Tuesday, June 5, 2018

How World Bank and IMF Strangled Africa Into Poverty

IMF-Christine Lagarde discussing with top African Diplomats.  
The World Bank is an international financial institution established in July 1945 to provide loans to less world for capital projects and IMF ( International Monetary Fund) which also created in the same year 27 December 1945 and consist about 189 member states that working to foster a global monetary cooperation. Dear brethren, true should be known to everyone that these two capitalistic entities were set up immediately after World War II as a Global Financial Order (LAWS70013) initiated by Bretton Woods Conference with one sole purpose to rebuild the economies of western countries and promote the international trade that favourable for them. But, today the world bank and IMF to maintain usual dominance in contemporary post World War, they have modified some of their traditional law which were entirely discriminating in nature in order to extend premeditated charities and lending loans to the developing nations include African countries. However, the traditional dictum of theirs are still alive and attached to those conditional loans, which work only in the best interest of the developed countries.

The two entities under this review, we have mentioned above are dictating poor countries to adopt misleading instructions and sign business treaties, in so doing, the international institutions gain an upper-hand to compel every African leader to privatize their economies, remove tariffs and allow western corporations gain a free ride to raw resources. IMF-World Bank created a non-competitive atmosphere for the multinationals to penetrate unprotected domestic markets. Dear, brethren we are in a poverty trap and only God knows when this apparition (Capitalism) of Adam Smith will finally be ended to free humankind from a well structured and well enforced Global Financial Order that commanding every soul on the planet and compelling every poor country to unsymbiotic business trades, many will not realize it, until is too later. 

Is not, only African continent that affected by an unfair capitalistic system, but the whole world is crying and completely engulfed under economical chain that failing the masses. Much of the social problems, people face today in Africa is caused by corruption, bad leadership and largely contributed by the IMF-World Bank structural financial system, that created an inescapable vicious cycle of poverty. Indeed, poverty is our blessing from IMF. Africa is in a vicious cycle of poverty and there seems to be no way out, no matter how hard you seems to try or how rich your country is in terms of minerals like gold, oil and diamond. The Capitalistic system has created enlistism both local and on the global scale, where some few countries flourish in excesses while others are indebted to the core of the bone. 

IMF’s Structural Adjustment Policies (SAP)

Image result for IMF’s Structural Adjustment PoliciesThe role of the I.M.F. Structural Adjustment Policies is the controversial and most diabolical in its mission rendering a financial solution. SAP is the main prerequisite measure a country must meet before any loan can be taken from World Bank or IMF; a country must first follow these strict economic policies, which include currency devaluation, lifting of trade tariffs, the removal of subsidies and budget cuts to critical public sectors such as health, education services even food production. When it comes to African nations IMF has taken a strong strove in monopolizing all natural resources and paralyzing any effort for economic freedom. Perpetual dependency in Africa is being maintained through Structural Adjustment Policies in forcing African nations not to subsidize the local products or impose the tariff on western goods. Dear, brethren African nations have surrendered up all the natural resources they have to multinationals for the simple mere grime of obeying the IMF's loan regimen. The multinationals such as Chevron and ExxonMobil, the foreign investors that operating in some African oil-producing countries like in Angola, where local cheap labours being paid with peanut salaries, and do tax evasions while shipping out tonnes of crude oil. Many wealthy countries in Africa with vast minerals and resources example Nigeria;( with 2.5 million barrels per day) Angola ( with 1.5 million barrels per day) and others are crippling in poverty because IMF constantly reminding them to remove fuel subsidies.  Africa and its poor people still continue suffering from those types of agreements and treaties signed by their leaders.  The poor living standard in the continent is largely contributed by IMF’s Structural Adjustment Policies (SAP)




The main objective of SAPs is to encourage borrowing countries to depend on importations and allow foreign companies exploit domestic resources, with the perception to increase foreign exchange (currency) which can often be subject to dramatic fluctuations in values and dependency. Since African countries, if not all don't have a proper trading system or functional statutory clause for price controls and other tangible financial measures to protect them from unfair trades or enforce/observe economic manipulations, authentic currency rate or extreme inflation.  Thus Africa countries following whatever IMF-World Bank have instructed them to do, regardless whether it is a trap or unfair business treaty. Remember, IMF financial manipulations can catapult nations into civil unrest.  Young scholars and economists in Nigeria have been vocal against IMF-induced austerity measures, but the government that is led by authoritative leadership tasked state security to arrest students who protesting against IMF policies. 


Image result for how many barrels of oil nigeria produce in a day
Nigeria is Africa’s biggest oil producer with production over 2.5 million barrels per day.  
To the total dismay of African states, the fuels' prices and the number of transports have nearly tripled over last decade, causing fuel shortage and widespread violence on the streets of major cities in Nigeria like the capital Abuja and its economic centre, Lagos. This economical woos is orchestrated much by IMF demands and privatization just like the induced riots in Indonesia during the 1997 Asian Financial Crisis. There is a public discontent in Nigeria, where incompetent and self-serving domestic elites are thriving on power through corruption, these incompetent leaders on political power, are the IMF compliant and puppets of capitalist corporate who serve its interests just like in Namibia and elsewhere in Africa. What they serve more is to appear democratic in the eyes of the west, and turned a blind-eye against neocolonialism and any practices that plundering African resources.

Nigeria and Angola are the main contributors to OPC and hold the vast proven oil reserves in the world just like Qatar and Saudi Arabia that have full control of their own oil reserves which gave them an international edge and recognition in the world. While people in Nigeria and Angola are swimming in abject poverty despite these African nations produced more oil than most other OPC members, and locals are paying flue fee more than an average American pays for the cost of fuel, and the worst part Africa is experiencing flue shortage more often than any other continent. While in  Europe, no single country has ever run out of fuel, nevertheless those countries don't own any oil reserve on their soil, like Britain that runs British Petroleum (BP) in Niger Delta that caused horrendous oil spillage with dire consequences on local communities and natural environment.


Talking about Nigeria especially in its capital city Lagos which is one of Africa’s highest concentration of billionaires, but yet the vast majority of the population still struggling daily on less than $2.00 USD.  Although, Nigeria pumping out about 2.4 million barrels of crude oil each day which intended for export use, the country struggles with generating sufficient electrical power and maintaining its infrastructure.  Ngozi Okonjo-Iweala, who is widely considered by many to be the de facto Prime Minister, stated that even after decades of producing lucrative oil for exports, Nigeria has failed to maintain it’s own refineries, forcing it illogically to purchase oil imports from the west.

Like so many other African nations, Nigerians are suffering from a systematically reduced living standard imposed by IMF’s Structural Adjustment Policies. People continue to die from extreme poverty and hunger in Africa and other parts of the world but not so many people know the World Bank, the IMF in combination with the World Trade Organization (WTO) that they are the ones behind almost all these; it is a new form of war you should know, the trade-war and protectionism was not only started when Donald Trump became a US president, but it is an old culture of all western based institutions include IMF and World Bank to promote economic interest for the capitalists.  In other words, the World Bank, the IMF, and the WTO  are the triple enemies of progress in almost every developing country.

IMF’s Jubilee Debt Campaign

The IMF's Jubilee Debt Campaign (JDC) has been keeping a close eye on Ghana's economy include its security sector. IMF interest in Ghana grew strongly after oil was discovered in the country which then created a bubble in local markets for nothing. Ghana suffered subsequently from numerous economical crashes that left the large population of its country unemployed. Although the vast majority are well educated with PhDs, these educated masses are finding extremely harder to get even a simple job. More money was then borrowed to blunt the impact of the commodity price fall, that led the country halving its currency, the cedi, following instruction from World Bank. Almost one-third of Ghana’s budget is spent on external debt servicing. Since 2015, the IMF and World Bank are continuously saying Ghana is at high risk of being unable to pay its debts. So, the Ghanaian government must borrow more loan in order to repay back its loan. In 2016, the World Bank guaranteed $400 million to Ghana as a repayment on £1 billion bonds which was not given directly to the state but sold separately to private investors, with conception to boost local earnings.


Jim Yong Kim talks to IMF' Chief Christine Lagarde during an annual meeting in Washington. Photograph: Yuri Gripas/Reuters.  
As per the advice, Ghana asked another loan, but the world financial entity apparently had to waive its rules to do so, because the World Bank is not supposed to guarantee loans to countries at high risk, a distress nation like Ghana. The World Bank said it was trying to help refinance expensive short-term debt and free up resources that could be used for investment, but the winners of this monetary arrangement not Ghanaian people, but the World Bank's spectaculars who getting a 10.75% in return, and still making money even though if Ghana can’t able to repay back the loan. Ghanaian people turned out to be the losers since they will be subject to austerity under the terms of a new IMF program. Again Ghana was advised to try government spending cuts with 20% per head in 2017 just at least to serve the cost, although IMF and World already knew it is not a solution. 

Ghana is blessed with an abundance of natural resources, that attracted the capitalistic entities include AFRICOM, where they can easily control the natural resources and its markets through multiple superficial string-attached and economic manipulations which they professed on. Ghanaian people are manually harder workers who plant their own crops and created prosperous rice farming activities in the northern parts of the country.  Before IMF have imposed a restriction on local food production, warning the Ghanaian government to desist from give farming subsidies to farmers. 

The government subsidies could enable them to produce rice on a large scale for national consumption and help the country to be self-sufficient in food production. However, the World Bank and the IMF stood in and told the Ghanaian government that, they (the World Bank and the IMF) would not give Ghana any more loans unless the Ghanaian government cut the farming subsidies completely. The main reason behind this was that Ghana had to import rice from western countries like the United States (whose a major partner of the World Bank and the IMF). Ghana is said to lose over US$500 million a very year through the importation of foreign rice. This action has posed serious challenges to local rice production, making it both noncompetitive to local markets and killing domestic self-sufficient.

Today, Ghana imports include rice are from abroad, which cost the state a hefty price every year. So at the end of the day, Ghana owes World Bank and the IMF, when huge amounts of money the government borrowed in order to purchase foreign food products to satisfy local consumption and demand. Frankly, speaking the money African countries borrowed did not remain within the continent to boost the economy as being widely published. African countries use 60% of these loans to import food from abroad. Although the borrowed money was returned to them, Africa still owe them! 

The rice farming in Ghana could at least have helped produce enough rice to feed the nations (and even export some abroad to make more profit for local farmers). This scenario this is how developing countries are trapped into debt spiral of the World Bank and the IMF's loans. Sometimes you hear "debt cancellations" and the person may think they cancelled the loan, but that is a different story.

The World Bank and the IMF never forgive nor cancelled its loan and as result, huge debts are owed by developing countries. They (the World Bank, IMF and WTO, [a major partner of the United States of America] that control almost all the affairs of those poor countries. In other words, if you don't obey what the World Bank and IMF commanding you, then you must pay back the debt with additional surcharge penalty or you cannot pay back the debt, the choice is yours to dance to the democracies whatever they tell you to do.

Any leader who doesn't obey the World Bank, the IMF, the WTO, etc. is considered an "undemocratic tyrant"  and must be toppled in most cases. The World Bank and the co quickly get rid of such a leader sometimes through sponsoring civil war (just like what happened in Iraq and Libya). The World Bank elects their own "obedient" leaders to rule those poor countries so that they (the World Bank, IMF and co) can easily control that country's economy, market and keeps the rest majority in perpetual poverty.

IMF Fears Chinese Loans

The language echoes recent through U.S. criticisms of Chinese financial practices in Asia and Africa, as well imposing the metal tariff on EU members' states include Canada and Mexico has brought trade wars to affect all nations on the planet. World Bank, IMF and WTO can sense that they are sitting on the edge of a volcano that could blow at any time, to uproot the safe haven of Global Financial Order and status quo. The capitalistic entities fear very seriously Chinese big cash that earmarked for African countries. Beijing has a friendly approach in extending loans, often under onerous terms, to a range of African countries include Sub-Saharan Africa where South Africa, Zimbabwe and Namibia subjected.



Image result for Chairman of the AU Commission Moussa Faki Mahamat, left, and Chinese Foreign Minister Wang Yi shake hands at the end of a joint press conference in Beijing, China (Feb. 8, 2018).
Jim Chairman of the African Union Commission Moussa Faki Mahamat, with Chinese Foreign Minister Wang Yi in Beijing.  
The west fears China influence in Africa and knows exactly what their bloody-sucking loans which abide by African resources for almost a century are about to end or being replaced by those ones from China. We have a testimony that China has cancelled many loans which owned by African countries, but we never heard about IMF-World Bank did the same, in order to allow African nations to re-start afresh.

The World Bank advocate unresilient economic policies via Washington consensus – austerity, privatisation and financial liberalisation which have contributed to weak and unequal economic growth in the world. Even Lagarde she oblivious to the fact that the Washington consensus approach is alive and well within their organisations, while in fact acknowledging the primordial chaos it has caused to the downfall of the global economy. The IMF’s remedy for Greece and Portugal for instance during the so-called eurozone crisis has employed structural adjustment playbook mythical scenario: In advocating for the reduction in public spending, salaries cut and benefits. The international economic institutions what often insistingly demand is that all state-owned enterprises should return to the private sector, and the government should reduce minimum wages and restrict collective bargaining. By so doing the IMF turned Greece into a developing country. It very interests to understand that IMF still continues to push the same inhumane agenda "Financial Liberalisation" even in Africa. 


As for the World Bank, based on the research done by Oxfam which shows that 51 of the 68 companies lent money from International Finance Corporation, to fund investments in sub-Saharan Africa, using these nations as a tax havens. That doesn’t square with the idea of inclusive capitalism. It is not immediately obvious why the World Bank is supporting private schools in low-income countries when the evidence there are poorest families who can't afford the privatized education.




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