How flawed rules of Globalisation are working against Africa

So much has been written on the trendy subject of globalisation. But as Larry Elliot of the Guardian concedes, “there is a gulf in perception and understanding between those who call the shots in globalisation and those who are powerless”. Joseph Stigliz, formerly Chief Economist of the World Bank and a Nobel prize-winning author, speaking a few years ago to an audience of about 200 at Yale Law School on financial crises, commented that the ‘failures to manage globalisation have gotten worse in the past few years”Let us turn to those ‘who call the shots’ and ‘those who are powerless’. It is no news that the development agenda is driven by the G7 to the detriment of the powerless developing countries. But the catalogue of paradoxical questions that have remained largely unanswered offer interesting reading. Why is it that ‘in a world where human capital is supposed to be the new wealth of nations, labour is treated with such contempt?How is it that the G7 can export neo-liberal economic policies to Africa yet the US would not dream of accepting “structural adjustment” for its own mal-functioning economy? Why is it that when a country like Zambia, for instance, deviates from its IMF-imposed programme gets punished, but if France thumbs its nose at the instability and growth pact, nothing happens? Luckily, we are seeing cases of countries in Europe, from Greece, well known for her thinkers who influenced the world, to Italy, Spain, and others in the league of non-performing economies, at the receiving end! No one disputes the positive side of the language of globalisation which underscores, among other things the importance of democracy, free trade and sharing the benefits of technological advance. The reality on the other hand is different. It is about rule by elites, mercantilism and selfishness. As one observer recently pointed out: “the rich nations, and those within rich nations, gaining control over a greater and greater proportion of the world’s wealth and becoming increasingly ruthless to retain that control, particularly as resources become stretched, pollution mounts and the number of hungry mouths multiplies”. Joseph Stiglitz says that it is better to be a cow in Europe than a farmer in Africa—at least comparing European farm subsidies to American economic support for African farmers. Stiglitz argues that despite the initial enthusiasm with which globalisation was received, by the end of the 1990s, pessimism and uncertainty had set in. The story of Senegal, now in the throes of political malaise, is a story of a debt-stricken country that has been forced against her will to adopt the famous stabilisation measures prescribed by the medicine men of the IMF and the World Bank: cuts in public spending, tight monetary and fiscal policies, export-led growth, trade and investment liberalization, de-regulation of internal prices, dismantling of the private sector, privatisation of state-owned enterprises, the rolling back of the state and the abrogation of the right to control its own economic destiny. According to this thinking by the IMF and the World Bank, countries like Senegal and many others pursuing these neo-liberal economic policies should definitely be doing much better. But the reality is very much different: peasants have been deprived of their livelihoods as a result of the liberalisation of the agricultural sector which has led to an increase in the number of malnourished people from 23 percent to 25 percent during the 1990s.Senegal like a few other countries in Africa qualified for debt relief. Indeed in 2010, Senegal was granted a US$ 850 million debt service relief by the World Bank and the IMF. The two institutions agreed then that “Senegal fulfilled the demands for such debt relief due to “political stability” and “broad ranging structural reforms” including privatisation and deregulation of the economy. However, the help in form of debt relief came with a host of strings attached. For instance, debt relief had to be premised upon the completion of a poverty reduction paper by the recipient country. But this paper had to have the full blessings of the IMF and the World Bank in Washington. Senegal is definitely not alone in this dilemma. Malawi is yet another example of a country that was asked by the IMF and the World Bank to reduce subsidies for small farmers, remove price controls and regulations and privatise the state-owned body that ensued availability of food country wide. It was assumed by the neo-liberal policy dispensers that the market forces would work the magic. The result was depressing. Prices shot up by 400 percent. There was widespread hoarding and famine became the order of the day. Zambia is yet another example of the negative impact of trade liberalisation. The argument was that by removing tariffs, subsidising credit and import quotas while at the same time devaluing the Kwacha, this would deliver a leaner and more efficient industry that would spur growth. The results were equally depressing. Exports as a percentage of GDP fell from 36 percent in 1991 to 27 percent in 2001. Today, the situation is a lot bleaker.It would not be difficult to see the reasons behind all this. African countries lack capacity. Liberalisation tends to mean that imports grow much faster than exports leading to chronic balance of payment deficit. The medicine usually dispensed is that of austerity, which our fragile economies cannot adequately sustain. Unless of course you live in the US where more liberal rules apply.The United States today provides about US$ 4 billion in form of farm subsidy to 25,000 farmers. According to a senior economist from the World Bank, the subsidy was ultimately harmful, as it economically disadvantaged 10 million African farmers. The said economist asserts that the US government subsidised its own farmers to produce more cotton, which they should not have been doing because it is economically inefficient! A meeting of WTO Trade ministers held in Mombasa, Kenya in 2009 recommended the removal of subsidies by the developed world. As a Tanzanian minister of Trade once remarked at the said Mombasa meeting, referring to Europe and the developed world, “for the past ten years, we have undertaken economic and political reforms, we have liberalised, but at the same time, you people in Europe, Japan and the United States are not liberalising. You have built up a lot of barriers, which make our products uncompetitive”.So Africans open up their markets and the developed countries close theirs or set up conditions that make our exports simply not have the chance to penetrate their markets. I am very eager to hear how we can make our markets work in the face of the flawed rules of globalisation. Anyone out there who can come to my help?