[comment] G8, Poverty And Africa

from All Africa

Leadership (Abuja)

By Kunle Somorin
Abuja

In 2005, when Africa was the thrust of the G8 meeting, nothing much was achieved. Amidst great fanfare, the leaders of the Group of Eight (G8) major industrial countries, are meeting again, in northern Japanese island of Hokkaido with one of their principal objectives being the need to address the problem of poverty in Africa. KUNLE SOMORIN contends that this may be a pipe-dream for Africa's renaissance again.

He was scathing and unsparing in his condemnation of the motioning without movement of the world's superpowers on the developmental crises plaguing Africa. He has been a development activist in Ghana and many parts of Africa and Asia. Charles Abugre, head of policy and advocacy at Christian Aid contends that G8 meetings offer no respite for Africa.

Undisputably, the Western powers have always known how to excite themselves. Like Bob Geldof's global rock party they churned out Make Poverty History, with at least one-third of humanity hooked to it. Felons, he believes, rock to the explosive music beamed from seven locations around the world interspersed with pictures of the misery and desolation of Africans and Africa. This is the al-familiar ritual that the leaders of the G8 nations: Canada, France, Germany, Italy, Japan, the UK, the US and Russia. Radical scholars see the G8 as more than EIGHT really, because it's actually an awesome assembly: (actually it is the G7 + 1 (Russia) + 3 (the IMF and World Bank and the European Commission). They always hype altruism 'common humanity' and their latest catch-word globalization to justify "the last-ditch effort to save Africa from itself and from poverty".

As Abugre postulated after a similar orchestra played out in Edingburg, Scotland three years ago, the on-going summit in Toyoka Hokkaido, may as well end up strides in deepening food crisis, undernourishment, worsening dependency higher indebtedness and trade deficit for the peoples of the poorest continent.

The 'negotiated' relief to debt overhang offer by the G8 through its spokesperson, former British Prime Minister, Tony Blair was called - a 'very good beginning' towards making poverty history. Yet it has bore no fruit from prevailing crises in the region, which is further encumbered by ravaging the global food crisis, increasing oil prices and natural disasters. Interestingly, Blair also acknowledged then that the palliative on offer 'will not please everyone'.

It therefore did not surprise many when civil rights campaigners gathered in Scotland with scathing reactions. The Make Poverty History coalition said: 'The G8 have chosen not to do all that campaigners insist is necessary to free people trapped in the prison of poverty. Important steps have been taken - steps that will bring hope to millions. But more action is urgently needed if they are to play their role in bringing about real change for the world's poorest people and consigning extreme poverty to the history books.'

According to Oxfam GB, 'The G8 have recognised today that this is the beginning, not the end, of their efforts to overcome poverty. The world's richest nations have delivered welcome progress for the world's poorest people, but the outcome … has fallen short of the hopes of the millions around the world campaigning for a momentous breakthrough.'

But others were more forthright in their condemnation of the deal. Christian Aid called it a 'vastly disappointing result which will not make poverty history', adding that: 'Millions of campaigners all over the world have been led to the top of the mountain, shown the view and now are being frog-marched down again.'

Caroline Sande Mukulira (from ActionAid's Southern Africa programme) said: 'What Africa needed from the G8 was a giant leap forward, all it got was tiny steps. The deal that has been announced falls way short of our demands. We have some aid, but not enough, some debt relief but not enough and virtually nothing on trade. Once again Africa's people have been short-changed.'

According to Yassin Fall of the African Women's Millennium Initiative (AWOMI), the G8 communique is a 'testimony of the determination of rich countries of the West to keep Africa subjugated by debt and unfair trading rules'.

So what was offered and how much of a 'very good beginning' did this represent?The Make Poverty History (MPH) coalition had demanded action in three areas - more and better aid, debt cancellation for all the poor countries needing debt cancellation to reduce poverty, and reform in trade rules in two fundamental areas: to stop dumping subsidised products on developing-country markets and to stop forcing poor countries to open up their markets through the World Trade Organisation (WTO) and through conditionality attached to aid and debt relief.

A review of these assertions may be imperative. The platitudinal talk about working in partnerships not via conditionality is fraught by a dubious Economic Partnership Agreement and the arm-twisting mentality that broke the Cotonou Treaty. Helping Africa to prevent conflicts and to rehabilitate their economies after conflict and contain the proliferation of small arms is dogged by a sinister planting of military outpost, called the African High Command by the United States' military.

Finally, they want to make Africa's development problems a long-term concern. So what's new? Nothing new here... all a leaf from the Blair/Brown Africa Commission report which was released in March, 2005!

An issue-by-issue dissection of Abugre's thesis impels a sense of forlorn hope in terms of:

Aid

The G8 promised to boost aid by US$48 billion for all developing countries in five years, of which $25 billion will go to Africa. This is in consonance with the recommendation of the Africa Commission. The Africa Commission report called for the boosting of aid to Africa by $25 billion per year by 2010 and thereafter, raising aid by an additional $25 billion by 2015. In contrast, the Millennium Project Report of Jeffrey Sachs called for raising aid by at least $85 billion in 2006, and by a further $60 billion by 2015. The MPR emphasised frontloading and new money.

Whilst the $48 billion promise has some aid agencies dancing, it falls short of expectations. Firstly, much of it is not new money. The MPH calculates that only around $20 billion is new money if delivered. Some of this money is also likely to be raised through borrowing from future aid budgets, rather than new contributions.

Moreover, it is one thing to promise, quite another to deliver. The track record of delivery is rather appalling. Recall the Millennium Challenge Account (MCA) announced by the United States in 2002 to provide $5 billion to support Africa's development. The United States managed to deliver only $17 million to Madagascar, bizarrely in support of land privatisation and the introduction of a cheque-account system in commercial banks, after three years. Countries like Ghana are still sniffing for the money they went haywire over when named as potential beneficiary.

The Enhanced HIPC debt relief initiative promised, in 1999, a debt relief package for all eligible heavily indebted poor countries to the tune of $100 billion. Several years later, as the HIPC regime threatens to fold up, they have delivered $80 billion less. Bush may make promises but he does not have the power to actually deliver. It is his Congress that does and that is filled with extreme neo-cons who hate foreign aid.

Good governance, in their view, also means deep and extensive liberalisation, including trade liberalisation, the privatisation of public enterprises and deregulation of foreign corporations. Good governance for Americans is an investment climate that reduces or eliminates taxation for their corporations, removes all barriers to the transfer of capital abroad and dismantles any protection for labour (the right of corporations to hire, fire and pay wages without obstacles or diktat). Good governance is a euphemism for a neoliberal political and economic order.

Besides the good governance conditionality, the G8 agreement effectively stamped the authority of the International Monetary Fund (IMF) and the World Bank over the policy-making environment of those expected to benefit from debt relief and aid. The debt relief package is explicit on this. It rewards those that have dutifully followed the IMF (often to the chagrin of their societies) and expects those hoping to gain debt relief to fulfil their IMF obligations fully. The IMF and the World Bank, two of the biggest culprits (alongside African governments and global corporations) for the demise of the continent, have not only escaped blame but have been re-enthroned as rulers. This agreement has effectively plunged Africa once more into another decade of IMF/World Bank stranglehold, which means greater enforced liberalisation and structural adjustment.

More harm than good?

The Millennium Project Report and the Africa Commission make a forceful case for the positive effect of aid. Aid works if it is directed to improving physical and social infrastructure and building the institutions of governance. Aid can improve poverty when it provides essential public services, expands government expenditure and increases economic growth. Although the aid-growth relationship is not so clear cut, expanding access to health care, especially HIV/AIDS, malaria and TB treatment, education, water etc. has a direct positive impact on poverty reduction. Aid provided in humanitarian forms can save lives and assist fragile communities to recover from stress and strengthen their livelihood structures.

But some aid can do more harm than good. A recent IMF report argues that aid can lead to lower growth if it distorts wages and exchange rates which in turn reduces competitiveness. Some argue that it is the size that matters. When aid exceeds 15% of GDP, it is more likely to do more harm than good because it exerts a negative pressure on absorptive capacity.

But there is also a political explanation as to why aid dependency hurts. Higher levels of aid tend to be associated with higher corruption and the erosion of the quality of the bureaucracy. It undermines accountability by prioritising accountability of bureaucracies and the political elite to aid arrangements rather than citizens groups. Aid tends to reinforce the power of the executive over the legislature, thereby weakening political checks and balances central to democratic governance.

More than everything else, aid carries with it a set of ideas with privileged access to the executive, thereby effectively leading to a monopoly of the ideas conveyed by the aid system. The power inherent in this is referred to as discursive power, as opposed to directly coercive power conveyed through conditionality. Aid basically undermines autonomous thinking and the confidence to rely on domestic ideas and domestic sources of development finance. That is why we have governments all over the continent who sound and act more neoliberal than Hayek (the godfather of neoliberalism), parroting the IMF and the World Bank and selling the interest of their people down the tube without noticing. Aid destroys democracy even more when ruling parties see their chance of continued rule in receiving disbursements of aid crucial to buying patronage. Aid and independence move in different directions.

Debt

The deal is that the G8 recommends to the annual meetings of the IMF and World Bank to cancel debt owed to them by 18 countries (14 in Africa) as well as debt owed to the African Development Bank. This number could rise to 32 if the remaining countries are able to fulfil typical IMF conditions under the HIPC framework. This effectively means an extension of the HIPC arrangement, but this time to include the cancellation of the principal, not just interest servicing falling due.

But this cancellation is not meant to be immediate. The $40 billion figure is in nominal terms and will be delivered over 40 years! In Net Present Value terms, this is equivalent to only $17 billion. Ghanaians seem to have developed the impression that there is a one-off cancellation of all its outstanding debts so that Ghana has suddenly woken up to a debt-free life. That's not what it is. Indeed the opposite is the case. Ghana is effectively married to the IMF for another 40 years before the old debt stock finally goes. Then again, a new one would have been built up.

The debt deal is a huge disappointment. The MPH had called for the cancellation of debt owed by at least 62 countries worldwide who need debt cancellation to revive their economies and reduce poverty. In contrast, the G8 offer is only to a small number of countries, but an impression has been created that 100% of their debt will be cancelled. This is disingenuous. It is in reality a 10% deal, not including middle-income countries, which offers little immediate relief. The deal excludes private sector debt and some debt owed to other multilateral institutions such as the Arab Development Bank and the Caribbean Development Bank. It should also be understood that the debt relief will be at the expense of a proportion of official development assistance (aid). Also it is still not clear how the IMF will finance its debt write-off. The scale of the World Bank debt reduction will also depend on how much the donors commit to financing the debt write-off. As for the IMF bit, campaigners are hugely disappointed that the IMF will not have to sell its idle and undervalued gold reserves but will instead depend on donor contributions and a 1999 sale-buyback agreement.

The task of African civil society is to persuade their Finance Ministers to develop the courage of the trade ministers who led the walkout of the WTO trade talks in Seattle in 1999. Beyond repudiation, the real challenge, according to the veteran intellectual and fighter, Samir Amin, is to fight for an international law regulating international debt which specifies a fair and transparent arbitration process. But for now, it will be a grave mistake for anyone to rejoice over the poisoned crumbs thrown to a few poor countries.

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