Live8, G8, Bono, Bush and Blair: everyone's talking about Africa and its problems. Bob Geldof and Bono have done a good job in recent months to publicise some solutions to Africa's ongoing grinding poverty: increasing aid flows, writing off debts and reducing trade barriers in rich countries. In fact, they've been so successful, the meeting of the leaders of the G8 (the group of rich, Western countries) focused almost exclusively on this agenda.
Central to finding solutions to Africa's problems is an understanding of their causes; answering the question “why is Africa in the state that it's in?” must be a precursor to answering “how can Africa get out of that state?” One answer which seems popular among newspaper columnists is that Africa's problems are Africa's own fault, the results of decades of rampant corruption by African leaders and wars fought between Africans. The corollary is that Africans need to fix these problems before rich countries can do anything. “Nothing to do with the West and hence not our problem”, is the implication.
The facts, however, dispute this hypothesis. Look back just a few decades and it is obvious Africa hasn't always been doing as badly as it is now. For instance, between 1960 and 1980, Sub-Saharan Africa's GDP grew by 36 per cent: not as much as developed nations, but not bad. Now compare this with the next 18 years, 1980 to 1998, when Sub-Saharan Africa's GDP actually decreased significantly: its economic output shrank by 15 per cent.
Did Africa suddenly discover corruption and war after 1980, but not before? No, these have been happening since at least the time of European colonialism. So what has changed since the 70s that might explain Africa's decline?
Well, two significant elements of the global economy changed in the early 80s. The first was the general displacement of Keynesian economics, which argues for a positive role for government in managing economies, by “neoliberal” economics (a belief that open markets, deregulation and privatisation can solve all society's ills). The second change was the move by International Monetary Fund and World Bank from providing short-term credit to the developed world, to providing long-term “structural adjustment” loans to developing countries.
Joseph Stiglitz, winner of the 2001 Nobel Prize for economics, describes, "In the 1980s, the era when Ronald Reagan and Margaret Thatcher preached free market ideology in the US and UK, the IMF and World Bank became the new missionary institutions, through which these ideas were pushed on the reluctant poor countries that often badly needed their loans and grants".
The IMF and World Bank's structural adjustment loans have been used to impose the dictates of neo-liberal economics on over 100 developing nations around the world, including most of Africa, and at the same time created the hundreds of billions of dollars of debt that has forced most African countries into a slave-like relationship with the West.
But while the Live 8 concerts have drawn attention to the massive debt burden on poor African countries, the most significant cause of African poverty has gone unmentioned: the “structural adjustment” conditions imposed by the IMF and World Bank on African economies in return for the loans. These conditions have forced radical changes on most African nations, including huge cuts to public spending on health and education, trade liberalisation, privatisation and deregulation. Stiglitz describes how these policies have "led to hunger and riots in many countries, and … often the benefits went disproportionately to the better off, with those at the bottom sometimes facing even greater poverty".
Take Zambia for example (pdf file 199KB). During the 1990s, the IMF imposed a structural adjustment package on Zambia in return for its loans. The package involved liberalising Zambia's trade barriers, privatising its industries and cutting budgets for health and education. IMF-imposed trade liberalisation led to a flood of imports, devastating Zambia's farming and manufacturing sectors, particularly textiles. Whereas in 1992 Zambia had sported 140 textile manufacturers, by 2002 this had been reduced to just 8.
IMF privatisation programs caused many previously state-run enterprises to collapse, with Zambia's president remarking the IMF's program "has been of no significant benefit to the country … privatisation of crucial state enterprises has led to poverty, asset stripping and job losses". The ratio of undernourished people in Zambia increased from 45 per cent to 50 per cent during the 1990s' decade of IMF structural adjustment. Infant mortality rose from 19 deaths per 1,000 births in 1980 to 202 deaths per 1,000 in 1999. Even the IMF's stated goals of creating economic and employment growth have failed miserably, with a fall in real GDP during the entire decade of the 1990s and corresponding large declines in Zambian employment.
As terrible as it is, Zambia is not a lone example. The story is much the same in the rest of Africa. In Ghana, new school fees imposed as a result of structural adjustment, forced two-thirds of rural families to stop sending their children to school. In Kenya, already devastated by AIDS, new IMF-imposed medical fees resulted in a drop of 65 per cent in the number of women seeking advice about sexually transmitted diseases. In Senegal, structural adjustment during the 1990s led to an increase in poverty from 60 per cent to 80 per cent between 1994 and 2003. There was also an increase in the proportion of the population that is undernourished: from 23 per cent in 1990-92 to 25 per cent in 1998-2000.
It is worth noting the IMF and the World Bank are not themselves really responsible for these policies, they are just the servants of the 178 countries which make up their membership. But, crucially, these institutions are not at all democratic bodies. Decisions are made within the IMF and World Bank based on how much money nations contribute. On the IMF board, for instance, the G8 countries control 48 per cent of the votes, leaving only 52 per cent for the other 176 IMF members. In stark comparison, the largest African member of the IMF, South Africa, holds just 0.87 per cent of the total voting power. As a result, the policies of these institutions reflect the agendas of the rich countries that control it. This is why it is up to the G8 leaders as to whether the IMF and World Bank will grant Africa debt relief.
The crux of all this is that achieving global justice means more than just getting the G8 to “drop the debt” - and much more than simply ending African corruption. Global justice would require fundamental reform of the global economic institutions. This includes an end to disastrous neoliberal structural adjustment policies and giving poor countries a real voice in the global institutions which have so much power over them. The UK Department for International Development has already understood the damage done by structural adjustment conditions and has just removed conditionality from its entire aid program on the basis "some conditionality has promoted reforms that have made poor people worse off". The Howard Government should commit to doing the same.