THE IMF, WORLD HUNGER AND POVERTY
A HEATED argument has been taking place in the country during the last two to three weeks between Zambians who believe that we should rush to the IMF to borrow money at that institution’s horrendous conditions and those that think that we must find our own means of economic survival.
I followed the arguments very closely and I must say that I found some of the statements to be very crude and childish.
The arguments took on a political nature and in the minds of the Zambians, the protagonists were merely acting for or against the idea without referring to any successes or failure of the International Monetary Fund; they were either against the PF government or were supporters of the PF.
The history and record of the IMF is very well known and there are massive documents of actual events and intellectual arguments concerning the institution.
These invents and documents
be referred to so that people can see that the arguments for and against are not being made in a vacuum but from factual history.
“The International Monetary Fund (IMF) is an organisation of 189 countries, working to foster global monetary cooperation, secure financial stability, facilitate international trade, promote high employment and sustainable economic growth, and reduce poverty around the world.
The IMF’s primary purpose is to ensure the stability of the international monetary system - the system of exchange rates and international payments that enables countries (and their citizens) to transact with each other. The Fund’s mandate was updated in 2012 to include all macroeconomic and financial sector issues that bear on global stability.” (Wikipedia).
These are the wonderful objectives for which the IMF was created soon after the Second World War. Unfortunately, the 70-year history of the organisation has been full of pain and economic colonialism. Criticism of the IMF has come from intellectuals from many disciplines, including economists.
One report which summed up the poor history of IMF states as follows:
“The IMF is undemocratic, infringes on the sovereignty of less developed countries and is the capitalist centre’s instrument in extracting profits from the periphery or in manipulating a financial low intensity conflict against the south.
The fund’s neoliberal adjustment policies are economically, socially and politically unsustainable. They are inappropriate for problems typical of Third World countries and hurt the poor and vulnerable groups and are broadly resisted by politically important political groups.”
The authors of this damning report’s reference to the “south” is in relation to what has been happening in the world financial sector. The rich and developed countries in the Northern Hemisphere have always had the money. They led to poor Third World countries which are mostly found below the Tropic of Cancer and the Equator.
When the rich Northern Hemisphere countries feel that the southern debtors will not be able to pay back the money, they ask the IMF to lend more money to these Third World countries so that the loans obtained from the north can be paid back.
In exchange for the loans to pay back loans owing to big brother in the north, the Third World countries are forced to surrender their sovereignty and implement conditions which lead to loss of employment, higher cost of living and withdrawal of any subsidies on important commodities such as staple foods and petroleum products.
In other words, the poor people of the Third World are forced to sacrifice so that the rich people of the north can reap more profits. Every country in the world that has borrowed money from the IMF has ended up with riots or protests. This includes Northern Hemisphere countries as is the recent example of Greece.
The austerity measures that the IMF has been imposing on second and Third World countries with the support of the G8 countries has wreaked havoc among the poorest of the poor. Zambia suffered the same fate in the 1990s when we experienced food riots in the urban areas of Lusaka and the Copperbelt.
In the Middle East, the IMF reforms faced resistance from the people leading to food riots and in some cases regime change. In 1977 Egypt experienced what became to be known as the Egyptian Bread Riots. The country suffered similar protests in 1984 when thousands in the Kfar el-Dewar industrial town near Alexandria rioted and police reported one person killed and 13 people seriously wounded.
Food riots hit Jordan in 1989 and 1996, Morocco experienced food riots in 1937, 1981 and 1984 and Lebanon faced similar reaction to IMF austerity measures in 1988.
Tunisia has been facing protests across the country at price and tax rises since the anniversary of the bread riots which occurred in 1984 under the Habib Bourguiba regime. That uprising was triggered by an intervention into the country’s affairs by international financial institutions and the subsequent shock to the livelihoods of Tunisians especially an increase in the bread and grain prices following the adoption of the IMF plan.
Back home in Africa, a Nigerian academic and senator of that country’s parliament has put it very plainly. “Öne of the tragedies in Africa is that we have very little regard for history, we copy a bit too quickly and too wrongly from elsewhere. In 1986 we had this thing called structural adjustment programme dumped on Africa and everything was destroyed.”
This is the poor history of the IMF. Why therefore should Africa sit back and wait for IMF bailouts every ten or fifteen years.
Why can’t we learn from China and India? African academics including economists must start thinking about reforms that will wean our continent from dependence on Northern Hemisphere financial institutions.
President Paul Kagame of Rwanda has suggested that Africa must print its own money for African development. These are ideas which must be explored by our economists. Europe started its own currency called the Euro not too long ago. America and Europe will be printing money as part of their economic recovery from the Covid-19 pandemic.
I leave it up to the Zambians to determine whether those calling for the country to go to IMF mean well or are mere tame disciples of western institutions.
In my view, the IMF has failed to reduce world hunger and poverty for 70 years. The world, particularly Africa, with all its resources must look for better alternatives.
In the interim, do we have any other choice?