Use of Debt Relief for the Education Sector in the DRC
Debt relief granted to a debtor government, such as in the case for the DRC, may result in more public resources available and, through the conditions attached to receiving the debt relief, can lead to increased social sector spending, in general, and higher education sector spending, in particular, and may also, given particular other conditions fulfilled, cause improved effectiveness of this spending in terms of improved outcome and impact indicators for education.
On July 1, 2010, the Executive Boards of the IMF and World Bank jointly announced, under the so-called heavily indebted poor countries (HIPC) and multilateral debt relief initiatives (MDRI), to irrevocably grant the Democratic Republic of the Congo (DRC) external debt relief of about 12.3 billion USD (IMF 2010). Initiated in 1996, these debt relief programs basically aim to act as a mechanism to help eligible countries not only restore debt sustainability but also increase macroeconomic stability, improve governance of public service provision, and reduce poverty. They intend to do so in two ways: first, they increase the country’s available resources. Whereas savings on current and future debt service provide for a direct budget increase, the elimination of “debt overhang” also has an indirect positive effect on both domestic (through higher economic growth) and foreign resource availability (through more aid and foreign private investment). The second and maybe more important channel works through conditionalities attached to the deal, which focus on structural reforms to spur economic growth and reduce poverty, for example, by improving the governance and quality of basic health care, education, or other public services (IMF 2015).
When the debt relief was granted, the IMF considered these aims to be accomplished (IMF 2010: 1). Now, 8 years after the completion point, the IMF’s claims on improved governance and service delivery can be reassessed with the benefit of hindsight. We focus on two questions in particular. We first question how and to what extent the HIPC debt relief program increased the availability of resources entering the public budget and how it triggered, reshaped, and sustained budgetary policies and priorities (Cassimon and Essers 2017). The second question asks how and to what extent the HIPC debt relief impacted on education, both in terms of sectoral resources and their allocation to schools and teachers and regarding the educational attainment of Congolese pupils. Our choice for education stems from the priority given to this sector by the Congolese government in the allocation of HIPC resources. Therefore, if any impact is to be expected, then it would become visible there first.
The DRC’s History of Debt
The origin of the Congolese debt burden can be traced back to the period between 1973 and 1975. Totalling 544 million USD at the start of this period (representing 25% of the country’s GNI and yielding a debt service of around 5% of the country’s exports), the overall debt stock rose nearly sixfold, and debt service doubled within only 2 years. This increase can be mainly attributed to four major projects: INGA I, INGA II, and INGA Shaba (800 million USD), the Tenke Fungurume Mining Company (320 million USD), Maluku/SOSIDER (182 million USD), and the Cimenterie Nationale (100 million USD) (Marysse et al. 2012). As none of these projects realized its potential, especially after the nationalization policy introduced by Mobutu in 1973, debt servicing problems emerged very early in the DRC.
In June 1976, Zaire (as the DRC was then called) was the first African country to conclude a deal with the bilateral creditors of the Paris Club. However, as the authorities did not respect the stipulated repayment schedule, new deals followed, and penalty interests kept inflating the debt stock. Although this snowball effect was briefly halted in the early 1980s (when structural adjustment programs prioritized debt repayment over social spending, resulting in severe budget cuts to education and health care), poor economic and fiscal governance soon returned to Zaire, which further eroded the formal economy and did anything but prevent further debt accumulation during the last decades of the twentieth century. When Joseph Kabila took power in 2001, the new president inherited a total external debt of nearly 13 billion USD in nominal terms, nearly three quarters of which were arrears and additional debt service arrears adding 700 million USD per year.
Did the Process of HIPC Debt Relief Increase Resources?
As such, significantly more resources have become available for public spending in general.
How Did the Debt Relief Process Impact on Education?
The success story of debt relief in the DRC needs to be curtailed halfway, and here we part ways with the IMF’s conclusion: based on the data available for the education sector (where its effect should have been most visible), the debt relief process did not result in improved public service delivery. True, at the level of the Ministry of Education, the HIPC initiative and its conditionalities have reversed the downward trend and contributed to a sustained increase in budgetary resources. However, this increase was still insufficient to reach the average level of state expenditures allocated to education in other sub-Saharan African countries or to regain its pre-structural adjustment level of 1982.
Evolution in gross enrolment rates (age 5–18 years) by sector, gender, and consumption deciles (%), 2005–2012
Furthermore, according to a recent World Bank study, three problems of internal efficiency seem to persist. First, most children continue to enter school relatively late: they enter the system around the age of 9. Second, and related to the first problem, the percentage of children abandoning school remains about as high as before. And third, there is practically no change in the repetition rate, which amounts to approximately 10% in primary school (World Bank 2015). Finally, when it comes to the quality of education, there is not much reason for optimism either. Indeed, even though the data do not allow for an accurate comparison of literacy rates over time (the principal reason being the varying methods used by different surveys conducted in the DRC), some systematic but geographically limited studies report alarming figures. A study carried out in a series of primary schools in Katanga in 2011 reported that more than two thirds of the pupils from the second to the fourth grade were unable to read 10 words of text, and of those who could, only less than 10% actually understood what they were reading (Torrente et al. 2011). Another study, carried out in several schools in Bandundu, Orientale, and Equateur in 2010, reported that no less than 23% of the sixth grade children were unable to read a “single” word of French text (RTI International 2010: 2).
Mind the Political Economy of Debt Relief
In other words, there is quite some contrast between, on the one hand, the substantial increase of funds geared toward the education sector, and, on the other, the persisting disparities in schooling as well as the sector’s poor performance in addressing internal efficiency and quality.
To understand this contrast, we need to disentangle the interests and logics of various stakeholders within the education sector. First and foremost, as the lion’s share of overall resources spent on education is still directly provided by the parents through the payment of school fees, the education sector remained very much dominated by a market logic, with schools being accountable to the parents rather than to the education administration. As a result, private income inequalities are translated into disparities in schooling, despite the increase of the state education budget. Apart from this key explanation, the policy leverage to pursue larger degrees of schooling inclusiveness is further jeopardized by tensions within the good governance agenda as well as in relation to short-term political rent-seeking strategies. Whereas myopic reforms and the adoption of generic blueprints might produce some superficial results and maintain donor loyalty in the short run, they will most probably hinder the promotion of a more structural and domestically driven policy process in the longer run.
Replication of the IMF exercise for the process of debt relief in the DRC connects to a broader debate about whether it is possible to stimulate good governance from the outside, if country ownership is considered to be such a crucial ingredient. Indeed, the HIPC debt relief process builds on an aid architecture that considers country ownership as a basic building block for improved governance, and the Paris Declaration (2005) and Busan Conference (2011) reaffirmed this view. Several scholars remarked, however, that country ownership may be at odds with other commitments, such as managing for results or with good governance in general. First, the institutional weakness in various countries constitutes a chicken-and-egg problem (Gisselquist and Resnick 2014): the final outcome of a sector reform fully owned by a recipient country ultimately depends on the institutional capacity of the sector to conduct such a reform in the first place. In this respect, one should also mention the considerable administrative workload, manifest in the multiple restrictive and implicitly imposed M&E formats that accompany such reforms. Second, the tacit assumption behind the pursuit of increased country ownership is that political leadership is development-oriented, which is argued to be often in tension with countries’ “short-term clientelistic strategies for gaining votes and seeking legitimacy” (Booth 2011: 15).
Given the varying degrees of institutional quality and diverse political incentives, it is thus unclear whether and to what extent foreign aid, in any particular setting, will be able to advance good governance and good policies. To address this issue, the generic answer is often to take context more seriously when designing, implementing, and monitoring reforms (Booth 2011; Gisselquist and Resnick 2014). Put differently, donors should “learn how to play local politics. If they want to be successful, they cannot refuse to be drawn into local events, despite their desire to appear neutral and giving only technical advice” (Marenin 2014: 159).
Now that we can judge with hindsight, our study of the debt relief process in the DRC teaches us what donors risk when they refuse to play local politics. Indeed, it is important to remark that our conclusions diverge from the IMF’s assessment of 2010, particularly at the point of engaging in a local political economy analysis. A mere technical analysis of macro-level results and micro-level outcomes, especially in a context with data of debatable quality, clearly does not suffice to make a final judgment of the effectiveness of aid in improving governance. In this respect, we can only concur with Marenin’s conclusion that if they want to be successful, donors should have a clearer idea about the intended effects of their actions on the beneficiary country’s political economy.
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