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Loans from the IMF and World Bank won’t end poverty in Africa by Kara Freedman, Policymic, 20 June 2013


On May 23 the World Bank approved a $50 million loan to Burkina Faso, one of many international development projects that will go into effect this year throughout West Africa and the world. Yet for all of the loans and aid projects in the region, Burkina Faso is just one of many African countries that is not on track to complete the Millennium Goal of reducing the poverty rate to 35%, among other objectives.

This particular loan from the World Bank will go to the Ministry of Labor and will create programs to train unemployed and underemployed youth to promote economic development. Most of Burkina Faso’s economy is based around agriculture and mining, particularly cotton and gold, so the lack of industry diversity can negatively affect economic growth. Even with a drop in poverty rates since 2003, from 49.2% to 46.7% in 2009, a huge percentage of Burkina Faso’s population still lives in poverty. In order to create the necessary jobs for youth in the coming years, the World Bank’s loan will go toward training programs for young people aged 15 to 34 in order to diversify the economy and hopefully reduce poverty rates.

When discussing these credits by international institutions, the following question arises: Are loans from the World Bank and other organizations such as the United Nations or individual governments — the United States gives more money in aid than any other country in the world — effective ways to helping developing countries such as Burkina Faso? There are certainly success stories such as the NGO Right to Play, which promotes education and health among young children through the medium of sports and playtime, or United Nations organizations such as UNICEF, which runs a large variety of programs for children’s health, education and economic future across the world. These organizations depend on money from governments such as the United States and European countries to fund their many programs and have had a largely positive impact on many people.

But as the Heritage Foundation published in 1996, many countries that receive loans from the World Bank or enjoy the presence of a large international aid organization are not necessarily better off than they were 50 or 60 years ago. In Burkina Faso, for example, the Gross National Income per capita is slowly growing, but has not seen a convincing increase in the past decade, In addition, its GNI is much lower than the GNI of other Sub-Saharan countries, as shown on the graph from the World Bank below, in spite of international aid and loans.

While in many cases a loan from the World Bank can prove useful to the receiving country, too often it leaves developing countries in increasing debt to these international organizations and struggling to repay it. This accumulating debt has an indirect impact on the taxpayers in the countries whose governments support these programs, so if for no other reason it is important for us to understand where this money is going and whether or not the programs that it funds are successful.

International aid and bank loans are certainly not all bad, however. A report funded by the World Bank entitled “Yes Africa Can: Success Stories from a Dynamic Continent” paints a different picture from the Heritage Foundation report. Inflation is down from the 1990s and private investment, particularly from China, flows freely across the continent, outspending international aid.

 
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Posted by on June 20, 2013 in Africa Development

 

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France and Francophone Africa: A marriage of inconvenience. By Chofor Che, 29 April 2013


France colonised a great part of Africa prior to independence in the 1960s. Former colonies of France include the North African states of Morocco, Algeria, Egypt and Tunisia. In West Africa, former French colonies include Ivory Coast, Benin, Mali, Niger, Guinea, Mauritania, Senegal and Burkina Faso. In the Central African region and French Equatorial Africa, former French colonies comprise of Chad, French Cameroon, Central African Republic, the Democratic Republic of Congo (DRC), Gabon, Congo Brazzaville and São Tomé and Príncipe. In French Africa, former French colonies include Madagascar, Mauritius Seychelles, Comoros and Réunion. Some analysts, like Placide Moussounda of Nouvelle Afrique, argue that Francophone Africa has benefitted very little from France since independence.

I am one who has always viewed the on-going relationship between France and Africa as suspicious and detrimental to the continent’s growth and development. My position is fortified by a statement made in 2006 by former President of France, Nicolas Sarkozy during his presidential campaign, where he said “France does not need Africa”. During President Sarkozy’s term of office, Francophone Africans were repatriated in their numbers from France. Despite such humiliation and expulsion of Francophone Africans from France, French presence in Africa remains firm.

Another area where Francophone Africa continues to suffer from the marriage with France is the imposition of the franc CFA, a currency utilised by former French colonies in the Central African region. CFA stands for Financial Cooperation in Central Africa (Coopération financière en Afrique centrale). The CFA franc represents two currencies utilised in Africa which are guaranteed by the French treasury. The two CFA franc currencies are the Central African CFA franc and the West African CFA franc. Although theoretically separate, the two CFA franc currencies are effectively interchangeable.

According to former French minister of finance, René Pleven, the CFA franc was created on 26 December 1945, in French colonies to spare them the strong devaluation, thereby facilitating exports to France. Today the creation of the CFA has grossly impoverished Francophone Africa. This currency is regulated by three central banks in Francophone Africa, Banque des États de l’Afrique Centrale, or the Bank of the Central African States (BEAC) located in Yaoundé, Cameroon, the Banque Centrale des États de l’Afrique de l’Ouest, or the Central Bank of the West African States (BCEAO ) located in Dakar, Senegal and the Comoros Bank in Comoros. French citizens who constitute part of the board of directors of the above mentioned banks have veto rights on decisions of these banks, which means decisions concerning the CFA are influenced enormously by the French. The structuring and composition of the central banks makes it possible for a colossal flow of finances from Africa to the French public treasury. This means that very poor countries in Africa finance France. There happens to be over 8 000 billion of CFA from Africa stocked in France. This means over 40 million Africans are deprived of their revenue. This can be connoted as monetary slavery which is the outcome of the marriage of inconvenience between France and Francophone Africa.

Time for a new Africa has come. This new Africa needs to get rid of the shackles of colonialism which continue to plunge the continent down the drains of poverty. Africans need to nurture the spirit of free markets and stop relying on aid especially from France. Maybe it is time for Francophone Africa, to have its own currency as other currencies like the South African rand. Allowing impoverished African states to continuously finance the French treasury is not the way to go.

Additionally, Francophone Africa can curb the numerous trade barriers inhibiting commerce amongst them. Francophone Africa can ease trade with Anglophone Africa and benefit from a fruitful relationship which would benefit the continent as a whole, rather than relying on a marriage of inconvenience which has done nothing but plunge Francophone Africa and the entire continent into poverty.

 
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Posted by on April 29, 2013 in Africa Development

 

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Africa: World Bank – Uphold Rights – Prevent and Address Adverse Human Rights Impacts of Bank Activities, By Human Rights Watch (Washington, DC) via AllAfrica, 15 November 2012


press release

Washington — The World Bank should incorporate human rights in its revised policies as a key component of fulfilling its mission to eradicate poverty, Human Rights Watch and the Center for International Environmental Law (CIEL) said today.

A new review of the World Bank’s environmental and social policies, known as the “safeguard” policies, begins with a consultation meeting in Washington, DC on November 15, 2012.

“The World Bank has long ignored the importance of free speech, assembly, and association and other basic human rights,” said Jessica Evans, senior advocate on international financial institutions at Human Rights Watch. “In the wake of the popular upheavals in the Arab world, the World Bank needs to recognize that human rights are critically important to its efforts to reduce poverty.”

Some World Bank-funded projects have been plagued by human rights problems. The World Bank recently approved a project in Ethiopia that indirectly funds forced evictions of indigenous peoples and other marginalized ethnic groups. These forced evictions, in violation of international law, violate rights to adequate housing and other social and economic rights including the rights to food, water, and education.

The World Bank Group, whose mission is to reduce global poverty and achieve sustainable development, should make a commitment to incorporate and abide by human rights standards in all of its activities, the groups said. As a starting point, it should require human rights due diligence and put measures into place to address any human rights risks before financing projects and programs.

The World Bank’s review of the safeguard policies is expected to take two years, during which time it will accept comments on its current standards, including policies on indigenous peoples and involuntary resettlement, and on whether to expand its coverage to other areas such as labor rights and climate change.

The World Bank has an obligation to ensure that it does not fund rights abuses, directly or indirectly, the groups said. The safeguards review is an important opportunity to introduce the necessary checks and balances in order to avoid adverse rights impacts.

There are other benefits to a human rights-approach, the groups said. The World Bank has recognized that many people living in poverty are victims of discrimination, including women, indigenous peoples, and people with disabilities. By incorporating human rights standards, the bank would have a useful tool to address inequality and entrenched discrimination and to ensure that the benefits of development reach the most marginalized members of society.

Historically, the World Bank Group has dismissed human rights as a “political” issue and therefore outside of its mandate as a development bank. The same was true of corruption until a former Bank president, James Wolfensohn, took the seemingly risky step of raising “the c-word” and began to address the issue within the bank and in its lending. President Jim Yong Kim has a similar opportunity to modernize the bank by taking on human rights, the groups said.

“The World Bank Group is not above international law – the bank and its member states must abide by human rights standards in their development activities,” said Kris Genovese, senior attorney at CIEL. “Now is the time for the bank to move into the 21st century and, if he’s willing to show leadership andsustained engagement with member countries, Kim can realize this signature achievement.”

Background

The current policies of the World Bank Group and their implementation are not sufficient to prevent or address the adverse impact on human rights that lending may have, the groups said. The diversification of lending instruments and activities supported by the Group are governed by a patchwork of inconsistent and increasingly vague policies that leave too much room for interpretation.

For instance, in the Ethiopia project, approved on September 25, the institution has not applied its safeguard policies on involuntary resettlement and indigenous peoples despite evidence that the project funds, at least indirectly, forced relocation of indigenous peoples and other marginalized ethnic groups. In other cases, even this patchwork of policies has been abandoned in favor of allowing funds to be disbursed without ensuring any protection for communities or the environment.

Commitment to human rights is not just a matter of good policy; it is also a political commitment and an obligation under international law. Member countries should not set aside their obligations to respect, protect, and fulfill human rights when they enter the boardroom or when they sign a loan agreement.

Further, as a UN specialized agency, the World Bank Group must act consistently with the UN Charter, which requires “[u]niversal respect for, and observance of, human rights and fundamental freedoms for all …” The UN Committee on Economic, Social and Cultural Rights has also stated that the World Bank “should act as [an] advocate of projects and approaches which contribute … to enhanced enjoyment of the full range of human rights.” Individually and collectively, member countries have the duty to ensure that their decisions do not lead to human rights violations.

 
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Posted by on November 15, 2012 in Uncategorized

 

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