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Poverty - aid, trade and corruption

By John Sweeney and Zeena Elton - posted Wednesday, 31 August 2005

Since the Live 8 concerts and the following G8 meeting in Gleneagles, poverty in Africa has been discussed in the media through two main viewpoints. On the one hand there are those who argue Africa's problems are principally internal: corrupt governments, inter-ethnic and religious violence and irresponsible economic management.

Proponents of trade justice, on the other hand, argue the problems are largely external: unequal and unfair trade agreements, undue political pressure applied by wealthy countries and ongoing legacies from the colonial past. The arguments have become polarised, each side dismissing the other as they become increasingly expressed through left and right political frameworks. Meanwhile most African countries continue to suffer, many sliding into ever worsening problems.

The question for the world is what global policies will directly assist African people to attain real security against famine and violence, and enable all to live in human dignity? To answer this question we need accurate analysis which identifies all of the factors, internal and external, that continue the cycle of poverty in Africa.


Very few commentators, for example, have focused on the reason African countries have amassed massive debts. A major factor is the ongoing impact and implications of structural adjustment programs that were conditions of government loans to African governments in the 1980s and 1990s. These programs typically included: large “cuts to public spending on health and education, trade liberalisation, privatisation and deregulation.” These neo-liberal policies led to even greater differences in income and wealth distribution in Africa than in industrialised nations, driving already poor people into desperation and violence. People cannot compete in a highly competitive globalised market place if they are suffering from malnutrition and chronic illness.

Developing nations have desperately tried to meet their escalating debts while health and education funds rapidly dried up, and the World Bank has retreated from many such programs. Sources close to the Bank have belatedly recognised that structural adjustment programs have been important factors in turning some African countries from steady development into decline.

Furthermore, policies of structural adjustment have not enabled fair trade. Struggling economies have had to compete with protection policies that protect industry in wealthy economies. Now many critics of such trade policies are calling for “trade justice”. One of the principles of trade justice argues for developing economies to have their own protection policies in order to develop industry and infrastructure to the point where they have the capacity to trade on more equal terms. The Trade Justice campaign also calls for consumers to avoid goods known to be produced through unjust employment and destructive environmental practices.

Africa has extensive resources but in many cases its countries enjoy a small proportion of the benefits of resource exploitation and a large proportion of the burden from environmental degradation. Zambia’s economy, for example, relies heavily on mining. It uses about 300,000 tonnes of chemicals each year, many of them toxic. Pollution of waterways and land is extensive. The Environmental Council of Zambia estimates about 300 tonnes of wastes have been dumped in the country, exposing humans and animals to extreme toxic risk. Zambia lacks the technology or the resources to process these waste products.

The power of local elites and governments is an important factor in this: they allow this unfair state of affairs to grow for their own benefit. This is a significant type of corruption in African countries. In many cases, the methods they use to maintain this state of affairs are military, with those who protest being violently repressed. The conflict in the Sudan, between the southern, largely tribal people and the very militarised elite in the North over control of the oil fields in the south is one such example.

In fact, there is a strong statistical correlation (pdf file 456KB) between violent conflict and resource rich and dependent African countries. While there are many causes of these correlations including poverty, poor governance, and so on, trans-national companies also contribute by sustaining poor governance through:

  • corruption and legitimation of unrepresentative and repressive authorities;
  • degrading local livelihoods and resource entitlements (forced and child labour, repressive use of security forces); and
  • bankrolling belligerents (pdf file 152KB) in local wars making them independent of any possible commercially driven diplomacy.

In many cases there is ample evidence this violence was actively driven by Western intelligence agencies.

While the G8 proposes some support in peace building and partnerships for development, there is no admission of corrupt or dubious practices by multinational companies that have enabled massive capital flow out of Africa and to the West. Policies of market liberalisation are based on the principle that “free trade” is the way to help developing economies to participate in the global economy, thus supposedly driving their development. However, the free market on its own does not achieve socially desirable outcomes, even in western economies, without very careful regulation.

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About the Authors

Dr John Sweeney is a lecturer at ACU National and Leader of Edmund Rice Business Ethics Initiative.

Zeena Elton is Co-ordinator of Research and Policy at the Edmund Rice Centre for Justice and Community Education.

Creative Commons LicenseThis work is licensed under a Creative Commons License.

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