For the longest time Africa has been labelled the impoverished continent with unforgivingly big debt corrupt leaders and failed leadership. For our part, we have largely apportioned all the blame on neo-colonialism and forgotten to take responsibility for our own misgivings. However, the greatest failure has been the ignorance of the West to its own contribution to this poverty that had been reduced to a catch line on television. The IMF and the World Bank’s Washington Consensus, the neoliberal policies these two institutions promoted have not yielded the results they were billed to yield. If anything, these two institutions have been at the fore-front of the systematic destruction of African economies. It is only now that their Highly Indebted Poor Countries Initiative has been seen to attempt to rectify past wrongs but the program has only impacted 36 countries in the world, and is this enough?
The danger of Structural Adjustment Programs to Agriculture in Africa
The Structural Adjustment Programs of the IMF and World Bank’s results in Africa have been far from desirable. In essence, they have caused the much publicised poverty. Though put in place to start a spiral of growth and prosperity, Foreign Policy in Focus says “structural adjustment saddled Africa with low investment, increased unemployment, reduced social spending, reduced consumption and low output, all combining to create a vicious cycle of stagnation and decline.”
The IMF and the World Bank have pushed for economies where the government has less control over the market. This is the main theme of the Washington Consensus and the hope is where governments are pushed out, private players will come in, offering competitive alternatives which could not have seen the light of day before. Though theoretically sound, in practice, the IMF and World Bank cooked up a suicidal approach to African economics. For example, in agriculture, the two institutions encouraged that governments scrap subsidies and lower agricultural research. The Economist, a normally pro-private sector publication admitted, “But many of the private firms brought in to replace state researchers turned out to be rent-seeking monopolists.”
In the 2008 World Development Report, the World Bank itself admitted to structural adjustments dismantling the elaborate system of public agencies that provided farmers with access to land, credit, insurance inputs and cooperative organisation. The Bank further admitted the expectation was that removing the state would free the market for private actors to take over which would in turn reduce state costs, improve quality and eliminate bias. However, the Report says, “The private sector emerged only slowly and partially- mainly serving commercial farmers but leaving smallholders exposed to extensive market failures, high transaction costs and risks and service gaps”
The aggregate of all these problems the Bank and the Fund created, is a less competitive African industry while the United States of America and Europe subsidise production and sell their produce at a fraction of the cost of African products. The more the IMF encourages this structural adjustment, the more it weaker and opens it up the market to Western invasion.
This situation is exactly what then US Agricultural Secretary, John Block hoped to create in 1986 when he said, “The idea that developing countries should feed themselves is an anachronism from a bygone era. They could better ensure their food security by relying on U.S. agricultural products, which are available, in most cases at lower cost.” It is all too clear now that through these structural adjustment policies, Africa could have become a glorified market for the U.S.A. and her friends.
The IMF and World Bank’s disrespect for African governments
The IMF and the Bank have not only dealt with African countries but have been known to have influenced policy reforms in Latin America and Asia. The approach was somehow different in these regions as the institutions advocated for the removal of the state from the economy and managed the process from above. However, in dealing with Africa, their strategy changed. Instead of the traditional macro-management, the institutions have been seen to go down to the smallest details of the processes the call for. A particularly worrisome example is Malawi in 2002. Then President, Bakili Muluzi accused the IMF of forcing Malawi to sell its grain reserves just before a devastating drought resulting in untold suffering in the country. The IMF is said to have instructed Malawi to sell maize from strategic reserves to enable repayment of commercial debts. The National Food Reserve Agency of Malawi ended up selling almost all of its grain and when the drought hit the country, there were no reserves to cushion the country leaving around 3 million people exposed. Why did the IMF go down to the specifics of what to do yet such brazen arrogance was never seen in Latin America or Asia? This disrespect for African governments is problematic and cannot be tolerated. Citizens elect their governments and not the IMF. Where these governments want to go through with the World Bank or IMF’s structural adjustment programs, the direct implementation should be left to the government structures. Micro-management is disrespectful.
The Fund and Bank’s involvement in Africa has come with increased debt in most countries. It maintains the status quo in global affairs. These institutions help keep poor countries poor. When they succeed in transforming countries from their debt ridden third world statuses to better fortunes, then maybe there will be a legitimate case for their existence. The Highly Indebted Poor Countries Initiative is hopefully a step in the right direction but as it stands, the IMF and World Bank are not two institutions to trust with African economies. It is either they are grossly incompetent to deal with their complexities or they are a part of some ploy to serve Western interests by destroying African economies.