries thereby decreasing unemployment.

(e) Spreading the Democratic Culture:
Equally significant is the fact that, by virtue of their years of exposure to Western democracies, the returning African nationals inevitably bring with them the democratic traditions and respect for the rule of law that is needed to undergird the tenuous reforms in Africa. Returnees will form a critical constituency for the private sector development. We espouse the virtues of DENI because of its interdisciplinarity. DENI’s attributes provide a compelling logic which renders it a superior alternative to mass forgiveness. However, DENI is not against all forms of forgiveness as such. A certain amount of forgiveness is acceptable if it is geared towards achieving such worthy goals as: Democracy, Rule of Law, Good Governance, Transparency and Accountability. Otherwise, in the absence of such conditionalities, outright debt forgiveness is indefensible and may make certain regimes even more repressive. Arguably, debt forgiveness may not be the best policy to stimulate African economies. A forgiveness strategy that does not enhance the country’s prospects for renewed growth and development is clearly counterproductive.