Global Policy Forum

By James Mutethia

No other region has suffered during this period of globalisation as Africa has. African countries now face all the usual problems associated with this economic phenomenon. Problems range from heavy debts to unfavourable trade and all the bad conditions imposed by the International Monetary Fund (IMF) and the World Bank. African people from South Africa to Algeria are now starting to fight back. And their leaders are complaining about these problems.

In a recent meeting in Egypt of 15 developing countries, leaders condemned the developed nations for ganging up against the rest of the world. The Nigerian president, Olusegun Obasanjo, put it more bluntly when he stated: "Our societies are overwhelmed by the strident consequences of globalisation and the phenomenon of trade liberalisation. The options open to us have narrowed as our increasingly shrinking world imposes on our countries a choice of integration or the severe conditions of marginalisation and stagnation." The summit issued a communique that said the promised high living standards were yet to be realised. It said: "This has not materialised. We are convinced that it will not until international community redresses the asymmetries and imbalances in the global economy."

Similar sentiments were expressed at the World Economic Forum Africa Summit in Durban. South African President, Thabo Mbeki criticised the Group of Seven (G7) developed countries for not keeping their promises to cancel some of Africa's debt. The Forum demanded that at least $100 billion of African debt be cancelled to allow the continent to deal with AIDS, other diseases and poverty.

Even before the era of globalisation, Africa faced unfair trade relationship with the developed world. One problem that remains the same is that African countries mostly import manufactured goods and export raw materials, mainly agricultural and mineral products. The prices of African exports have continued to fall while the value of imports has continued to rise. Furthermore, the markets for African goods continue to shrink as the developed countries use all types of barriers, tariff and non-tariff. This has been made worse by the fact that the developed countries use global as well as regional trade organisations to their own advantage.

With low prices for their products and fewer markets, African countries are forced to borrow in order to pay for the imports. But this problem is complicated further in the fact that they already have huge devastating debts owed to the Western countries. In most cases these countries are left to borrow to pay existing debts with little capital left for development. Just like the Cairo meeting said, the promises, the agreements and other relationships with the developed world amount to nothing other than attempts to yet again manoeuvre and take advantage of the poor countries. The problem is not likely to change soon despite the promises and agreements signed with different developed countries or blocs of developed countries.

Take, for example, the recent African Growth and Opportunity Act signed by the U.S. government and offered as an opportunity for African countries to sell their products to the Big American market. Critics say it offers nothing new. Two professors of economics, Jagdish Bhagwati of Columbia University and Arvind Panagariya of the University of Maryland recently argued that the Act only goes to benefit the US businesses and not Africa. In an article published in the Financial Times of London, June 29, 2000 the professors said: "The Act reads superficially as if it were an 'aid package', a one-way grant of free trade to the poor countries in Africa. But this gift horse is actually a Trojan horse. The tariff preferences in the Act are contingent on preferential purchase of inputs from the US. For example, for duty-free access, shirts assembled by the qualifying African country must be made from fabrics formed and cut in the US. In addition, the fabric must be made from US yarns. This forces on African imports from the US, displacing cheaper imports from elsewhere."

To illustrate their argument about the US interest in Africa, the professors point at the recent controversy over AIDS drugs in South Africa. Due to the relatively high number of people with AIDS, the South African government wanted to make cheap generic drugs that can limit the effects of the disease and also import cheaper drugs from the neighbouring country of Botswana. The US used all types of threats, including the suspension of aid to persuade South Africa from pursuing these policies. Again, under the African Growth and Opportunity Act, all interested lobby groups in US are empowered to challenge the actions of African governments on everything from intellectual property to labour standards. All these are mechanisms used to wrestle economic concessions from the poor countries while claiming to maintain standards.

The US is not alone in seeking to take advantage of Africa.

Take the recent signing of the Cotonou Agreement. This is the accord that replaced the Lome Convention, a trade pact between the European Union and nations from Africa, the Caribbean and the Pacific. With the old agreement, the European countries used barriers to block goods from their agreement partners from the Third World. Now they are using the new global rules to gain even more advantage. They make all sorts of excuses to gain economic concessions such as demanding that the countries in the Caribbean, the Pacific and Africa uphold rules of good governance, as defined by the European governments. Again, even with a new agreement, the European governments are not willing to remove tariffs on the Third World goods. They merely promise to phase them in a period of 15 years.

But it is not only in trade that the rules of globalisation are being used against African countries. We see the same thing now being played out on the question of debt. African countries are being asked to impose austerity measures on the populations, to sell state-owned enterprises to foreign multinationals and give up more and more of their political independence. Those who accept these conditions are offered some more loans and shown as good examples to the rest. Those who do not are subjected to more subtle economic pressure. Some of the measures directed at the Third World countries are meant to prevent them from presenting a united front in their fight against the debt. The debt burden is the worst problem weighing on the African continent. It slows down the fight against AIDS, delays economic development and and devastates African societies.

Just consider the situation of Zimbabwe, Nigeria and Kenya. In order to qualify for more aid and loans, the governments in the three countries have implemented one austerity measure after another. The governments have only refused to implement more measures when it became politically explosive with workers organising protests and strikes. Note the recent strike in Nigeria. Yet the International Monetary Fund has argued that they have not done enough. The upshot of the austerity measures has been that these governments have diverted money from development and expenditure on social services to debt payment. But the debt continues to grow.

In Zimbabwe the government has been asking for an IMF and World Bank Loan. For almost five years now, these institutions have demanded that the government cut food subsidies, reduce expenditure on education and collect more money through taxation. As well the government is asked to privatise state owned factories and mines. Another demand has been that the government withdraw troops from the Democratic Republic of Congo. They were sent there at the request of the Congolese government. As well, the government is told not to proceed with the planned confiscation of white owned land and redistributing it to landless Blacks.

The same story is repeated in Nigeria. Here the government has been asked to reduce fuel subsidies, cut spending on schools and hospitals and speed up the privatisation of state owned companies, especially the oil industry. Nigeria has been required to allow foreigners to monitor the sales and revenues of its oil. When the government went ahead and cut fuel subsidies and raised fuel prices by 50 per cent, the workers and students organised a week-long strike and forced President Obasanjo to lower the increases to 10 per cent. A similar situation has occurred in Kenya where the government has imposed a wage and hiring freeze on teachers. Health care has been hit by cost sharing programmes.

Yet even with these tough measures no aid has been given to these governments. In the London Financial Times of June 14, 2000, a Harvard professor, Jeffrey Sachs criticised the demands made on Nigeria. He wrote: "Until now, the US and Europe have insisted on stringent International Monetary Fund-led measures, including massive debt servicing ($1.5bn, or 4 per cent of GDP), a denial of debt cancellation, crumbs of aid, and demands for the elimination of fuel subsidies that, as we have seen during the past few days, are a guaranteed trigger of violence."

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