What Africa Needs: Debt Repudiation But Not Another IMF As A Tool For Development And Economic Liberation.

Posted on Jul 05, 2022
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Africans have been sent in frenzy over the news that BRICS organization will start their own IMF Bank. BRICS is an initialization molded of Brazil, Russia, India, China and South Africa. They are per se the biggest emerging markets of the 21st century founded in 2009 at a summit held in Yekaterinburg, Russia. Formalization of the organization was initially intended to promote peace, security, development and cooperation among member states. This has greatly changed over the years due to Geopolitical interests, multilateral intrigues and corporate agendas of the member states. The evolution has thrust out in to overseeing economic developments, lending and capacity developments through Loans, AIDS and grants.

 

The evolution eventually capitulated in to the New Development Bank (NDB) formerly known as BRICS Development Bank. The aim of NDB is to support public or private projects through loans, guarantees, equity participation and other financial instruments as per the agreement signed in 2014. They shall also cooperate with international organizations and other financial entities, and provide technical assistance for projects to be supported by the Bank. The objectives of the organization have thus evolved from austere motivations to materialistic agendas of the member states.

 

Consequently,I see no contentment and pleasure in this development of the BRICS organization. The roles of organizations like World Bank (WB), International Monetary Fund (IMF), and World Trade Organization (WTO) are entrenched in webs of subterfuge. The games of Multi National organizations are just like the games of politics. This is because regardless of the change experienced; it is always the change in Opinion that they talk about. The policies never change for the fact,whether it is the democrats or Republicans, Conservatives or Liberals. They will always twist the opinion but not the policy, which never changes.

 

As of 2021 AidsData report: Chinas Bilateral lending to 165 countries was in excess of $395 Billion. Most of the heavily indebted developing countries to china includes Venezuela ($74.7B), Angola ($39.9 billion), Pakistan ($24.4B), Ethiopia ($13.7B), Sri Lanka ($10.4B), DRC ($7.42B), Zambia ($6.38B), and Cameroon ($5.57B) etc. Uganda has over 20% of its debt to china at over $1.6B. The Chinese debt Trap is coined behind infrastructural developments which has a future market Cap of $40 Trillion as per the US government forecast. A market that china seeks to dominate given its huge thirst for raw materials and Natural resources for its exponentially soaring industries, this is by controlling the producer countries through concessions in to their unilateral terms during debt renegotiation.

 

In Africa’s Rising debt 2021,Depanjan Roy Chaudhury says, "The Chinese debt aims to saddle developing countries in loans, forcing them to make strategic concessions like giving long-term access to a commercial port that may have military or economic value in exchange for debt restructuring or forgiveness". We have already seen countries lose Ports and strategic assets around the world because of the bilateral loans with China. The Hambantota Port in Sri Lanka has been a victim to this vice. A loot that sets precedent as China is a protagonist concerning BRICS initiative with actually the biggest dividends in NDB. Take, why is fishing becoming a problem in Ugandan lakes? In the name of undersized nets, poor gears and engines. Fishing in Uganda’s fresh water seems to be a cat and mouse game aimed at monopolizing the sector, if so then to who? One day the truth will come out, I leave that to rest.

 

We should ask tentative questions to the new Honey trap being set up by BRICS in the Multilateral Loans and AIDS they will be providing. My fear from past or current Multilateral and Bilateral loans leaves me perforated and hesitant. This is because while we seem buoyant on the same water, we have staked our lives on different boats. They have nuclear powered Sea cruisers, battle ships, Aircraft carriers and submarines while we are in canoes, dinghy, dory, kayak and the parisal. The imbalances we face at the behest of these lending are full of exploitative and subjugated preconditions. They all drive for the same Structural Adjustment Policies (SAP) and Protectionism Policies promoted by the IMF, WB and WTO, which is already Severe Persistent Asthma on Africa.

 

We have already experienced with an iron fist the effects of both The Multilateral Loans from IMF, WB and The Bilateral loans from China, USA, UK among others. One thing for sure is they are all bound by Neo-liberal policies, let us not allow the braggadocios and displays they preach hoodwink us in to another debt trap. Regardless of the spectacle being displayed, it is more abracadabra than the gospel they seek to achieve in the long run. This is nothing short of super imposing a dominant control over Africa in the name of globalization and internationalism. Let us not fall prey to three vampire bats at once; we are already in a state of aplastic anaemia, let us not add a hemo lytic anemia to it.

 

Some of the strategic concessions and structural adjustments we are forced to cede and adopt relates to Fiscal discipline, balanced budget, Low inflation, Policies of Privatization, Deregulation, Liberalization and Reduction of trade barriers. Any failure or deviation to honor the conditions and strict policies leads to market censures and penalties. Take a crash in their export prices, results in to interests rate increment. This consequently leads to more unemployment and low domestic savings. They are policies enshrined to make the rich richer and poor poorer. The persistent increase in debt further reduces government expenditure on its citizens.

 

The concessions we make when heavily indebted makes us bite in to unwanted control of our economic policies in defiance of prior knowledge that the compromise sucks. They prick further in to controlling policies of taxation and ownership of industries with huge Protectionism towards their own indigenous companies in regards to foreign investments to Africa. Have you ever asked yourself why government keeps introducing new unnecessary taxes annually like OTT, Bodaboda Taxes etc. in Uganda? Why it is very easy for foreign investors to get free land and Tax exemptions compared to indigenous companies? Why they are allowed repatriate all the profits they make in the midst of persistent out cry? Government dances to the tune set and say we are in a free market economy. The truth is always hidden in orifice of tributaries after tributaries; no one will ever admit that the base problem is debt instigated by the Multilateral and bilateral entities to corrupt African leaders.

 

Africans say in lack of deceit that, "A butcher will never bother about the justice of the cow". As much as they don't care about the effects of these policies, we should never allow ourselves to be fooled. What the developing world needs is not another IMF, but a complete redress and repudiation of the current debt. It is not a matter of sympathy, empathy, pity or commiseration but rather Justice, equity and return of loot Africa has witnessed over years in the name of debt and AID enshrined with Neo liberal policies, Protectionism and felonious Structural Adjustment Policies perpetuated by lenders at the detriment of Rich but poor Africans. They preach water but drink wine, their economy has grown and survived on Protectionism Policies like subsidies, tariffs, import quotas and other handicaps placed on import of foreign products like standards.

 

An English dictum says "Fool me once, shame on you. Fool me twice, shame on me". We don't have to be fooled twice again and let us not forget the pomp with which the Bretton woods conference came up with towards the recovery of effects from World War 2 in 1944 and how they evolved in to the IMF and WB of today. The raison d'être is always hidden behind beautiful objectives and policies like promotion of peace, security, development and cooperation. Never must we forget how they hid in chocolate coatings the reeking bitter truth about the Structural Adjustment Policies initiated in the 1980s by the IMF and World Bank. Sadly Uganda was among the first countries to meet the set conditions and SAPs at that time, no wonder we are among the most heavily indebted countries in regard to GDP ratio.

 

Another IMF will lead to profligate lending which is bound to send them [IMF, NDB, and World Bank] in to a frenzy of competitive lending. It will be about who has lent the most as long as there is a commitment to pay without understanding the costs involved and ability to pay back. I can commit to pay money borrowed to me with complete disregard of my ability to pay back. This will jack up the already excessive money owed by the third world countries which is hitherto way too much than they can possibly even service in principle and interests accrued. We are at a point whereby if we take all the money we have right now as Africa to pay existing debt, they will still be demanding us threefold.

 

A new IMF will add humus and water to the current existing debt consequently sowing the seeds of more crisis, under developments, reduced domestic savings, unemployment and wars in developing countries. Most failed states in history like Somalia, Liberia, DRC, Sierra Leone, Yemen have had enormous debt as the base problem. A further bulge in debt will lead to the complete subjugation of the great, richly endowed and beautiful Mosaic called Africa. Imagine what will happen if because of competition they start to lend at negative interests or zero interests as it happened in the 1970s. Then all of a sudden a global crisis hits the world due to adverse geo political conflicts or change. The worst of what happened due to debt increase in Latin American countries like Argentina, Brazil, Mexico, Venezuela, Nicaragua, Bolivia, Ecuador, Peru etcetera awaits Africa. Diaz Alejandro in his book Latin American Debt: I Don't Think We are in Kansas Anymore (1984) coined the famous word 'La Década Perdida' (The lost decade ) the period from 1972 to 1982 and he says "Latin American countries reached a point where their foreign debt exceeded their earning power, and they were not able to repay it". Argentina witnessed a record increase in debt, growing from us$ 9.7 billion in 1976 to us$ 45 billion in 1983(Cooney, 2007).

 

The debt time bomb exploded following the 1978 oil price crash. The crash was instigated after the disposition of Shah Muhammad Reza Pahlavi following the Iranian Revolution of 1978 thus ending the Pahlavi Dynasty. This created the second oil crash in about 10 years after the first one of 1973 which happened when Arab members of the Organization of Petroleum Exporting Countries (OPEC) imposed an embargo against the United States following the US decision to support Israel during the Yom Kippur war. What followed was default in servicing debts due to the stretched ability of the borrowing states to service debts. In developed countries, the hike caused an increase in prices of consumer goods consequently inflation. To curb the inflation, developed countries like USA and UK raised interest rates leading to an immeasurable global recession. This caused the markets for developing countries to shrink and export earnings dropped so does the ability to pay back the huge debts. Interest rates for money already borrowed rose from Negative, Zero and 1% to 13.5%. Increase in interests also made debt of countries like Argentina to rise exponentially. Such increment affected projects, which were funded at friendly interest rates thus ballooning the final costs involved.

 

What Africa should push for and needs are what the late Col. Muammar Muhammad Abu Minyar al-Gaddafi was pushing for rather than dig its own La Década Perdida:

 

1. Start its own Development Bank made up of shares from African states that gives loans at zero interest rates without preconditions.

2. Develop a Central Gold reserve for Africa to avoid the shocks incurred when they (looters) reintroduce the gold standard as they have always done in history.

3. Conceptualize and actualize the idea of a single currency or regional currencies say for the East African Community (EAC), South African Development Community (SADC), Economic Community of West African States(ECOWAS), Arab Maghreb Union(AMU).

4. Where need be tie the values of these different regional or continental currencies to the gold standard in times of crisis or recession.

 

In the Book How Africa developed Europe by Nkwazi Nkuzi Mhango he says, "Africa needs Justice: Natural and restorative Justice as opposed to criminal or retributive justice". We don't need another IMF in Africa; we need a change in Policy and the current debts to be repudiated completely because they were attained through bad policies and conditions at the benefit of the lender. This is the only redress we need, not another IMF Again. We don't want African scholars to write books in the future like: How Africa developed BRICS countries; How China and India underdeveloped Africa in the future. 'Once beaten, twice shy'.

 

By

Eng. JAKECH BORIS RWOTHOMIO

jakech.boris@gmail.com

 

 

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