Today Nigeria reached an agreement with its largest creditors, grouped in what is known as the Paris Club. The debt had built up over many years, following loans given by France, Germany, Japan, the UK and others to a string of Nigerian despots.

Today Nigeria reached an agreement with its largest creditors, grouped in what is known as the Paris Club. The agreement will lead to the cancellation of a large portion of Nigeria’s massive $35.9 billion debt, 85.8% of which is owed to the Paris Club. The debt had built up over many years, following loans given by France, Germany, Japan, the United Kingdom and others to a string of Nigerian despots.

In today’s agreement Nigeria has been granted cancellation of $18 billion of its eligible debt. But, to receive this deal, Nigeria had to commit to paying the Paris Club nations $12.4 billion, mainly to France, the UK, and Germany. This figure comprises $6.3 billion in arrears to be paid by the end of October, plus another $6.1 billion for a debt buy-back operation next March.

“This agreement extracts $12.4 billion from Africa and transfers it to a group of wealthy countries who do not really need the money,” said Dr. Paul Zeitz, Director of the Global AIDS Alliance. “It is an outrage that creditors simply plan to use this payment to fill their treasuries. The annual budget of such creditors as Japan and the United Kingdom is over 100 times that of Nigeria. Surely we can do better than accepting taking billions from the world’s poorest continent. We expect more from the G8 nations, who promised Africa so much in their Gleaneagles declaration in July.”

“Nigeria’s government has made the best of a terrible situation,” he noted. “In the long run, Nigeria could save a billion dollars a year in debt repayments and potentially double health spending. That is an impressive achievement. Nigeria has the third highest number of HIV positive people in the world, and with these resources it could scale up AIDS treatment.”

“However, the creditors should be ashamed of themselves if they simply take this money,” Zeitz stated. “These creditors often knew that the money would be siphoned off by dictators and deposited in western banks, and the resulting debt is morally illegitimate. They bear a moral obligation to think more creatively about how to use this money. Nigeria has already paid these creditors $11.6 billion in debt service since 1985. We challenge the creditors to redirect this additional $12.4 billion to Africa’s development.” “A substantial portion of this sum should be given to the Global Fund to Fight AIDS, tb and malaria and specified for high-quality health projects in Africa,” Zeitz said. “The Global Fund has stated that it urgently needs greater contributions to proceed with additional grant-making next year.”

“The contribution of Nigeria’s debt payments would revolutionize the financial status of the Global Fund. Let’s make sure African resources go towards helping Africa, not wealthy nations.”

Even with the recent scale up in global AIDS programs, the needs of orphans and vulnerable children are far from being met, and millions of children face abandonment. Global AIDS Alliance released a report today, “Remember the Children: Global Fund Round 6 in 2006,” which shows that with greater resources the Fund could dramatically increase funding to help children.

The new report is online at: www.globalaidsalliance.org/remember_the_children.cfm

The Fund could also use these resources to help Africa improve health systems. Better health systems are needed to not only to fight AIDS, tuberculosis and malaria, but also to prepare for a possible avian flu pandemic.

Dr. Paul S. Zeitz,  PR Newswire, October 25, 2005