AFRICA MUST UNITE AND FIGHT FOR ECONOMIC FREEDOM

“THE truth is that we are not yet free; we have merely achieved the freedom to be free, the right not to be oppressed,” Nelson Mandela said after South Africa gained its independence.

Nelson Mandela knew the difference between political and economic freedom. Real freedom is economic freedom.

Last month, it was widely reported that Ghana had committed to managing its debt without the assistance from the International Monetary Fund (IMF). Ghana Finance Minister Ken Ofori-Atta was said to have expressed confidence that his Government measures were moving the Country in the right direction.

This bold decision by Ghana could not have come at a right time as Africa just recently commemorated its Freedom day.

Ghana, the first African Country to gain its independence in 1957 is once again leading the liberation struggle - this time around for economic freedom of the continent by refusing to get assistance from the International Monetary Fund (IMF).

There is no doubt about the seriousness of Africa’s economic crisis. The continent entered a technical recession after being terribly hit by the Covid-19 pandemic which affected the continent’s trade.

It is a fact that many African Countries’ economies are limping and situations are getting more desperate and there are calls for desperate measures. However, the idea to turn to the IMF is a bad idea and must be dismissed and there are many reasons why I think this is the case.

WHY IMF IS BAD FOR AFRICA

First, historical evidence suggests that IMF administered rescue programmes are actually a recipe for disaster. They worsen rather than rescue the situation.

Second, to suggest that Africa’s problems are financial in nature is a dangerous misdiagnosis. It will distract Governments from the critical issues it needs to address which have little to do with the finances.

And lastly, one of the main driving factors of the current economic predicament is a loss of investor confidence in African Countries. This is linked to other factors like policy uncertainties, political instabilities, mismanagement of public resources and rampant corruption.

The IMF bailout packages can’t address these problems African Countries face because they require homemade solutions. I strongly believe that the solutions to the continent’s economic crisis are within. Africa needs internal discipline to address them – not an external force.

IMF BAD RECORD

When it comes to dealing with African Countries - the IMF does not have a good historical record. A view of the many African countries which have subjected themselves to the IMF hardly inspires any confidence. Instead of bailing out countries, the IMF has created a list of countries suffering from debt dependency.

The shocking IMF statistics show that of all the Countries across the world that they have bailed out;

11 have gone on to rely on IMF aid for at least 30 years

32 countries had been borrowers for between 20 and 29 years, and

41 countries have been using IMF credit for between 10 and 19 years.

The statistics above clearly show that it’s almost impossible to revive an economy through the IMF debt programmes. Debt dependency, especially from the IMF, undermines a Country’s sovereignty and integrity of domestic policy formulation. Moreover, their debt conditions usually restrict pro-growth economic policies therefore making it more difficult for countries to come out of recession.

IMF’s poor record is partly influenced by the policy choices that it imposes on countries it funds. The IMF policy choices for developing countries, known as a structural adjustment programme, have been widely condemned. The main reason is that they insist on austerity measures which include; cutting government borrowing and spending, lowering taxes and import tariffs, raising interest rates and allowing failing firms to go bankrupt. These are normally accompanied by a call to privatise state owned enterprises and to deregulate key industries.

The IMF’s austerity measures usually cause great suffering, poorer standards of living, higher unemployment as well as corporate failures. The current technical recession African Countries are facing would be magnified into a full-blown crisis, leading to even greater shrinking of investment.

CONCLUSION

Many African Countries are aware of the dangers of taking IMF money because it undermines their sovereignty. It would be politically naive and economically counterproductive for any African Country to give itself to the IMF.

Ghana, the first African Country to gain its political freedom, has demonstrated political will to solve its economic crisis without the assistance of the IMF. Ghana is about to gain its economic freedom - real economic freedom.

In fighting for economic freedom, Africa must unite and policymakers must turn their minds to real problems - this can be done devoid of IMF bailout packages.