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Impoverishing a Continent: The World Bank and …

Impoverishing a continent : The World Bank and IMF in Africa 1 Impoverishing a Continent: The World Bank and the IMF in AfricaBy Asad IsmiISBN 0-88627-373-0 July 20042 Canadian Centre for Policy AlternativesAbout the authorAsad Ismi is a writer on international politics specializing in policy towards the Third World andthe role of Canadian corporations there. The author of 90 articles, seven reports and a book, he has beenpublished in 21 magazines including CCPA Monitor, Z Magazine, Covert Action Quarterly,, Briarpatch,and This Magazine.

Impoverishing a Continent: The World Bank and IMF in Africa 7 The World Bank and the IMF development assistance to middle-income and creditworthy poor countries; International Devel-

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1 Impoverishing a continent : The World Bank and IMF in Africa 1 Impoverishing a Continent: The World Bank and the IMF in AfricaBy Asad IsmiISBN 0-88627-373-0 July 20042 Canadian Centre for Policy AlternativesAbout the authorAsad Ismi is a writer on international politics specializing in policy towards the Third World andthe role of Canadian corporations there. The author of 90 articles, seven reports and a book, he has beenpublished in 21 magazines including CCPA Monitor, Z Magazine, Covert Action Quarterly,, Briarpatch,and This Magazine.

2 He has written reports for the Canadian Auto Workers, Canadian Labour Congress,Communications, Energy and Paper Workers Union, MiningWatch Canada, the Halifax Initiative Coa-lition and the NGO Working Group on the EDC. His reports include the ground-breaking Profitingfrom Repression: Canadian Investment in and Trade with Colombia. He is winner of a 2003 Project Cen-sored Award for his article The Ravaging of Africa (Monitor, October 2002) which was partly ex-cerpted from this report. For his publications visit This report was commissioned by the Halifax Initiative Coalition ( ) but doesnot necessarily reflect its views.

3 Impoverishing a Continent: The World Bank and the IMF in AfricaBy Asad IsmiISBN 0-88627-373-0 July 2004$ a continent : The World Bank and IMF in Africa 3 ContentsIntroduction .. 5 The World Bank and the IMF .. 7 The Connection .. 8 Structural Adjustment .. 8 LIC-FLIC .. 10 Adjusting 11 Impacts of Adjustment .. 11 Zimbabwe .. 14 Ghana .. 16 Cote d Ivoire .. 19 Conclusion: Alternative Strategies .. 21 Endnotes .. 24 Appendix .. 274 Canadian Centre for Policy AlternativesImpoverishing a continent : The World Bank and IMF in Africa 5 Just between you and me, shouldn t the World Bank be encouraging more migration of the dirty indus-tries to the LDCs [less-developed countries]?

4 I think the economic logic behind dumping a load oftoxic waste in the lowest wage country is impeccable and we should face up to ve always thoughtthat underpopulated countries in Africa are vastly under-polluted, their air quality is probably vastlyinefficiently low compared to Los Angeles or Mexico concern over an agent that causes a onein a million change in the odds of prostrate cancer is obviously going to be much higher in a countrywhere people survive to get prostrate cancer than in a country where under 5 mortality is 200 problem with the arguments against all of these proposals for more pollution in LDCs(intrinsic rights to certain goods, moral reasons, social concerns, lack of adequate markets.)

5 Etc.) could beturned around and used more or less effectively against every Bank proposal for liberalization. Lawrence H. Summers, chief economist of the World Bank, in an internal memo dated De-cember 12, 1991. Summers went on to become the Treasury Secretary in the Clinton Ad-ministration as well as president of Harvard University. (See Appendix)..tural Adjustment Programs (SAPs). SAPs requiregovernments to: cut public spending,(includingeliminating subsidies for food, medical care andeducation); raise interest rates, thus reducing ac-cess to credit; privatize state enterprises; increaseexports; and reduce barriers to trade and foreigninvestment such as tariffs and import duties.

6 Thesemeasures are supposed to generate export-ledgrowth that will attract foreign direct investmentand can be used to reduce debt and poverty. 2 According to a three-year, multi-country (in-cluding three African countries) study released inApril 2002 by the Structural Adjustment Partici-patory Review International Network (SAPRIN),which was prepared in collaboration with theWorld Bank, national governments and civil soci-ety, SAPs have been expanding poverty, inequal-ity and insecurity around the World .

7 [They have]torn at the heart of economies and the socialIntroductionThe World Bank and the International Mon-etary Fund (IMF) are the two most powerful in-stitutions in global trade and Since 1980,the United States government which dominatesboth bodies has used them to economically subju-gate the developing World . The World Bank andthe IMF have forced Third World countries to opentheir economies to Western penetration and in-crease exports of primary goods to wealthy steps amongst others have multiplied prof-its for Western multinational corporations whilesubjecting Third World countries to horrendouslevels of poverty, unemployment, malnutrition,illiteracy and economic decline.

8 The region worstaffected has been two decades the World Bank and the IMFhave forced developing countries to create condi-tions that benefit Western corporations and gov-ernments. These conditions are known as Struc-6 Canadian Centre for Policy tensions among different socialstrata, fuel ing extremist movements anddelegitimizing democratic political systems. Theireffects, particularly on the poor are so profoundand pervasive that no amount of targeted socialinvestments can begin to address the social crisesthat they have engendered.

9 3 SAPRIN explains this damning indictment byidentifying four ways in which reforms under SAPshave impoverished people and increased economicinequality. Firstly, trade and financial sector reformshave destroyed domestic manufacturing leading tomassive unemployment of workers and small pro-ducers. Secondly, agricultural, trade and miningreforms have reduced the incomes of small farmsand poor rural communities as well as their foodsecurity. Thirdly, labour market flexibilizationmeasures and privatizations have caused mass lay-offs of workers and resulted in lower wages, lesssecure employment, fewer benefits and an ero-sion of workers rights and bargaining power.

10 Pri-vatization of major national assets and essentialservices has also allowed multinational corporationsto remove resources and profits from countries aswell as increase rates for water and electricity whichhas hit the poor the hardest. Fourthly, the cuttingof health and education spending under SAPs andthe introduction of user fees for these services,when combined with higher utility rates, has re-sulted in a severe increase in the number of pooras well as a deepening of poverty. 4 In the following sections we look at the ef-fects of conditions imposed by the World Bankand the IMF s SAPs, on Africa generally and onthree African countries, Zimbabwe, Ghana andCote d Ivoire, in particular.


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