How did Malawi get entangled in unsustainable foreign debt?
Just as was the case with most developing countries, much of Malawi’s foreign debt was amassed following the 1973 oil crisis when the western members of OPEC pushed the price of oil up making the Arab nations very wealthy. They decided to deposit this money in large Western banks. The banks did not want all of this money lying around so it was lent to the third world countries. Banks lent large amounts of money to developing countries without much attention to where the money would be spent or whether countries would be capable of repaying the amount. While some of this money went towards trying to improve the living standards for those in the countries, most of the loans never reached the poor. A large percentage of foreign debt was either spent on large-scale development projects, most of which proved to be of little value, or ended into private bank accounts of dictators. It should however be noted that getting foreign debt was not wrong per se but what was wrong was how the funds w
