Abstract:
This thesis regards debt relief accorded to poor countries as a means to fight
extreme poverty. Indeed, the financial crisis the 1980s and the Structural Adjustment
Plans (SAP) imposed upon poor countries by International Financial Institutions
(IFIs) left a legacy of widespread poverty and high debt. It is in that context that
these IFIs departed from the strict Washington Consensus and proposed debt relief
for some Highly-Indebted Poor Countries (HIPC), with the implementation of Poverty
Reduction Strategy Papers (PRSPs) which were supposedly inclusive of the
countries’ concerns and pro-poor orientated. Now that the Initiative is virtually over,
this thesis endeavoured to critically explore its efficacy in terms of poverty reduction
with the goal of discovering if the HIPC Initiative translated into significant beneficial
outcomes for the poor. Additionally, it sought to discover if there are alternative,
tested poverty reduction strategies and how the IFIs should act if confronted with a
debt crisis again, with alleviating poverty the true goal. Responses to the problem
were reached through a quantitative and qualitative comparative analysis of
secondary data from two participating (and fairly close in size) countries, Cameroon
and Nicaragua.
The use of the Most Similar System Design (MSSD) method during the comparison
further allowed the uncovering of a differentiating factor between the Nicaraguan
and the Cameroonian PRSPs. Indeed, the Nicaraguan PRSP (contrary to its
Cameroonian counterpart) had an Unconditional Cash Transfer (UCT) program
embedded into its PRSP. The critical analysis indicated that the PRSPs, just as the
SAPs earlier, promoted pro-growth policies covered with a redistributive discourse.
Furthermore, the comparative analysis suggested that Nicaragua fared significantly
better in terms of extreme poverty alleviation than Cameroon, partly thanks to the
use of UCT. Using the Foster-Greer-Torbeck poverty formula, it was then
demonstrated that in the case of Cameroon, the funds from the Initiative were
enough to eradicate extreme poverty in Cameroon for eight consecutive years
through a similar UCT program. The above results strengthen the advocacy for the
continuation of UCT programs by Nicaragua and for the implementation of UCT programs by Cameroon using its own resources. They also promote the use of such
programs by the IFIs whenever they are confronted with a debt crisis again, with
extreme poverty alleviation as their goal.
