By MARVELLOUS SAKALA
LATE former American President and Statesman John Adams once famously said “There are two ways to conquer and enslave a country. One is by the sword. Another is by debt.”
John Adams’s statement is staggeringly backed by a Bibilcal verse found in the book of Proverbs 22:7, “The rich rules over the poor and the borrower is a slave of the lender.”
Figuratively speaking, debt is the new form of colonialism or slavery – at least going by the given quotations from John Adams and the wisest man King Solomon who wrote the book of Proverbs.
Before I digress from the topic which – is the International Monetary Fund the solution to Africa’s problems? I would be doing a disservice if I do not highlight a brief background of the IMF and who they really are.
Established in 1944 in the aftermath of the 1930’s Great Depression by 44 founding countries with a purpose of building a framework for international economic cooperation, today the IMF’s membership has increased to 190 countries with staff drawn from 150 nations.
The functions of this organisation are promoting financial stability and monetary cooperation as well as giving debt to developing countries.
It is safe to say that the IMF is a lender of last resort because most African countries run to them after they have mismanaged their economies and have exhausted all their lending options.
The United States of America (USA) is the largest contributor to the IMF and it has 17 percent voting power, this means that they have the largest say on who gets and who does not get an IMF bailout package.
Back to the topic; It is always very important to learn from history because as Bob Marley sang in his song “‘Buffalo Soldier’ if you know your history then you know where you are coming from.” History helps us not only know where we are coming from but also where we are going.
During the 1980s and 1990s debt crisis, many African countries turned to the IMF for financial bailouts. However, these bailouts came with strict conditions in the name of “structural adjustments.”
The poor and desperate African countries had to open their economies to international trade, privatise their state-owned industries and companies, liberalise their currencies and cut costs in exchange for loans.
Simply put, African countries were forced to incorporate neo-liberal programmes and policies in their economic programmes.
The IMF’s structural adjustment programmes did not really address Africa’s economic woes, rather they addressed the interests of multi international corporations and investors and encouraged them to exploit the African market.
These adjustments just made things worse for African countries by making them more dependent on the Western superpowers.
For instance, one common condition the African countries were given by the IMF was to be export-oriented so that they could earn more forex and pay the debt.
What ended up happening as a result of this condition was that when all African countries started exporting, almost the same trading commodities, this resulted in prices dropping because high supply could not correspond with the demand.
The western superpowers who were the buyers ended up benefitting from buying African commodities at low prices and consequently African countries were forced to get more debt because they were earning less than before.
The effects of the IMF structural adjustment on the poor African countries were absolutely devastating. African countries ended up paying more on debt than on public health, education and their economies.
Some countries lost their mines, industries and companies due to privatisation. The effects of the IMF’s structural adjustments made poor African countries more dependent on the western superpowers.
To sum it all up and find the answer to the question whether the IMF is the solution to African problems I consulted our African history with the IMF and it bluntly stated that they have never been our solution.
I put it this way because African countries have always ended up losing their policy sovereignty and ability to make their own decisions whenever they have dealt with the IMF.
Elected leaders stop being answerable to the people who voted for them instead they become answerable to the IMF. Putting it in layman’s terms, I would say the IMF is not Africa’s best friend.
It’s like this illustration where X decides to borrow a K1, 000 from his neighbour Y to sort out some financial problems he is facing.
Y before agreeing to lend X the money gives the condition that he must be allowed to manage X’s home because he suspects X is not a responsible father. X agrees to Y’s condition because he is desperate, Y then instructs X to sell all his household goods to Y’s friend Z so that he can manage to pay back the K1, 000 he borrowed.
In the end of it all, X loses his household goods to Z who happens to be Y’s best friend, as a result X and his family end up impoverished. Would you advise X to go back to Y next time he is in a financial crisis?
To fully understand how the IMF operates – replace them with Y in the illustration and you will have your own answer to the question whether the IMF is the solution to Africa’s problem.
