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[e-drug] US Export-Import Bank Offers Africa Billions to Fight AIDS

E-DRUG: US Export-Import Bank Offers Africa Billions to Fight AIDS
[Below a New York Times article on the loan announcement.
Will a loan help to buy drugs that are priced too expensively??
I thought we were trying to reduce debts... WB]


July 19, 2000

U.S. Offers Africa Billions to Fight AIDS
WASHINGTON, July 18 -- The United States plans to offer sub-Saharan 
African nations $1 billion in loans annually to finance the purchase 
of American AIDS drugs and medical services, a program that greatly 
increases the money available to combat the disease in a region that 
has become its epicenter.

The program, which will be announced by the United States 
Export-Import Bank on Wednesday, comes after five multinational drug 
companies agreed in May to cut the prices they charge African nations 
for drugs to combat AIDS. The loans will help poor nations to buy the 
drugs that fight the complications and transmission of AIDS, and 
which are expensive even at discounted prices.

It is estimated that Africa already has 50 million people who carry 
H.I.V., the virus that causes AIDS, far more than any other region, 
and doing more to fight the disease there has become a central goal 
of the Clinton administration and several European nations. Despite 
the severity of the problem, international health officials estimate 
that only 5 percent of Africans who carry H.I.V. are aware of the 

But wealthy nations have only just begun to make money available to 
match their vocal pledges to address the problem. The United Nations 
estimated recently that the amount of money devoted to fight the 
disease in Africa needs to rise 10-fold to $3 billion annually if the 
nations hardest hit are to make significant progress in education, 
prevention and care.

"This is at least a first step in showing the world that Africa is 
important to the United States and that we can make a dent in this 
terrible problem," said James A. Harmon, president of the 
Export-Import Bank, which is an independent government agency 
financed by Congress. "We think that this is the most significant 
funding commitment by any international institution to date."

Mr. Harmon said he expected that export promotion agencies in Europe 
and Japan would eventually match the American initiative. He 
estimated that together wealthy nations could make $3 billion 
available in annual financing to African governments that want to buy 
pharmaceuticals, equipment and services.

The loans are not without complications. Several officials said the 
administration was split about the wisdom of the Export-Import bank's 
action, with some officials arguing that it does not make sense for 
the United States to lend African countries billions of dollars in 
export credits at a time when Congress is being pressed to forgive 
past loans.

Most of the new loans, which will not require Congressional approval, 
would be provided at commercial interest rates that now average about 
7 percent, though a small percentage might be offered at a lower 
concessional rate, bank officials said.

Wealthy nations and international lending agencies are seeking to 
forgive as much as $100 billion in past development loans to the most 
indebted nations, including many in Africa. Some administration 
officials had promoted debt relief to a reluctant Republican-led 
Congress as the best way for the United States to combat AIDS, 
because it would free up money that African nations would otherwise 
have to use to service their debts.

The loans are also likely to increase an active debate among groups 
interested in development over the best way to tackle AIDS. Many of 
the African nations and private charity groups have argued that AIDS 
is a huge medical and social crisis that requires more than 
discounted drugs and new loans.

"I think what the United States is doing is laudable," said Koby 
Koomson, Ghana's ambassador in Washington, referring to the loans. 
"But the pharmaceutical companies need to come around and see that 
the only way to fight this pandemic is to donate whatever is 

The United States loans could help American pharmaceutical companies 
prevent the spread of generic knock-offs of their profitable AIDS 
drugs to Africa. Even with heavy discounts of up to 80 or 90 percent 
-- the companies have not made public the prices they will charge -- 
some drug makers may still hope to sell their product profitably in 

The United Nations has said it is exploring the possibility of 
helping African nations buy generic AIDS drugs from Brazil and India 
for less money that even the discounted prices Western drug companies 
might charge for the original product. The drug companies consider 
generic alternatives a violation of their intellectual property.

But it seems unlikely that Brazil, India or other nations that 
produce such drugs for home consumption would have the export 
financing available to help African nations buy the goods. The 
American loans, along with a recent commitment by the World Bank to 
provide at least $500 million to help African nations set up 
anti-AIDS initiatives, give added incentive to African nations to 
treat many of their AIDS cases with Western medicine.

Even at 90 percent discounts, a typical cocktail of AIDS-suppressing 
drugs might cost $2,000 a year for a single patient in Africa, more 
than four times the average per capita income in many of the 
worst-afflicted countries.

Jacob Gayle, a senior technical adviser for the United Nations AIDS 
Program, which is based in Geneva, called the Export-Import Bank 
action "a major announcement" that takes a big step toward providing 
the $3 billion in annual fund commitments that his agency considers 
necessary to fight the disease in Africa.

But he stressed that the problem is much broader than a lack of AIDS 
drugs. African nations need to set up education and prevention 
efforts and develop the medical infrastructure to administer drugs 
effectively before they can make good use of loans to purchase 
medicine, he said.

The loan program is the first time the Export-Import Bank has offered 
financing for drug purchases by any nation, Mr. Harmon said. 
Moreover, the government bank plans to make the financing available 
to the 24 eligible sub-Saharan nations for five-year terms, an 
unusually long term for loans that are considered high risk.

He called the loans a pilot program that could be expanded or scaled 
back depending on how African nations and drug companies respond.

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