An alternative to the World Bank and IMF – Profile

The World Bank’s launch in late November of a five-year action plan for fighting the HIV/AIDS pandemic in Africa is emblematic of the Bank’s new direction. The structural adjustment programs are of yesteryear. Less controversial campaigns are becoming more common and economic strong-arming less frequent. Why the shift? The economies of some former Bank recipient countries have improved, loans repaid, and Bank presence ushered out. Venezuela, Bolivia and Ecuador have done as much, even creating a Bank of the South, launched in early December with four other South American countries. The split from foreign aid is a significant one, even though western economists doubt that the southern three will survive on their own. Yet, the numbers already look promising and there is precedence for economic stability in foreign aid-free, developing countries. Take Eritrea. Long a nation determined to be self-reliant, the country’s GDP and income both rose nearly 9 percent in the last ten years, with adult illiteracy dropping by 8.4 percent. Life By: Timothy Kalyegira As a continent, Africa remains at the margins of the world’s economy as it has for the last 1,000 years and more. Television and photographic images of Africa continue to be those of human misery, displacement, dirty surroundings and backwardness. It contributes only two percent of global trade, has only two percent of the world’s Internet users, and is the poorest and least developed continent. There are more refugees and internally displaced people in Africa and more AIDS patients and victims than in any other part of the world. In that sense, it is an unimportant part of the world order. However, there are certain features about Africa that make it extremely valuable – as there were in 1884 when the Berlin conference was called to discuss parceling up this world’s second largest continent into geopolitical spheres of influence and economic zones- and which in recent and coming years will turn Africa into a global political, economic, and military battleground nearly on the scale that the Middle East is today. As it was in 1884, this very state of underdevelopment is what 125 years later makes Africa such an important asset to the various competing world powers. A second, equally intense and self-seeking “Scramble for Africa” between the major western and emerging world powers is now underway and the result could prove devastating to the continent. It will scuttle the national development plans of many countries, as African states attempt to respond to the pressure from foreign powers desperate to gain access to these vital resources. It will exacerbate local ethnic and territorial tensions and conflicts, many of them going back centuries. It will lead to unheardof levels of corruption as heads of state and their close aides act out the role of vassal chiefs of 200 years ago as those earlier chiefs directly negotiated with incoming colonial adventurers, missionaries and traders. For the African states that try to hold onto their strategic resources, there will be a return to the externally-orchestrated military coups, assassinations and mutinies of the 1960s and 1970s. The greatest threat to an African leader’s or government’s hold on power will cease to be from opposition political parties or national uprisings, but from powerful foreign governments and multinational corporations seeking to control these strategic resources in Africa. This very real insecurity to African regimes and leaders will in turn lead them to focus their main energies on holding off external sabotage or entering into alliances with one power against another, all of which will result in the wasted 30-year period that marked African history from about 1960 to the end of the Cold War in 1990. The great new resource discoveries Africa continues to possess vast quantities of the traditional high-value minerals such as gold, bauxite, uranium, diamonds, cobalt, and other minerals critical to world economic production. These were the minerals of the 1800s. However, in the last 15 years, apart from the traditional nations of North Africa, Nigeria, Gabon and Angola, great new sources of petroleum oil and natural gas have also been discovered in Sudan, Chad, Uganda, Equatorial Guinea, Ghana, and most likely more will be discovered in the Democratic Republic of Congo. Since June 2006, the UK-based oil firm Tullow has discovered what it says are an estimated two billion barrels (or drums) of oil in north-central-west Uganda in the Albertine sedimentary basin of Bunyoro toward the border with Congo. Tullow Oil is also exploring for petroleum in Ghana. Two American companies, Africa Oil and Range Resources, say they have discovered an estimated ten billion barrels of oil in the war-torn Somalia. In February 2010, the American company Anadarko Petroleum discovered a huge reservoir of natural gas off the Indian Ocean coast of Mozambique. Eni of Italy, China National Offshore Oil Corporation (CNOOC), the stateoil company of China, and Petronas of Malaysia are all at various stages of exploration in East Africa. Reported the American newsmagazine Time CNN) on March 12, 2010: “Seismic tests over the past 50 years have shown that countries up the coast of East Africa have natural gas in abundance. Early data compiled by industry consultants also suggest the presence of massive offshore oil deposits. Those finds have spurred oil explorers to start dropping more wells in East Africa, a region they say is an oil and gas bonanza just waiting to be tapped, one of the last great frontiers in the hunt for hydrocarbons.” The world’s largest petroleum consumer, the United States, now imports more than 11 percent of its oil from Africa. The talk in the global oil industry is that there might be oil and natural gas reserves in and offshore Africa that rival those in the Middle East. The American company, NGEx Resources, announced in March that it had made “an exciting new copper/zinc discovery” in the Aradaib area of northwestern Eritrea, adding that this “gold content, high zinc and copper grade…could represent a very significant new gold-rich massive sulphide discovery in a new and unexplored area.” Apart from its wealth of traditional minerals, the Democratic Republic of Congo has about 80 percent of the world’s reserves of Columbite- Tantalite, or Coltan, the tar-like mineral used in such high-value digital-era products as mobile phones, digital cameras, laptop computers and video cameras. The Second Scramble For Africa expectancy, school enrollment and primary school completion rate all increased, while mortality rate dropped substantially. During the same period, Eritrea’s ratings on the UN Human Development Index which measures achievement in three dimensions (long healthy life, knowledge and a decent standard of living) rose 9.3 percent. While Eritrea is no shining star ranking at an unenviable 130th in the HDI, it does challenge the paradigm of dependency, faced by many developing countries, on foreign aid. Its social indicators are improving, slowly but surely, and without the backing of the banks in the west. Mimicking Eritrea’s headstart on self-reliance, Venezuela, Bolivia, Ecuador and most likely others are eager to shrug off what they perceive as the political yoke of foreign aid. They think western aid is frequently aligned with the geopolitical priorities and interests of developed nations. Not long after the Bank appointed Robert Zoellick and the IMF appointed France’s Dominique Strauss-Kahn, South American nations announced their intentions to form the Bank of the South. Now, with December’s launch, Argentina, Bolivia, Brazil, Ecuador, Uruguay, Paraguay and Venezuela have staked their self-reliant claim to be free of foreign philanthropy. How the south will fare is yet to be seen. Venezuela’s 2008 budget allocates 46 percent to the social sector with special attention to health, education, food aid, land reform, affordable housing, micro credit and job training. These are sectors in which the Bank and the IMF traditionally focused on. Some economists see this as serious socialism. How dare Venezuela’s President Hugo Chavez funnel oil and natural gas revenues into the social sector and rebuild the deteriorating infrastructure? How dare Bolivia’s President Evo Morales consider an equitable nation-wide distribution of revenues stemming from natural resources? How dare Ecuador’s President Rafael Correa decree that 99 percent of extra oil income will be distributed among the people, leaving only one percent for foreign firms? They dare because they can. With fuel prices crossing $100 a barrel, oil-rich and gas-rich nations are exerting the same power on developed nations that they once did so determinedly on developing nations. The tables have turned and the formerly dependent are less so. And who’s to blame them? HIV/AIDS programs in Africa then for the Bank? With the pandemic on the rise throughout the continent, countries are in weak position to refuse assistance. Selfreliance in Sub-Saharan Africa may be slower to pick up steam than in South America. But don’t be surprised if the African continent creates a Bank of its own sometime soon. The Eritrean model may well be worth mimicking. Source: Eritrean Profile Newspaper 29. July 2010.

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