Coping with Poverty in Africa

COPING WITH POVERTY IN AFRICA

by John Mclean

THE SELF INTEREST OF THE MAJOR ECONOMIC NATIONS

THE NEW BUZZWORDS - " ENLIGHTENED SELF INTEREST "

In past years it was always the African countries which were the richest in natural resources who received the most attention from the major economic countries. Interest in these counties with rich natural resources was kept high solely due to national self interest. The extremely poor African countries, those without major resources to deplete, were forgotten and abandoned. Somalia, Ethiopia, Guinea Bissau, Liberia, Burkina Faso, and Mozambique are examples of African countries left solely to their own devices.

However, things may now be changing, and it is enlightened self interest which is now the key concept during world economic forums. In March of this year, the World Economic Forum held in Davos, Switzerland, tried an experiment of a

"town-hall meeting" to find out what the top issues for the attendees were. What was amazing were the top two issues on the list. That is, fighting poverty, and equitable globalisation.

Each of these two topics received votes from the majority of the attendees.

Have we encountered a den of liberal thinkers? Not really! British Prime Minister Tony Blair's talk on Africa had a quote that it explains it clearly: "it is based on enlightened self-interest".

Bad for business?

The message from many of the business leaders at Davos is that major world problems are bad for business: poverty is bad for business and the backlash against inequitable globalisation is bad for business. Plus, major multinational firms are not likely to stop focusing on return, but social considerations are now creeping in.

In the past, international aid was designed entirely for the benefit of the donors and represented an important tool for the perpetuation of economic, political and military colonialism.

Aid - enlightened self-interest or gun-boat politics?

In many observers eyes, international aid is designed entirely for the benefit of the donors and represents an important tool for the perpetuation of economic, political and military colonialism. And often there is more in the aid available for better off countries such as Turkey and Mexico - which, unlike the countries of Africa, have the money with which to buy manufactured goods from the major economies.

The US Department of Agriculture has in the past admitted that American food aid is a means of creating a demand for imports from the US. It declared that: " Food Aid can pave the way for US commercial exports."

One of the main reasons why aid is sound commercial practice is that much of it is officially tied. In the same way that colonies were once forced to buy their manufactured goods from the country that had colonised them, today's recipients of aid must spend much of the money they receive (money that is supposed to relieve poverty and malnutrition) on irrelevant manufactured goods that are produced by the donor countries.

What is more, if they dare refuse to buy any of their manufactured goods or to sell back some scarce resource - generally, because they want to keep it for themselves or to conserve it for the future - they are immediately brought to heel by the simple expedient of threatening to cut off further aid, on which they have become increasingly dependent.

Thus, a few years ago, a WHO study revealed that only a minute fraction of commercial pharmaceutical preparations were of any real therapeutic use. Bangladesh, one of the poorest countries of the world, decided to take the study seriously and announced that it would ban all superfluous drugs. The US government immediately reacted by threatening to withhold food-aid if Bangladesh discriminated in this way against US pharmaceutical manufacturers.

The British government behaved in a similar manner with the government of India, by threatening to cut off aid if India did not go ahead with plans to buy 21 Westland helicopters at a cost of Ј60 million.

It was at the Bretton Woods Conference in 1944, held under US leadership that aid was institutionalised as the Industrial World's principal tool of economic colonialism. At that conference, 44 nations agreed to set up the key international institutions. They were: the International Monetary Fund (IMF); the World Bank (IBRD); and the General Agreement on Tariffs and Trade (GATT). These highly interconnected 'agencies' formed a single integrative structure for manipulating world trade, which until the early 70s was basically dominated by the United States of America.

The original role of the IMF was to make sure that member nations pegged their currency to the US dollar or to gold, 72 percent of world supplies of which were in the possession of the USA. This expedient would, among other things, make it difficult for Third World debtors to get out of their financial obligation to the Western Banking System by manipulating their currencies.

The World Bank's first function was to reconstruct Europe's shattered economy after World War II. Its second function was to prevent the recurrence of a 1929-style slump by systematically expanding the western economy. As a result the World Bank soon moved into the business of Third World development, its main activity for a long time being to build roads, harbours, ports etc.- in effect, to supply the infrastructure required to enable the importation of manufactured products and the export of raw materials and agricultural produce.

More recently, since the 70s, the Bank has played a leading role in financing the commercialisation of agriculture in the Third World and, in particular, the substitution of export-orientated plantations and livestock rearing schemes for traditional subsistence farming, designed to feed local people. In doing this, it has made a massive contribution to the growth of poverty and famine in Africa and south and south-east Asia. The role of GATT, the third of the institutions set up at Bretton Woods, was to liberalise trade and hence to ensure that Third World countries did not try to manufacture produce locally, which they could buy from western countries - that is, to indulge in highly frowned-upon 'import substitution'.

IMF Conditionalities

In the past, the IMF