1 - 7 March 2001
Issue No.523
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Al-Ahram Weekly On-line 1 - 7 March 2001 Issue No.523 |
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Change of heart?
Nobody likes being told how to run their affairs, and African decision-makers are no exception. They do not relish being reminded of their countries' lack of economic performance, slow pace of privatisation, bad governance and human rights violations by the very people widely seen as a source of their people's suffering. Scathing criticism of international financial institutions is not without justification; much of the blame for Africa's socio-economic predicament can be attributed to the policies of the World Bank (WB) and the International Monetary Fund (IMF), which have reneged on their promises to reward countries that scrupulously adhere to their painful prescriptions.
Africans have long become accustomed to disturbing and contradicting signals emanating from the Washington-based Bretton Woods institutions. At their annual meeting in Prague last October, the IMF and the World Bank pledged to put Africa at the centre of their institutions' activities. But the consensus in Africa is that the two institutions do more harm than good. Some 2.6 million people were last year resettled against their will by World Bank projects, many in Africa. Average economic growth in Africa has persistently fallen short of the 5 per cent necessary to prevent poverty from increasing. In Africa 151 children out of every 1,000 die before reaching the age of five, mainly because of poverty-related illnesses and malnutrition. Furthermore, decreasing foreign aid and investment is leaving Africa ever more dependent on IMF and World Bank handouts. Overall, global foreign direct investment (FDI) reached an unprecedented $865 billion in 1999, largely the result of cross-border mergers and acquisitions. But Africa's share of global FDI flows amounted to a mere 1.2 per cent, and forecasts predict it will dwindle even further. It is in this context that WB President James Wolfensohn and IMF Managing Director Horst Koehler's tour last week set off alarm bells in Africa.
Between 18-20 February, Wolfensohn and Koehler presided over a summit of 10 western and central African leaders in the Malian capital Bamako. They then flew to the Nigerian capital Abuja to meet with President Olusegun Obasanjo, leader of Africa's most populous nation. Between 22-24 February, Wolfensohn and Koehler were in Dar Es-Salam, Tanzania, meeting leaders of southern and eastern African countries. On 25 February they flew to Kenya for the last leg of their African tour.
Previous IMF/WB meetings in Uganda, Senegal and Gabon achieved little, so why would Africans expect anything to come out of last week's summit meetings?
In Bamako, Senegalese President Abdoulaye Wade warned that the traditional method of financing African development through aid and loans "will never allow African countries to progress." Indeed, several African leaders voiced concern that the Bretton Woods institutions' practices perpetuate corruption in Africa and help expatriates line their pockets.
The prickly subject of Nigeria's $28 billion external debt also cropped up. "If you take credit, you have to pay [previous debts] first. It is a very important element of the international financial system, but also for the long-term interest of Nigeria as a location for foreign investment," Koehler told reporters in Nigeria. The Bretton Woods institutions argue that oil-rich Nigeria should be ineligible for debt relief. "Investors want to be sure that if they invest they get their returns on investment. And creditors want to be sure if they give a credit that they are paid back," Koehler explained, much to the chagrin of his Nigerian hosts.
In Kenya, the reception reserved for the IMF and the WB was even stormier. "They are plotting against elected governments. [Theirs is] a deliberate effort to undermine democratic governance and bring down by default elected governments," raged Kenya's health minister, Dr Amukowa Anangwe. According to Kenya's Daily Nation, he called the two Bretton Woods institutions "autocratic, paternalistic and neo-fascist." The irony is that certain African governments, including Dr Anangwe's, are among the biggest beneficiaries of IMF/WB largesse on the continent. But the IMF and WB are critical of Kenya's economic deregulation programme, especially as the government has failed to privatise Telecom Kenya and other major public companies. The two Bretton Woods institutions have threatened to cut $700 million in aid to Kenya if their conditions are not met.
In Bamako, Malian President Alpha Omar Konare, current chairman of the Economic Community of West African States (ECOWAS), urged closer political, economic and monetary ties among African nations. The IMF is highly critical of ECOWAS plans to institute monetary union by 2004, insisting that a single West African currency is neither necessary nor sufficient to facilitate economic integration and consolidate trade ties. Nevertheless, six West African countries -- Gambia, Ghana, Guinea, Liberia, Nigeria and Sierra Leone -- announced that they are going ahead with plans to set up a common currency by January 2003. Seven francophone West African countries already use a common currency, the CFA franc, which is guaranteed by their former colonial master France.
The main topics of discussion at last week's summit meetings were poverty alleviation and debt reduction; Africa's lack of economic growth, diversification and economic competitiveness; education and health, the AIDS pandemic and IMF/WB-assisted infrastructure development on the continent. The IMF timed the announcement of its third annual Poverty Reduction and Growth Facility (PRGF) to coincide with the tour.
The Bretton Woods institutions have long failed to give the poor the assistance they desperately need, so one can fairly ask, why the change of heart now?
"We are working with Africa very differently from the way in which we have worked in the past. We are listening more," explained Callisto Madavo, World Bank vice-president for Africa. But critics continue to claim that the IMF and WB are happiest when African countries deregulate their economies, privatise and sell off their agricultural and mineral assets to Western concerns.
Instead of lending a helping hand to desperately poor countries trying to enhance economic growth, the Bretton Woods institutions force unemployment on the poor and needy. Impoverished Mozambique, a WB/IMF star pupil, was forced to cut export tariffs on cashew nuts, a policy which caused thousands of Mozambican farm workers to lose their jobs.
The health of the poor is affected as well. The IMF and WB are against pharmaceutical companies, such as India's Cipla, which mass produce cheap generic copies of drugs that are patent-protected in the West. South Africa and Kenya are toying with the idea of importing generic HIV/AIDS drugs against the stipulations of the World Trade Organisation, giant Western pharmaceutical companies and the United States -- but their governments fear reprisals.
Meanwhile, Western countries dump agricultural produce and manufactured goods on the African market at subsidised prices, destroying domestic industries and undermining local livelihoods in the process. African leaders urged the IMF and WB heads to guarantee African exporters unhindered, tariff-free access to the developed world's markets.
Wolfensohn and Koehler faced the wrath of protesters in Mali, Nigeria, Tanzania and Kenya, but African citizens are critical of their own governments, as well. African leaders are concerned about dwindling popular legitimacy that comes with the disappointingly slow decline in extreme poverty in Africa in the 1990s. The world as a whole must become less unequal, but closing wide economic disparities within African countries is an issue on which African leaders could take a similarly strong stand.
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