Debt in the East; 1970 - 2020 🇧🇮 🇰🇪 🇷🇼 🇹🇿 🇺🇬
- Our Data
- Current Account Balance (current US$)
- 1. Debt forgiveness grants (current US$)
- 2. Total reserves (includes gold, current US$)
- 3. Debt service and Net Flows on external debt, central bank
- 4. Debt service and Net Flows on external debt, general government sector (PPG)
- 5. Principal debt forgiven and Principal debt rescheduled
- 6. Use of IMF credits
- Conclusion
- Current Account Balance (current US$)
- List of Events
Our Data
Our data was downloaded from the international debt statistics which was last updated on the 14th of January at the time of download.
We have data on five countries in East Africa to Explore and compare some debt metrics from 1970-2020. The five countries are;
- Burundi
- Kenya
- Uganda
- Rwanda
- Tanzania
Note: This Analysis is purely exploratory in nature, and correlation is not proof of causation.
Current Account Balance (current US$)
This introductory plot shows the trends of the current account balance and some major events that took place during our time period of interest. Although there might be several first-takes but mine was, “what happened in the 2000s ? and is it still happening?”
This plot, however, does not give granular insight to trends. As one would wonder why country’s account balances took steep dives even after events like SAPs transitions, G8 summit in 2005 and the 2000 Jubilee.
The current account balance is a result of various factors like new grants, disbursements, debt forgiveness grants, principal repayments to external debt, reserves and many more.
In the following sections we will be looking at some of the factors that account to the current account balance sum, and we will see how they relate with some of the major events. Let’s dive right in.
1. Debt forgiveness grants (current US$)
We see a collective spike in debt forgiveness grants after the G8 summit (so meetings do work!), however Kenya and Burundi seem to be left out on the action. It would be interesting to know if they were withheld due to not meeting the same criteria that left Kenya out of the HIPC initiative in 1996. (links to resources below plot)
In June 2005, the Group of Eight (G8) gathering of the worlds most developed economies, resolved, through their finance ministers, to grant total debt relief to 18 countries that had reached ‘completion point’, amounting to $40 billion. Fourteen of these countries are in Africa. Foreign aid, debt relief and Africa’s development: problems and prospects. 2009.
The World Bank, the International Monetary Fund (IMF) and other multilateral, bilateral and commercial creditors began the Heavily Indebted Poor Countries (HIPC) Initiative in 1996, However among the East African countries, Kenya does not meet the criteria to receive debt relief. Countries must make full use of traditional debt-relief mechanisms to be eligible for debt relief under the HIPC Initiative. Brief Countries must make full use of traditional debt-relief mechanisms to be eligible for debt relief under the HIPC Initiative.
2. Total reserves (includes gold, current US$)
For some reason, As of 2022-02-16, The world bank’s most recent info reported on Total reserves for both Tanzania and Uganda is from 2018.
3. Debt service and Net Flows on external debt, central bank
It is curious to see how the trends of Debt service on external debt, central bank correlated with political unrest and wars with the respective countries involved.
The Ugandan Bush war intrigued me as even with other charts on Disbursement on external debt and Principal payment on external debt (which are not incl. due to redundancy) show the same trends, where the payment of external debt, central bank, peaked during the war. Even the Netflow on external debt took a hard regression towards the mean to negative values. Would be interesting to learn more on this.
(links to resources below plot)
- Ugandan Bush War, 1980-1986. Wikipedia
- Second Congo War, “Operation Kitona” was a Rwandan/Ugandan offensive that marked the beginning of the Second Congo War 1998-2003. Wikipedia
- Burundian unrest, 2015-2018. Wikipedia
4. Debt service and Net Flows on external debt, general government sector (PPG)
Generally, the debt service on external debt, general government sector (PPG) has gradually been increasing as the debts pile up which is a good thing, however, we see that despite Kenya’s efforts on debt service on external debt, general government sector(PPG) a huge chunk of that might be attributed to the high Net flows on external debt, general government sector(PPG) which are the payments that go the interests as opposed to the principal payments.
5. Principal debt forgiven and Principal debt rescheduled
No general trends visible on Principal debt forgiven and Principal debt rescheduled.
6. Use of IMF credits
Simply put, The IMF credits are low interest loans offered to countries in need. We see a sudden drop in reported in 2006 which might be attributed to policy changes as we see a pick up on the SDR allocations post-2008.
The IMF report linked below the plot might clarify things but the technical jargon was two vocabularies away from turning my brains into mush. 😂
Conclusion
Despite several interesting findings, My main question about what happened in the 2000s has not been answered with the data at hand.
However, upon browsing I stumbled upon various resources that reported record high loans from our friends from the far east, China, from the year 2000. I specifically liked the dashboard on the following site. (click on explore)
And with that I close this chapter with my eyes set on the public database provided by China Africa Research Initiative and Boston University Global Development Policy Center. 2021. It would be nice to explore in the near future.
List of Events
This list is not an exhaustive list of all the major events that happened between 1970 - 2020
- Breakup of East African Community, 1977
- Kagera War “Vita Vya Kagera”, 1979
- General elections held in Uganda, 1980. They followed the overthrow of Idi Amin the previous year and were the first since the pre-independence elections in 1962.
- Ugandan Bush War, 1980-1986. Wikipedia
- End of Ujamaa in Tanzania, 1985
- KANU one-party rule ended in Kenya (Dec, 1991) report
- Tanzania adopts Multiparty democracy system, 1992. report that speaks on the roles of donors in the democratization process.
- The World Bank, the International Monetary Fund (IMF) and other multilateral, bilateral and commercial creditors began the Heavily Indebted Poor Countries (HIPC) Initiative in 1996, However among the East African countries, Kenya does not meet the criteria to receive debt relief. Countries must make full use of traditional debt-relief mechanisms to be eligible for debt relief under the HIPC Initiative. Brief Countries must make full use of traditional debt-relief mechanisms to be eligible for debt relief under the HIPC Initiative.
- Second Congo War, “Operation Kitona” was a Rwandan/Ugandan offensive that marked the beginning of the Second Congo War 1998-2003
- Jubilee 2000 report
- almost steady increase in China to Africa loans from 2000. Report Link
- SAPs underwent another transition, the introduction of Poverty Reduction Strategy Papers. 2002 Doc
- In Kenya, loans and grants from China became significant in size after 2002 when a new government was elected, when China’s share in total aid exceeded 1 percent. Since then, China appears in Kenyan national statistics among bilateral donors whereas before then, it was classified in the category of ‘other donors’. report
- “Jubilee 2000”, “Drop the Debt” 2005, “One” 2005, “Live 8”, “Bono on the White House Lawn”, “make poverty history” blog
- keynote address by the president of Tanzania, Hon. Benjamin William Mkapa at annual conference of the jubilee debt campaign, London, 2005 “WIPE OUT DEBT IN 2005”
- In June 2005, the Group of Eight (G8) gathering of the worlds most developed economies, resolved, through their finance ministers, to grant total debt relief to 18 countries that had reached ‘completion point’, amounting to $40 billion. Fourteen of these countries are in Africa. Foreign aid, debt relief and Africa’s development: problems and prospects. 2009.
- Tanzania Gets US$ 75 Million Poverty Reduction Loan and US$ 645 million Debt Relief, 2006
- Huge debt reliefs reported for Tanzania, 2006 Tanzania Gets US$ 75 Million Poverty Reduction Loan and US$ 645 million Debt Relief, 2006
- BOT’s press release commemorating 50 years of independence, with annex explaining background to Tanzania’s National debt, 2006
- Drop of aid, 2006Development aid from OECD countries fell 5.1% in 2006
- Financial crisis, 2008. The 2007–2008 Financial Crisis in Review
- East Africa Drought 2011. Said to be “the worst in 60 years” the drought caused a severe food crisis across Somalia, Djibouti, Ethiopia and Kenya that threatened the livelihood of 9.5 million people.
- Kenya peak debt, 2014 Kenya Financial Sector Stability Report. 2014
- Burundian unrest, 2015-2018. Wikipedia
- Central & East Africa Floods 2020
