Poverty in Africa, the unvoiced failures of the World Bank

15 April by Salaheddine Lemaizi

Siris - Flickr cc

A recent report from the World Bank World Bank
WB
The World Bank was founded as part of the new international monetary system set up at Bretton Woods in 1944. Its capital is provided by member states’ contributions and loans on the international money markets. It financed public and private projects in Third World and East European countries.

It consists of several closely associated institutions, among which :

1. The International Bank for Reconstruction and Development (IBRD, 180 members in 1997), which provides loans in productive sectors such as farming or energy ;

2. The International Development Association (IDA, 159 members in 1997), which provides less advanced countries with long-term loans (35-40 years) at very low interest (1%) ;

3. The International Finance Corporation (IFC), which provides both loan and equity finance for business ventures in developing countries.

As Third World Debt gets worse, the World Bank (along with the IMF) tends to adopt a macro-economic perspective. For instance, it enforces adjustment policies that are intended to balance heavily indebted countries’ payments. The World Bank advises those countries that have to undergo the IMF’s therapy on such matters as how to reduce budget deficits, round up savings, enduce foreign investors to settle within their borders, or free prices and exchange rates.

http://worldbank.org
tells us that the number of Africans living in extreme poverty has considerably increased since 1990, rising from 280 million people living on less than $1.25 per day in 1990, to 330 million in 2012. For the standard-bearer of neoliberal ideology in the southern countries this is due to two factors: demography and statistics. ”...major poverty challenges remain, especially in the light of the region’s rapid population growth.” the report says.

The authors of “Poverty in a Rising Africa” |1| also put this statistical increase down to insufficient data concerning Sub-Saharan Africa. Maybe, but the World Bank World Bank
WB
The World Bank was founded as part of the new international monetary system set up at Bretton Woods in 1944. Its capital is provided by member states’ contributions and loans on the international money markets. It financed public and private projects in Third World and East European countries.

It consists of several closely associated institutions, among which :

1. The International Bank for Reconstruction and Development (IBRD, 180 members in 1997), which provides loans in productive sectors such as farming or energy ;

2. The International Development Association (IDA, 159 members in 1997), which provides less advanced countries with long-term loans (35-40 years) at very low interest (1%) ;

3. The International Finance Corporation (IFC), which provides both loan and equity finance for business ventures in developing countries.

As Third World Debt gets worse, the World Bank (along with the IMF) tends to adopt a macro-economic perspective. For instance, it enforces adjustment policies that are intended to balance heavily indebted countries’ payments. The World Bank advises those countries that have to undergo the IMF’s therapy on such matters as how to reduce budget deficits, round up savings, enduce foreign investors to settle within their borders, or free prices and exchange rates.

http://worldbank.org
omits to mention a ’detail’: the increase in the number of people living in extreme poverty and the persistence of pronounced inequalities on the African continent are the direct result of the poverty reduction policies that the World Bank has been recommending since the 1990s. Since that time, neoliberal structural adjustment Structural Adjustment Economic policies imposed by the IMF in exchange of new loans or the rescheduling of old loans.

Structural Adjustments policies were enforced in the early 1980 to qualify countries for new loans or for debt rescheduling by the IMF and the World Bank. The requested kind of adjustment aims at ensuring that the country can again service its external debt. Structural adjustment usually combines the following elements : devaluation of the national currency (in order to bring down the prices of exported goods and attract strong currencies), rise in interest rates (in order to attract international capital), reduction of public expenditure (’streamlining’ of public services staff, reduction of budgets devoted to education and the health sector, etc.), massive privatisations, reduction of public subsidies to some companies or products, freezing of salaries (to avoid inflation as a consequence of deflation). These SAPs have not only substantially contributed to higher and higher levels of indebtedness in the affected countries ; they have simultaneously led to higher prices (because of a high VAT rate and of the free market prices) and to a dramatic fall in the income of local populations (as a consequence of rising unemployment and of the dismantling of public services, among other factors).

IMF : http://www.worldbank.org/
policies have taken a heavy toll on African populations.


Say ’thank you’ to the World Bank

Certainly, the percentage of Africans in poverty has dropped from 56% in 1990 to 43% 2012. Adult literacy has gained 4% and gender differences are reduced. Life expectancy has risen by six years and the prevalence of chronic malnutrition of children under five years old has diminished by 6% to around 39%. Should these improvements in the living conditions in Africa be applauded?

To think that the struggle against poverty in Africa is gaining ground is illusionary. The rate of poverty eradication on the African continent and in its three sub-regions remains very slow. The failure to achieve the Millennium Development Goals (MDGs) can be largely explained by the shortcomings in reaching the goals set for Sub-Saharan Africa.

A joint report by the UNDP UNDP
United Nations Development Programme
The UNDP, founded in 1965 and based in New York, is the UN’s main agency of technical assistance. It helps the DC, without any political restrictions, to set up basic administrative and technical services, trains managerial staff, tries to respond to some of the essential needs of populations, takes the initiative in regional co-operation programmes and co-ordinates, theoretically at least, the local activities of all the UN operations. The UNDP generally relies on Western expertise and techniques, but a third of its contingent of experts come from the Third World. The UNDP publishes an annual Human Development Report which, among other things, classifies countries by their Human Development Rating (HDR).

http://undp.org
, the ADB, and the Economic commission for Africa and the African Union, confirms that: “Africa’s progress in reducing poverty has been slow compared to that of developing regions as a whole. Africa excluding North Africa only reduced poverty levels from 56.5 per cent in 1990 to 48.4 per cent in 2010 (a 8 per cent reduction), which is well below the MDG target of 28.25 per cent by 2015.” |2| The following graph, from the same report shows the situation. |3|

Not forgetting that, as we have indicated above, the total number of Africans living in poverty continues to increase significantly.


Repay the debt or wipe-out poverty?

The so called improvements in African economies have in no way changed Africans’ lives. As the report says, “growth has neither been robust nor sufficient enough to sustain poverty reduction efforts. Many countries, particularly in Africa excluding North Africa, are dependent on primary commodities Commodities The goods exchanged on the commodities market, traditionally raw materials such as metals and fuels, and cereals. and susceptible to shocks that tend to disrupt development gains.”

Yet, over the 2000s economic growth averaged 5%. The worldwide rise in commodity prices improved economic performance figures, without producing significant improvements in African living conditions. Only the share Share A unit of ownership interest in a corporation or financial asset, representing one part of the total capital stock. Its owner (a shareholder) is entitled to receive an equal distribution of any profits distributed (a dividend) and to attend shareholder meetings. of added-value grabbed by Capital increased, while that distributed among labour has not changed. What’s more, the World Bank report mentioned above also notes that “we observe an increase in the number of very rich people”. The billionaires, Dangote, Rupert, Weise, Mohammed VI |4| and Sawaris have climbed the Forbes list ladder. |5|

Meanwhile, seven of the ten countries where inequality is most extreme are in Africa and mainly in Southern Africa. The World Bank twice admits failure “poverty reduction has been slowest in fragile countries” and “the inhabitants of countries rich in natural resources have the least favourable indicators of human development”!

In these long known circumstances, a question arises: why has the World Bank, that has supposedly been struggling against poverty in Africa for two decades, failed so lamentably? (The World bank itself claims, since its supposed exit from structural adjustment, to be working towards “a World without poverty”.) We can reply to this question by saying that the World Bank’s choices (or rather, their diktats), directly linked to their preferred financial models for development, which are based on indebtedness, are in fact the cause of the poverty.

Figures supporting this observation, which have been omitted by the World Bank report, are available in CADTM’s brochure ’Debt figures 2015’. |6| In Sub-Saharan African countries indebtedness has increased 165 fold between 1970 and 2012, rising from $2 billion to $331 billion. Over the same period 30 Sub-Saharan countries have repaid the debt they owed in 1970 217 fold.

As the political charter of the CADTM says, “In most countries of the South, the amount spent each year in repayment of public debt comes to more than that spent on education, health, rural development and job creation all together”. Poverty is not to be measured in revenues and consumed calorie levels alone, access to basic public services, drinking water and sanitation, electricity, health cover, education, transport, which are today under-funded and widely privatized services, are also important indicators. By giving the priority to debt repayment and to “growth”, the World Bank and the leaders of the African countries turn away from any objective of eradication of poverty on the continent. The peoples resist and fight for alternative choices based on abolition of the debt, redistribution of wealth and social justice.


Translated by Mike Krowlikowski


Footnotes

|1| https://openknowledge.worldbank.org...

|2| http://www.uneca.org/sites/default/...

|3| “The intensity of poverty, measured by the poverty gap index, estimates the average poverty gap in a population as a proportion of a poverty line; it estimates the depth of poverty by considering how far on average, the poor are from the poverty line.” (Source MDG report 2015)

|4| Africa’s 50 Richest, Forbes for Morocco see « MarocAfric » ou l’investissement marocain en Afrique subsaharienne (in French)

|5| Africa’s 50 Richest, Forbes

|6| http://cadtm.org/World-Debt-Figures-2015,273

Author

Salaheddine Lemaizi

membre d’ATTAC CADTM Maroc et Comité des études et de plaidoyer du CADTM Afrique.


Translation(s)

CADTM

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