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The IMF and Afrika - the Double standars and hypocrisy

Kwame Osei | 07.06.2010 14:35 | Analysis | Education | Globalisation

The IMF claims that it has sent Afrika trillions of dollars in so-called aid only for the bulk of it to be squandered by so-called greedy Afrikan leaders. What this article seeks to do is to expose the double standard at play here and impart to White people and others whose media brainwashes them that far from so-called corrupt Afrikan leaders wasting the money in Swiss Bank accounts, the real corruption lies with the West and its corrupt institutions like the IMF.

This article is being written as a response to the World Bank President and the World Bank Vice President for the Africa Region in articles in the Ghanaian media.

In terms of the assertion made by the World Bank president, it is interesting to note that he admits that in the past they viewed Afrika as "Third World" - now this confirms what I have been saying all along that the World Bank does NOT have the interest of Afrika at heart. This is where the power of language is so acute and the readership has to understand how this works in practice.

If you view a certain part of the word as "third world” hence backward then you will NOT ENACT polices that will make them "first world". As we have seen failed and flawed IMF/World Bank like SAP's and ERP have had a catastrophic affect on the Afrikan continent and has in part created the appalling economic and social crisis we see in Afrika today.

I have always detested the use of the term "Third World" to describe the developing world particularly Afrika. As someone who lived in the West and understand how the West particularly those of the white middle class persuasion who are responsible for making decisions that affect Afrika use language, I always thought that this loaded term was used in a racist and derogatory way especially in reference to Afrika - implying on a sub-conscious level that we Afrikans are uncivilized, backward and primitive akin to the days of colonialism.

In commenting on Afrika the World Bank President laments that we as Afrikans import everything, confirming my import diagnosis of Afrika but claims that some of the things that we import could be made by ourselves if we remove the barriers that we have imposed on ourselves.

I think that it is very unfair for Mr. Zoellick to state this as one, it is unfair trade regulations and protectionism policies as practiced by the West that stops Afrika from making some of these things that it imports and secondly that it is conditions imposed by the likes of the IMF re, "loans" and "financial assistance" that hinders Afrikan governments from subsidizing their local industries to create growth.

A typical example of this is in the pharmaceutical industry where due to so-called intellectual property rights engineered by the health wing of the IMF/World Bank, the World Health Organization (WHO), Afrikan countries ARE STOPPED from producing local drugs and are coerced into importing foreign medicines made by the big Western pharmaceutical companies like GlaxoWellcome.

It is interesting to note that Afrikan countries like Botswana who have ignored World Bank/IMF policies have become much more prosperous than those Afrikan countries that naively have followed the economic route espoused by the IMF/World Bank.

As we have seen in the years since the overthrow of Dr. Kwame Nkrumah, IMF/World Bank sanctioned policies have all but crippled Ghana's once envied and thriving education, healthcare and agriculture sectors, destroyed the livelihoods of millions of Ghanaians resulting in a social and economic time bomb and making Ghana, once the Black Star of Afrika now a basket case.

This is why Dr. Kwame Nkrumah said that political independence is meaningless unless economic independence is attained too. Economic independence is doing what is in the best interests of swathes of the ordinary people and the country and further the continent and not being tied down or being enslaved to the impositions of the oppressor via its economic machinery, in this case the IMF/World Bank being the main two culprits.

Dr. Kwame Nkrumah also warned in his classic book "Neo-colonialism, the last stage of Imperialism that "imperialism has grown more sophisticated and more dangerous. It is more sophisticated because the neocolonial powers i.e. the West have developed a comprehensive propaganda machinery, which moulds the minds of the people in the neocolonies. It is more dangerous because it is difficult to hold the powerful states that exercise neo-colonialism responsible for their criminal actions".

He also stated that purpose of the West particularly the United States is to ensure that governments in Afrika comply and conform to the wishes of the Western powers, especially the United States.

The main interest of the West, especially the United States is to secure access to markets, cheap labour and natural resources and this is where the IMF/World Bank come in with their flawed economic policies designed to achieve this.

Therefore the World Bank President MUST be aware and honest that a new system of economics that does not exclude countries such as those in Afrika needs to be implemented if the IMF/world Bank and international community at large a serious about seeing Afrika thrive.

This is precisely the point made by the World Bank Vice President for Afrika when she intimated that "we have learnt from our mistakes and successes". However any new relationship between Afrikan and the IMF will be judged by the tangible results that is evident and not loose talk. As the saying goes "the proof of the pudding is in the eating".

This is so because as stated above and in previous articles the IMF/world Bank's policies have failed Afrika and the double standard that is at play here at that the very same IMF/World Bank/EU who claim to be Afrika's development partners have just agreed to give Greece a member of the EU the whopping sum of 146 billion dollars to help them with their economic difficulties.

This is where the hypocrisy lies - if the IMF and the EU can give one small country in Western Europe $146 billion then why can't it give Afrika made up of 54 countries this amount? The answer is political will - the political will from the IMF/EU was evident in order to bail out Greece with Germany's Angela Merkel playing a key role. Why?

Well Greece is a member of the EU and also a member of the Eurozone. Greece due to its inability to manage its economy well has found itself in a position that has made the country nearly bankrupt.
If Greece was not bailed out then it could have had a catastrophic affect on the EU with weaker states such as Portugal, Spain and Ireland being dragged into a financial meltdown which would have had an awesome effect on the Eurozone, the Euro and the entire European Union as a whole.

The bankruptcy of Greece led to a massive decline in European Stock markets and therefore if something was not done it could spell doom for the European market and this is where the political will was there to bail out Greece because doing nothing and allowing Greece to sink was not an option that the IMF and the EU could take.

So if the political will is there to help a fellow EU state then why the question must be asked is why is not that same political will there for AFIRKA?.

This is why I lay claim to my assertion that the IMF and EU does not want to see the economic emancipation of the Afrikan continent but to see it as it always has been namely the hewers of wood and the drawers of water for the West.

To prove my point, the most recent figures from the Organization for Economic Cooperation and Development (OECD) stipulated that development assistance from the richest 23 countries mainly from the West rose by a paltry 0.7% to US$119.6 billion in 2009 of which a pathetic US$11 billion went to Afrika (made up by the way of over 50 countries) and is far short of the US$50 billion pledged to Afrika at the Gleneagles G8 summit in 2005 but they very same people can give Greece a whopping US$146 billion - see the double standards and hypocrisy.

So based on their actions AND NOT their hollow words I do not believe in the assertions of the World Bank President and the World Bank Vice President for Afrika when they say they want to help Afrika.

Ironically if the president of the World Bank and World Bank Vice President for Afrika were genuinely serious about helping Afrika, since they are influential figures in this body, they would help Afrika get more voting rights in their set up. As this article is being written, Afrika is being given less voting rights in the IMF/World Bank set up further marginalizing and alienating the continent so I think the World Bank President and the World Bank Vice President for Afrika cannot have their cake and eat it!!

The truth of the matter is that of all the billions of dollars they have put into Afrika allegedly the IMF and Western powers along with their multi-national companies have taken hundreds of trillions of dollars outside of Afrika in terms of loan payments, exorbitant interest payments, re-cycled debt cancellation, repatriation of profits from Afrika's mineral resources and very dubious one-sided agreements.

Again to prove my point that Afrika has given out more than it has received please read the following courtesy of IRIN;


Hundreds of billions that could have been used for poverty alleviation and economic development lost, finds new report from Global Financial Integrity

WASHINGTON, DC - Africa lost $854 billion in illicit financial outflows from 1970 through 2008, according to a new report to be released today from Global Financial Integrity (GFI). Illicit Financial Flows from Africa: Hidden Resource for Development debuts new estimates for volume and patterns of illicit financial outflows from Africa, building upon GFI’s ground-breaking 2009 report, Illicit Financial Flows from Developing Countries: 2002-2006, which estimated that developing countries were losing as much as $1 trillion every year in illicit outflows.

The new Africa illicit flows report is expected to feature prominently at the 3rd Annual Conference of African finance ministers in Malawi, which is currently underway. “The amount of money that has been drained out of Africa-hundreds of billions decade after decade-is far in excess of the official development assistance going into African countries,” said GFI director Raymond Baker. “Staunching this devastating outflow of much-needed capital is essential to achieving economic development and poverty alleviation goals in these countries.”

Examining data for a 39-year range from 1970 to 2008, key report findings include:
-Total illicit financial outflows from Africa, conservatively estimated, were approximately $854 billion;
-Total illicit outflows from Africa may be as high as $1.8 trillion;
- Sub-Saharan African countries experienced the bulk of illicit financial outflows with the West and Central African region posting the largest outflow numbers;
- The top five countries with the highest outflow measured were: Nigeria ($89.5 billion) Egypt ($70.5 billion), Algeria ($25.7 billion), Morocco ($25 billion), and South Africa ($24.9 billion);
- Illicit financial outflows from the entire region outpaced official development assistance going into the region at a ratio of at least 2 to 1;
- Illicit financial outflows from Africa grew at an average rate of 11.9 percent per year.

“This report breaks new ground in the fight to end global poverty with analyses and measurements of illicit financial outflows never before undertaken,” said Mr. Baker. “As long as these countries are losing massive amounts of money to illicit financial outflows, economic development and prosperity will remain elusive.”

“The drivers of illicit financial outflows vary from country to country but overall transparency in the global financial system would curtail all forms of outflows by making it harder for money to disappear once it exits the country,” commented Mr. Baker. “When the G20 meets in Canada this June, the problem of illicit financial flows must be at the top of the agenda.”

LONDON, 13 April 2010 (IRIN)
a so-called Vulture Funds bill - to stop finance companies using British courts to extort excessive debt repayments from some of the world’s poorest countries - was passed in the frantic scramble to finish outstanding parliamentary business before Britain’s general election in May.

“It’s the first time since the global credit crunch that financial services companies have been told, ‘Thus far and no further’. They won’t be able to fleece developing countries, and they will have to comply with the same rules on debt relief as the public sector and the more responsible parts of the private sector,” said MP Sally Keeble, who proposed the bill.

In the last few days of the outgoing parliament many proposed laws were abandoned or drastically cut so they could be rushed through without debate. Keeble told IRIN she was “absolutely delighted” that the bill had been passed - “It’s a real landmark.”

The companies targeted by the new law act as international debt collectors. They buy old debts incurred by developing countries from creditors happy to sell at a massive discount because they despair of ever getting paid. The new owners of the debt then pursue it far more aggressively than the original creditors would have done.

Taking liberties
They also take advantage of the debt cancellation process offered to Highly Indebted Poor Countries (HIPC) by the International Monetary Fund and the World Bank. Once a country has gone through the HIPC process, most of its creditors agree to write off nearly all its debt, often accepting less than 10 cents for every dollar they are owed.

This is intended to make more money available for the country to spend on health, education and other essential services - but this is the moment the Vulture Funds have been waiting for.

As soon as the see the country has some money, they move in to collect the debt; unlike the other creditors, they demand payment in full, including years’ worth of unpaid interest.

In one case, two finance companies based in Caribbean tax havens bought up Liberian government debt dating back to the 1980s, when Liberia’s National Petroleum Corporation borrowed US$6.5 million from an American bank in the time of Samuel Doe.

By the time the debt’s new owners took the case to court in London, the debt had swollen to more than $20 million. The claim may have been extortionate, but it was legal, and the funds won their case.

This judgment, and another where a vulture fund bought Zambian debt for $4 million and then sued for $42 million, caused an outcry in Britain. The Jubilee Debt Campaign, which called for the debts of the poorest countries to be cancelled and a change in the law, was launched in response.

Its spokesman, Jonathan Stevenson, told IRIN they felt it was wrong for these companies to make huge profits out of developing countries; Britain had given debt relief so that money could be used to relieve poverty, not to enrich financial speculators.

The new law specifically applies to the 40 countries which have taken part in the HIPC process, and limits the amount of debt that can be recovered in British courts to the level agreed by the other commercial creditors.

The Democratic Republic of Congo (DRC) is approaching completion of its HIPC process and the cancellation of its debts, and could be one of the first countries to benefit from the new law, Stevenson said. The DRC has said it is afraid some of its commercial debt may end up in the hands of debt recovery funds.

Although the campaigners and MPs from all parties who backed Keeble’s bill are justifiably pleased, they stress that because there was no time for proper debate, the new law will only apply for one year unless the new parliament makes it permanent.

There is still the risk that when debt owners find it is no longer worthwhile to sue in Britain they will use courts in other countries, wherever the debtor has assets worth seizing. Keeble said the UK has set a standard; the next task is to press for similar legislation in Europe and the United States.

Also I do not necessarily share the assertion being made by the World Bank Vice President for Afrika who states that that a jointly "owned" action plan for a rapidly transforming Afrika is part of the Bank's "new attitude" to help develop Afrika. One can easily say that does such a plan really have the vested interests of Afrika at heart or is this just another false dawn.

We remember that NEPAD (New Partnership for Afrikan Development) was touted in the same way as the above but in reality NEPAD was just a bunch of re-cycled ideas that has not had the desired effect of getting Afrika out of poverty and tackling many of the socio-economic problems that Afrika faces.

The way forward.

As the recent World Economic Forum on Afrika has shown, the time has come to move Afrika from the periphery to the centre of the global economy and for an end to Afrika's marginalization proving my point that Afrika is being deliberately under developed and grossly exploited by chiefly the West, China, India and the Arabs.

Tanzania's President Kikwete at the forum said “Africa remains predominantly a primary producer and importer for industrial use. We produce what we don't consume and consume what we don't produce"

Therefore the only way forward as I have said is for Afrika to unite. Unity is the only way forward to emancipate Afrika from the ravages of impoverishment, under development and exploitation of the highest order that has severely dented Afrika's development.

By uniting politically as well as economically Afrika will be able to move the artificial colonial boundaries that separate them and begin to do real business with one another.

For example it is scandalous that Britain as the former and current imperial power can easily do business with Ghana and Tanzania, but because we are currently divided via our mental thinking, artificial colonial borders and do not share in inter regional trade Ghana finds it very difficult to trade with its Afrikan brothers Tanzania.

Our leadership has to recognize that just like in Asia with ASEAN, in Europe with the EU, in North America with NAFTA, in the Caribbean with CARICOM and the new arrangement under way in South America, it is by inter regional trade that Afrika can move itself out of inordinate poverty because if Afrika trades as one single block that is over 1 billion strong we would no longer depend on non-Afrikans for our survival as we will be depending on ourselves.

The great advantage of trading with one another is that being that Afrika has the mineral capacity we could barter with one another as we did before the imperialists came. How this could manifest itself is that if country A for example had massive oil deposits and country B that did not have any oil had diamonds and copper that country A did not have.

All this would entail would be for the two countries to barter their resources for the development of their respective countries involving the sharing and transformation of technology, expertise and technical assistance that would see the rapid transformation and development of the Afrikan continent that is in the interests of the continent and the people themselves AND NOT in the interests of Western and Asian economic domination.

The time has come for Afrika to go it alone and ignore the broken promises of the IMF/G8/EU and other imperial institutions that do not give a hoot about Afrika’s development.

600 years of history should have taught us Afrikans that the West, India, China and the Arabs do not care about Afrika’s development. In order for us Afrikans to become great again just as in the days of yore, Afrikans must believe in themselves and be that change they want to see.

Kwame Osei
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  1. Chinese investment - good or bad? — insidejob