Selina Ahmed

Due to a conjunction of both domestic policy failures and external actors most African state, by the early 1980’s were experiencing severe economic difficulties. Difficulties marked by balance of payments deficits, growing budget deficits, growing external indebtedness and in many cases very high rates of inflation resulting in severe decline in living standards. As a result many of the African states from the early 1980’s onwards signed up for IMF stabilization programs and then subsequently singed up for the World Bank structural adjustment programs (STABS &SAPS). Although one can distinguish between these two programs their over all aim is to adjust or re-adjust the structure of an economy. In order to restore balance of payments and encourage sustainable growth certain measures are required to be adopted and or adhered to i.e., the rising of export producer prices, the cutting of government expenditures, the introduction of user fees, the liberalization of economic activity and privatisation.

The above programs (which have ultimately failed) and indeed Western involvement in African countries are highly contested by academics and political entrepreneurs alike. In agreeance with Susan George many would state that the IMF and the World Bank “not only maintain as participants in the world markets but also, through adjustment programmes, force them to increase that participation, even if this is demonstrably against the interest of the people concerned.” The above programmes have also been interpreted by many as economic domination, as new from of imperialism. Imperialism as defined by Lenin, which implies Western political control over raw materials and consumer markets of other countries due to economic necessity. The extent to which one believes this to be true or the extent to which one believes the multilateral organisations such as the IMF and the World Bank (IBRD) to be responsible for Africa’s economic failure, as opposed to LDC governments, very much depends on one’s perceptions of the politics of balance of power and of the relationship between these institutions and the states of Africa. Again this is an issue, which has proven to be highly contentious and has caused a lot of divisions amongst academics and politicians. Contrary to the title I will argue that far from being convenient scapegoats, the multilateral organisations, such as the IMF and the World Bank are used as tools by the industrialised world to ensure a favourable climate. It has been the lack of responsibility on the part of the institute in question that has to a large extent caused Africa’s economic failure.

Writing on the IMF, Susan George asserts “the Fund is highly visible because it is architect of the ‘adjustment’ programmes that create serious hardships for low income groups. But it cannot be held responsible for the circumstances that brought heavily indebted countries to its doorsteps in the first place”. Thus for Susan George what lies behind these institutions are the very affluent OECD countries, which exercise a great deal of power or leverage regarding the decision making process of the IMF and the World Bank. Based on a system of voting quotas relative to contribution in the case of the IMF and voting rights according to share holdings with the IBRD, both organisations are in effect controlled by the industrialised countries. In short, they are little more than agents of the industrialised world especially as 67.5 percent of the votes with the IMF are held by 18 industrial countries, 43 African countries total 5.2percent of the votes and 80 other less development countries come to 27.3 percent of the votes. A similar situation is found in the case of the World Bank, where the industrial countries hold 67.1%, 4.7% by the African countries and eighty other countries hold 28.2%. Hence “it is clear from the voting structure of the IMF and World Bank that these institutes are in control of the industrialised countries. This gives these countries the ability to access the funds contingent upon such policies as they are see fit to impose”.

However this is not the case for Jeffries who argues that contrary to the popular belief there are important differences between the role of the World Bank and the IMF. The World Bank must not be seen in the same light as the IMF as it does enjoy a considerable degree of institutional autonomy. Even though the voting strength within the World Bank’s formal political structure is determined by size of each countries capital subscriptions, its policy in practice is determined by the president of the Bank (who just happened to an American). In addition, continues Jeffries, most of the Bank’s loans do not come from capital subscriptions rather their funds are raised from selling its own bonds on world financial markets. Jeffries also emphasises the shifts in World Bank policies after having learned from its experiences. It is the case that the World Bank has changed course and retreated from its earlier dogmatic stance to a much more pragmatic one. World Bank officials based in Tanzania, Zimbabwe and Uganda do actually recommend quite different policies taking into consideration differences in local circumstances. Overall, Jeffries states the World Bank must not be seen as working in par with the IMF as it has been the IMF which has in certain periods of time inflicted server hardship with little or no consideration given to future growth for development and which has above all hindered the World Banks attempts to engender adjustment with growth.

The above distinction as presented by Jeffries is useful and indeed acknowledged by Susan George and Green. However, George maintains, “the overall vision that guides its practice cannot seem to transcend the narrowest of economic orthodoxies serving a smaller fraction of transactional elite interest world wide”. In support James O’Connor states that “the international capital market is highly centralized and domination by the agencies of the main imperialist powers – the IMF and the World Bank.” It is far from clear the extent to which the World Bank is truly a transnational institution working in the interest of African countries and implementing programs that take into account the wishes of Third World governments and indeed local factors. As Decalo states “many African states are forced to implement structural adjustment programmes…. and to democratise….as a condition for aid from the World Bank and IMF.” One could ask here why the World Bank is siding with the IMF and insisting upon the implementation of these policies knowing very well that to implement structural adjustment policies, a vastly stronger state and indeed a stronger society is required.

Furthermore the short-term effects of these policies are often detrimental to large sections of the population and in a democratic system governments may find themselves caught in a pincer movement between external pressure and domestic protest. What is not recognized here however is the extent to which these measures limit the choice and flexibility of African governments regarding their economic policies. Overall and despite Jeffries comments the problem of conditionality clearly shows that the programmes implemented usually do not take into account the local factors and have as a result failed due to the neglect of specific problems of individual economies. In fact there is little disagreement within the literature on the African debt crises that the programmes implemented by the multilateral institutions have not been very successful. The World Bank itself admitted in its 1987 annual review that 75% of African agricultural projects had been failures.

The real difference between evaluations of the collapse of African economies lies in the question of responsibility. Douglas Rimmer certainly agrees that “the external debt of the countries of tropical Africa is large and oppressive”, he adds that it is largely the result of commercial and non-commercial borrowing. Although Rimmer notes that tropical Africa’s primary product exports decreased by one half between 1970 and 1983, he sees the crises primarily as a product of African government mismanagement”, it would have been helpful if African governments had accumulated external assets during the relatively prosperous 1970’s and drawn on those assets and borrowed abroad during the 1980’s. In fact, they borrowed heavily in the 1970’s and, for want of credit worthiness, they could borrow little in the 1980’s save from the multilateral agencies and aid donors”. Hence Rimmer finds it unjust to blame the IMF and the World bank for political failures committed by African leaders. He also points out that indebted governments are quick to identify the donors as the culprits. Allegations that the Bretton Woods organizations are part of an international conspiracy within the capitalist countries to recolonise and exploit Africa for their own expediency are dismissed by Rimmer; “tropical Africa is of far too little economic importance for outside powers to want to recolonise it, or even much to exploit it.” According to Rimmer, responsibility for the African demise first and foremost must be found with the debtors themselves.

Part of the blame for economic failure must of course be accorded to LDC governments, as much of the leadership since independence has been incompetent and predatory. Thus Rimmer is correct in highlighting the domestic factors. Government policies and attitudes could go a long away in explaining the differences in SAPS results between Kenya and Ghana for example. Kenya’s low level of success and resistance toward structural adjustments policies mainly stems from political and self-image considerations rather than for the defence and interest of the masses of the populations. President Moi’s refusal to implement reform of the maize marketing system is basically due to the fact that the current system is enriching a small group large scale maize producers including the President himself and his surrounding cronies at the expense of smaller producers and producers of other agricultural products. Ghana under Rawling on the other hand had become, together with Uganda, African’s relatively few structural adjustment success stories. The success of SAPS in Ghana is largely due to the purposive and relatively incorrupt Rawlings regime, which managed to combine repression with popularity to deter outright opposition in order to carry out the reform programme until their benefits were evident.

Thus a great deal can be said for non-predatory in the long term, rather than self-enrichment or short term fixes. Despite this however one could still argue against Rimmer and his idea that responsibility must first and foremost go to the debtors themselves and ask why the World Bank and IMF continue to support governments that are obviously incompetent and predatory! Acknowledging the fact that Africa’s problems are largely a result of incompetent or predatory leadership, James Bovard argues “instead of spurring reform, most ‘aid’ had simply allowed governments to perpetuate their mistakes.” Using Zambia as an example he quotes IMF official Blaine Harden; “it is fair to say that what we have done is to allow Zambia to maintain a standard of living for its civil servants (whose payroll amounts to 20% of the country’s gross domestic product) which is totally out of synch with the rest of the economy.”

Thus, it would appear that despite proclamation of economic policies towards development, the World Bank and the IMF in many instances seem to pursue the exact opposite. Writing on the World Bank and the IMF as an international government Bureau, James Burnham, a former U.S. executive directors of the bank claims that “the major resource providers-particularly those elements within the governments for foreign relations-also see the bank, and the other multilateral development institutions as valuable instruments for rewarding friendly or useful governments or for disciplining politically wayward countries...economic performance, recent or prospective, can become a secondary consideration.” Hence the image of multilateral organisation as essentially political tools comes back into perspective. The question whether the IMF and the World bank are neutral organizations, who only worship at the alter of pragmatic economics, as former Bank President William Clausen pointed out or whether they are actually directed and led by political decisions within donor countries still stands at the centre of the debate.