Sunday, May 5, 2013

How IMF, World Bank failed Africa.

World Bank chief: global poverty bigger challenge than action on HIV

Jim Yong Kim says 1.2bn on under $1.25 a day 'stain on our conscience', and urges bold action on global warming
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    The president of the World Bank has warned that ending the worst of global poverty within a generation would prove a tougher challenge than tackling Aids, as he urged direct action to help more than a billion people benefit from growth.
    Jim Yong Kim, the former health activist chosen by Barack Obama to lead the Washington-based institution, said the goal of reducing the number of people living on less than $1.25 a day from 21% to 3% by 2030 was achievable but "extraordinarily difficult".
    Interviewed by the Guardian after a keynote speech this week in which he made poverty reduction and shared prosperity the focus of his five-year presidency, Kim said that rapid growth in China had been the most important factor in lifting people above the global breadline in recent years.
    "Most of the low-hanging fruit has been picked," Kim said, following suggestions that the World Bank had set itself too easy a target. The proportion of people living in extreme poverty would fall to 6% if the recent trend continued, but Kim, who spearheaded a global campaign to provide blanket treatment for Aids, said this was not realistic. He added: "This is the hardest goal I have ever tackled, harder than Aids. The curve is going to flatten out."
    Kim said the target would only be met if there was progress in India, sub-Saharan Africa and states torn apart by conflict. "I hope those who say it is going to be easy are right. But everything I have seen tells me that it is not going to be easy."
    Kim, who was once part of the campaign urging the abolition of the World Bank, said the fact that 1.2 billion people were on less than $1.25 a day was "a stain on our conscience", and said he wanted to restore the anti-poverty focus the institution had under the presidency of Jim Wolfensohn, who ended his term in 2005.
    Reducing poverty, Kim added, was impossible without growth, and 90% of new jobs would be created by thriving private sectors. But he said growth on its own was not enough, and governments needed to adopt policies that made growth more inclusive. "The evidence is overwhelming that if you pursue gross domestic product without inclusion you are building instability into your system. Growth has to be inclusive and there is much evidence to support that view."
    Identifying the need for governments to tailor policies to help young people, women and minorities, Kim said greater investment in health, education and conditional cash transfers – welfare payments that can only be spent on specific services such as medical check-ups – would help the poorest 40% of populations to share in growth. It made sense for health to be free at the point of use in poor countries unless it could be shown that payments were needed to prevent services being over-used.
    Kim said there was no contradiction between growth and a "clean, sustainable future" and said urgent action was needed to tackle climate change. Expressing alarm that global temperature could increase by four degrees centigrade by 2060, Kim said he had one question for the leaders of the environmental movement: "Where's the plan?" He added that when he was an Aids activist it had taken 22 years from 1981 to 2003 for the campaign to deliver an effective solution to the problem. Asked if there was a similar plan to tackle global warming, Kim replied: "Not yet. There isn't one."
    The World Bank and the United Nations, Kim said, needed to come up with a bold and workable plan.
    "We need to present it to the population and say there are going to be trade-offs and life is going to change a bit, but how much do you love your kids. The scientific evidence on climate change is overwhelming, and if you believe the science it is about family values. It's not about your great grandchildren, it's about your children."


    World Bank chief: global poverty bigger challenge than action on HIV

    Friday, April 5, 2013 21:24
 Jim Yong Kim says 1.2bn on under $1.25 a day ‘stain on our conscience’, and urges bold action on global warming
    The president of the World Bank has warned that ending the worst of global poverty within a generation would prove a tougher challenge than tackling Aids, as he urged direct action to help more than a billion people benefit from growth.
    Jim Yong Kim, the former health activist chosen by Barack Obama to lead the Washington-based institution, said the goal of reducing the number of people living on less than $1.25 a day from 21% to 3% by 2030 was achievable but “extraordinarily difficult”.
    Read More :

    Title Annotation: International Monetary Fund
    Publication: New African
    Geographic Code: 0BANK
    Date: Jan 1, 2007
    Words: 2286
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    How IMF, World Bank failed Africa.

    Welcome to how the IMF IMF

    See: International Monetary Fund


    See International Monetary F
    und (IMF). and World Bank run the show in Africa and, thus, lead our countries down the garden path. This report was put together by the London-based World Development Movement (WDM (1) (Wavelength Division Multiplexing) A technology that uses multiple lasers and transmits several wavelengths of light (lambdas) simultaneously over a single optical fiber. ) as its contribution to the ongoing debate on what kind of global institutions would improve everyone's quality of life in a highly interconnected world.">How IMF, World Bank failed Africa.

    "After 20 years of implementing structural adjustment programmes, our
    economy has remained weak and vulnerable and not sufficiently
    transformed to sustain accelerated growth and development. Poverty has
    become widespread, unemployment very high, manufacturing and agriculture
    in decline, and our external and domestic debts much too heavy a burden
    to bear"--Kwamena Bartels, Ghana's minister for works and housing, May
    2001 (he is now minister for information).

    The IMF has received heavy criticism for its handling of various financial crises in middle-income countries: Mexico (1965), Russia (1998), Brazil (1998), Turkey (1998) and Argentina (2001). But perhaps the most famous is the Asian financial crisis of the late 1990s, occurring during Michel Camdessus' tenure as head of the IMF (more recently he has sat on Tony Blair's Commission for Africa).


    The problem with the World Bank and IMF's focus on "export-led growth" or "export-led development" is the way that it has been pursued. Most industrialised Adj. 1. industrialised - made industrial; converted to industrialism; "industrialized areas"

    industrial - having highly developed industries; "the industrial revolution"; "an industrial nation"
    or newly-industrialised countries have moved away from exports that are focused on agriculture, and into trading manufactured goods.

    As the Norwegian economist, Erik Reinert, points out: "No nation has ever taken the step from being poor to being wealthy exporting raw materials in the absence of a domestic manufacturing sector."

    Although history suggests nobody gets rich by exporting low value agricultural commodities, the World Bank and IMF seem to be encouraging or forcing poor countries, especially in Africa, to pursue just such a strategy, with disastrous results.

    Take the international coffee trade as a case in point. In coffee producing countries, the World Bank and IMF have been advising or requiring governments to liberalise Verb 1. liberalise - become more liberal; "The laws liberalized after Prohibition"

    change - undergo a change; become different in essence; losing one's or its original nature; "She changed completely as she grew older"; "The weather changed last
    . This has involved measures such as eradicating controls on supply and prices, disbanding state trading boards and actively encouraging increased production and exports.

    For example, in 1998, under the Highly Indebted Poor Country (HIPC HiPC High Performance Computing
    HIPC Highly Indebted Poor Countries
    HIPC Heavily Indebted Poor Country (World Bank initiative)
    HIPC Health Insurance Purchasing Cooperative
    HIPC Hosted IP Centrex
    ) initiative, Cote d'Ivoire's eligibility for debt relief was made conditional on the full liberalisation n. 1. Same as liberalization.

    Noun 1. liberalisation - the act of making less strict
    liberalization, relaxation

    alleviation, easement, easing, relief - the act of reducing something unpleasant (as pain or annoyance); "he asked the nurse
    of its coffee sector by the 1998/99 crop year. This was also backed up with a second national agricultural services support project, funded by the World Bank, which sought to increase productivity for all crops, including coffee, as well as stressing the requirement to fully liberalise the coffee sector. Perhaps the greatest "success" has been in Vietnam where the World Bank has helped promote a massive expansion of coffee growing. In 1993, for example, the World Bank funded an agricultural rehabilitation project with an aim of diversifying export income through the expansion of coffee and rubber exports. As a result, since the late 1980s, Vietnam has risen from a marginal coffee producer, producing less than 50,000 metric tons, to one of the world's largest producer. By the late 1990s, it was producing some 400,000 tons of coffee.

    During the same period, the World Bank and IMF were requiring other coffee producing nations--such as Uganda, Ethiopia and Kenya--to liberalise their agricultural sectors and encouraging increased coffee exports.

    For example, a study of Uganda by the World Bank in 1993 advised the Ugandan government to plan for a greater share of the world coffee market. The study argued that Uganda "could double its coffee exports to perhaps five million bags, without significantly affecting medium-term international prices of Robusta coffee Noun 1. robusta coffee - native to West Africa but grown in Java and elsewhere; resistant to coffee rust
    Coffea canephora, Coffea robusta, Rio Nunez coffee

    Unfortunately, the study did not seem to take into account the implications of increased production and exports being encouraged by the IMF and World Bank in other parts of the world. The result of the oversupply o·ver·sup·ply
    n. pl. o·ver·sup·plies
    A supply in excess of what is appropriate or required.

    tr.v. o·ver·sup·plied, o·ver·sup·ply·ing, o·ver·sup·plies
    has been a price collapse and a crisis in coffee producing countries.

    According to according to
    1. As stated or indicated by; on the authority of: according to historians.

    2. In keeping with: according to instructions.

    a World Bank study in 2002, "coffee prices have declined sharply in recent years because of large increases in coffee production and exports from traditional exporters such as Brazil and new entrants such as Vietnam. Between July 1998 and June 2001, coffee export prices declined by almost 50%.

    Ironically, the kind of policies that now help coffee producing countries qualify for debt relief under HIPC (ie, reducing state intervention in coffee markets), have contributed to increased coffee production causing oversupply in the market, a price crash, a commodity crisis, and making the debt problems of producer countries even worse.

    Of course, any standard economic textbook will tell you that an increase in supply, without an increase in demand, will lower prices. Yet it looks like the IMF and World Bank economic experts forgot, or chose to ignore, the basics as they encouraged increased production and exports and reduced state intervention across the globe.

    The other side of the trade equation to increasing exports is liberalising imports, which the World and IMF have pushed with almost theological zeal. Trade liberalisation has been a key feature of Bank and Fund conditionality throughout the 1980s and 1990s.

    Yet the United Nations Conference on Trade and Development United Nations Conference on Trade and Development (UNCTAD)

    Organ of the United Nations General Assembly, created in 1964 to promote international trade. Its highest policy-making body, the Conference, meets every four years; when the Conference is not in session, the
    (UNCTAD UNCTAD United Nations Conference on Trade & Development ) has found that the rapid and extensive trade liberalisation undertaken by developing countries during the 1990s failed to benefit the poor. An UNCTAD report concludes: "The more recent evidence from liberalisation episodes in sub-Saharan Africa as well as Latin America Latin America, the Spanish-speaking, Portuguese-speaking, and French-speaking countries (except Canada) of North America, South America, Central America, and the West Indies. suggest that they have often been accompanied by an increase in unemployment. According to calculations done by Christian Aid Christian Aid is an agency of the major Christian churches in the United Kingdom and Ireland. It works with local partner organisations in over 60 countries around the world to help the world's poorest communities. , trade liberalisation has cost sub-Saharan Africa $272bn over the past 20 years.

    In 2003, the Ghanaian Parliament passed a budget to increase the import duty on poultry products to protect Ghanaian farmers who were being priced out Priced out

    The market has already incorporated information, such as a low dividend, into the price of a stock.
    of the domestic market by subsidised European poultry. However, after a phone call from the IMF, the legislated increase was removed by the Ghanaian government after just two weeks.


    So even though Ghana had managed to mention reviewing trade liberalisation in its Poverty Reduction Strategy Paper (PRSP PRSP Poverty Reduction Strategy Paper
    PRSP Penicillin Resistant Streptococcus Pneumoniae
    PRSP Program Requirements Support Plan
    ) and then subsequently implemented an "alternative policy", it was pressured by the IMF to revert to trade liberalisation. (A PRSP is an economic plan whose content is heavily influenced by the World Bank and IMF and is used as the basis for defining Bank and Fund policy conditionality).

    Starting in the 1980s, user fees for health and primary education were pushed as conditions of World Bank programmes. In a 1998 internal review of the Banks Health, Nutrition and Population (HNP HNP Health, Nutrition and Population
    HNP Herniated Nucleus Pulposus
    HNP Host Negotiation Protocol
    HNP Hernia Nuclei Pulposi (Medicine)
    HNP Herstigte Nasionale Party van Suid-Afrika
    HNP Herenigde Nasionale Party
    ) lending, the Operations Evaluation Department The Independent Evaluation Group (IEG) (previously known as the Operations Evaluation Department (OED)) is an independent unit within the World Bank that reports directly to the Bank's Board of Executive Directors. reported that 40% of HNP projects, and specifically 75% of HNP projects in sub-Saharan Africa, included the establishment of expansion of user fees.

    Studies have consistently shown that fees have reduced the poor's access to essential services. For example, with the implementation of fees for health services health services Managed care The benefits covered under a health contract in Ghana in the late 1980s, a visit to a specialist cost 10 times the daily wage. Unsurprisingly, there were "substantial declines in the utilisation of health care services. The decline was greater and more sustained in rural than in urban areas.

    As for Zambia, the World Bank reported in 1994 that with the introduction of user fees in health provision, "vulnerable groups seem to have been denied access to health services". However, this was followed by a new World Bank health project to increase the use of user fees.

    UNCTAD has criticised the use of user fees as "undue emphasis is placed on market mechanisms" and has called for their removal from anti-poverty polices. The former president of the World Bank, James Wolfensohn James Wolfensohn AO KBE (born December 1, 1933) was the ninth president of the World Bank Group. Early life
    Wolfensohn was born in Sydney, Australia. According to The World's Banker
    , stated that the Bank no longer promoted user fees for basic health and education. However, Bank programmes which make countries delegate responsibility for delivering a service to local communities often include a requirement for user fees, as a community has no other way of raising finance internally.

    In contrast, where user fees have been abolished, improvements have been seen. For example, when Malawi eliminated a small school fee in 1994, primary enrolment increased by 50% from 1.9 to 2.9 million pupils.

    Ignore the Bank and Fund

    As the economics professor, Charles Wyplosz of the Institute of International Studies in Geneva Geneva, canton and city, Switzerland
    Geneva (jənē`və), Fr. Genève, canton (1990 pop. 373,019), 109 sq mi (282 sq km), SW Switzerland, surrounding the southwest tip of the Lake of Geneva.
    , says: "There is growing recognition that the IMF should not be interfering too deeply in sovereign affairs ... When firemen come to your house to put out a blaze, you would not expect them to meddle med·dle
    intr.v. med·dled, med·dling, med·dles
    1. To intrude into other people's affairs or business; interfere. See Synonyms at interfere.

    2. To handle something idly or ignorantly; tamper.
    in your marriage."

    A damning indictment of the failure of the free market model pushed by the World Bank and IMF in Africa and elsewhere is the fact that those countries that have developed most successfully have often been those that have ignored the Bank and Fund and pursued their own path to development.

    For example, on the issue of trade liberalisation--even looking at countries using the Bank and Fund's own standard of economic growth--we can see that between 1996 and 2000, four of the top five fastest growing developing countries were those deemed to have "trade restrictive" policies (China, Mozambique, Equatorial Guinea Equatorial Guinea (gĭn`ē), officially Republic of Equatorial Guinea, republic (2005 est. pop. 536,000), 10,830 sq mi (28,051 sq km), W central Africa. , and the Dominican Republic Dominican Republic (dəmĭn`ĭkən), republic (2005 est. pop. 8,950,000), 18,700 sq mi (48,442 sq km), West Indies, on the eastern two thirds of the island of Hispaniola. The capital and largest city is Santo Domingo. ).

    Although no data was available on the fifth, Maldives, and Equatorial Guinea's growth can be ascribed to its oil wealth, the other three countries at the very least call into question the "liberalisation leads to growth" dogma.

    Similarly, although during the 1990s the IMF ranked Mauritius as one of the most protected economies in the world, between 1975 and 1999, Mauritius achieved an average annual per capita [Latin, By the heads or polls.] A term used in the Descent and Distribution of the estate of one who dies without a will. It means to share and share alike according to the number of individuals. growth rate of 4.2% and a reduction in income inequality.

    The policy choices and the success demonstrated by Mauritius are perhaps no surprise, given that since 1988, the country has not owed the IMF any money under its structural adjustment programmes, so it has not been subject to IMF conditionality.

    A similar story exists in terms of investment liberalisation. The more successful countries in East Asia East Asia

    A region of Asia coextensive with the Far East.

    East Asian adj. & n. , not to mention industrialised countries such as the US and various European countries, used a variety of controls on foreign direct investment (FDI FDI

    See: Foreign direct investment
    ) to ensure that when FDI was allowed it produced benefits for local people.

    And the same trend can be seen when it comes to financial crises. The countries that ignore the standard prescriptions of the IMF tend to do better. Perhaps the most cited example is that of Malaysia. Commenting on the Asian financial crisis, Joseph Stiglitz, the former chief economist of the World Bank, said: "I think it is no accident that the only major East Asian country, China, to avert the crisis took a course directly opposite that advocated by the IMF, and that the country with the shortest downturn, Malaysia, also explicitly rejected an IMF strategy."


    In an ironic twist, in 2003, the Malaysian president, Mahathir Mohamad, was the opening speaker at the World Economic Forum in Davos; a place where deregulation Deregulation

    The reduction or elimination of government power in a particular industry, usually enacted to create more competition within the industry.

    Traditional areas that have been deregulated are the telephone and airline industries.
    , including financial deregulation, and unfettered markets had been the rallying cry for over two decades. As one author writes: "Mahathir excoriated global and economic policies, rightly boasted of Malaysia's success following a national regulated model and received a rapturous rap·tur·ous
    Filled with great joy or rapture; ecstatic.

    raptur·ous·ly adv. standing ovation."

    This is not to say that more successful countries have not liberalised at all. They have simply done so at times and in sectors that are deemed appropriate in achieving development progress. But critically, these countries have still maintained various degrees of control over trade policy, foreign investment and foreign capital, so that if a policy approach is not working they have the ability to change course.

    Of course, African governments are well aware of this evidence. In a paper submitted to the Doha Round WTO See World Trade Organization. negotiations, Ghana, Kenya, Nigeria, Tanzania, Uganda, Zambia and Zimbabwe have pointed out that, subsequent to IMF and World Bank structural adjustment, including unilateral trade liberalisation, "the broad-based development that was expected to ensue has remained elusive ... Indeed, empirical studies show that industrial growth has fallen behind GDP GDP (guanosine diphosphate): see guanine. growth in sub-Saharan Africa since the 1980s with de-industrialisation in a number of African countries being associated with trade liberalisation."

    Trade liberalisation has also created problems for sustainable government income. Research has shown that cutting import tariffs has reduced tax revenue resulting in a fiscal squeeze, exacerbating the debt problem and causing cutbacks in infrastructure investment. Although the theory is that governments can replace tariffs with other taxes, this is easier said than done in the real world.

    It is, therefore, perplexing per·plex
    tr.v. per·plexed, per·plex·ing, per·plex·es
    1. To confuse or trouble with uncertainty or doubt. See Synonyms at puzzle.

    2. To make confusedly intricate; complicate.
    that the World Bank, a body whose remit to promote development requires countries to reduce their debts and become less reliant on aid, should be requiring recipients of its financial assistance to implement policies that will reduce their tax base--a predictable source of income--exacerbating their debt problems and making them increasingly reliant on unpredictable, not to mention conditional, bilateral and multilateral aid.

    Sadly, for almost 20 years, going back to the latter days of the Cold War, poor countries have had little choice but to seek development finance from Western powers, with the most obvious manifestation of this being the World Bank. Accepting this finance has meant accepting the policies promoted by Western governments: free markets and deregulation.

    However, this period may be coming to an end with the increasing involvement of China in poor countries, particularly those in Africa. For the first time in two decades, some poor countries are getting a choice. While this may not be the most appetising range of options, there is now a distinction between finance from China that comes with no broader economic policy strings, but in all likelihood with some political and foreign policy strings, and finance from the World Bank with all its associated conditionality.

    It is hard to find any official World Bank reaction to China's activities, but it is likely that this new development will have rattled the World Bank hierarchy as much if not more than any civil society campaign.

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