"Debt is not just a financial issue: it is a moral issue when we are talking about meeting debt obligations at the expense of people’s survival.” Jubilee Debt Campaign, Zambia
So what is a debt footprint?
Put simply, this is the environmental, economic and social impacts resulting from debts that individuals, communities and even whole nations acquire. Linked to this are the impacts of credit; spending money that has been borrowed rather than earned.
Shoes too big for our feet
The world is facing a global economic crisis. This is affecting individuals, families, communities and whole nations in both the rich and poor countries of the world. Debt and credit are central to this economic crisis.
In recent years banks and other lending agencies have loaned vast amounts of money to consumers, particularly in the US and the UK. The result is that many consumers have been living beyond their means – spending money that they have borrowed, rather than money that is really their own. Our shoes have become too big for our feet.
Suddenly however, banks and other lending agencies discovered they were losing money and so tightened up on the credit they were providing. This meant that suddenly money was no longer available to borrow as it had been before and consumers found themselves with huge debts that had to be repaid. The term ‘credit crunch’ has been used to describe this sudden severe shortage of money or credit. The start of the ‘credit crunch’ occurred in August 2007.
Most economists believe that the economic crisis is leading to a recession or even an economic depression. However, it could be argued that the so-called recession we are experiencing is actually a return to normality: what we are being forced to do is to live within our means, to spend real money rather than money that is borrowed or provided as credit.
Debt footprint: how it measures up
For every £1 that poor countries receive in aid, they pay out more than £2 in debt service.
In 2004, Malawi had to pay nearly £6 per person servicing debt, but only £3 per person on health despite an average life expectancy of just 37 and with one in seven adults HIV positive.
Some home buyers in the UK borrow up to 90% of the value of their property.
There are about 55 million credit cards in use in the UK, with total debt on them in the region of £740 billion.
On average a student in the UK can expect to finish University with over £12,000 of debt.
The richest 10% of the world’s population consume 60% of its resources; the poorest 10% consume just half a percent (0.5%).
The combined income of the 41 most Heavily Indebted Poor Countries (567 million people) is less than the wealth of the world’s 7 richest people
Debt and human rights
When governments of Heavily Indebted Poor Countries (HIPC) spend more on debt repayments than they do on health and education combined, it is clear that debt denies the world’s poorest people some of the most basic human rights.
Similarly, many of the rights enshrined under the Convention on the Rights of the Child are threatened or denied by debt, including the right to life itself (Article 6). All articles that relate to the provision of basic or essential services to children are threatened in countries that face high levels of debt. Article 24 for example, highlights the right to good quality health care, clean water and nutritious food while Article 27 refers to the right to a standard of living that is good enough to meet physical and mental needs and Articles 28 and 29 relate to the right to an education. All of these rights are likely to be denied if governments have to pay off debts rather than invest in their country’s children.
For further information on the Convention on the Rights of the Child click here