The export-led strategy African governments (including Zimbabwe) have been obliged to adopt by The World Bank, quite simply has not worked, does not work, and cannot work, says Susan George, an expert on Third World development, in her new book: Short-changed: Africa and World Trade.
“Repeated reports emanating from Washington announcing light at the end of the export tunnel are either lies or illusions and are in either case tragic for the countries and the peoples of sub-Saharan Africa,” she says.
Normally, there should come a time, especially among World Bank strategists who pride themselves on their grasp of economic “science,” when even they recognise that their dogged persistence is destined to go unrewarded, she says. All the signs, for anyone willing to examine them impartially, point to failure so the bank should be willing to re-examine its premises and admit their inadequacy.
George, however, believes that the bank is not likely to do this because it always has a ready answer to its critics. This is that the doctrine is correct, the principles are inviolable, but the application is faulty. Consequently, export-led growth must be pursued with renewed vigour. There is no alternative.
She says this thinking has to be seriously challenged but this will be a formidable task because critics of the World Bank and other structural adjustors will not be dealing with rational argument, dressed though it may be in technical language, but with dogma.
“If, however, present strategies remain unchallenged, if the Bank persists with its present practice, if it remains deaf not only to its critics but to Africa’s suffering, we know for sure that the continent is in for a painful forced march into the 21st century,” she says.
George argues that the World Bank operates on two fronts. One is the reliance on the market place which it believes is capable of satisfying all humankind’s needs both economic and social. The other is integration. All countries, it argues should participate in the world economy to the fullest possible extent.
But because most Third world countries, including Zimbabwe are cash-strapped, they are forced to implement export-led growth to obtain the necessary hard currency. However, African countries, almost without exception, rely for their foreign currency on the run-of-the-mill commodities and usually just one or two or three of them. Worse still, they do not have any control on the prices of these commodities.
When they are in financial trouble the International Monetary Fund, which George says exists at a financial and political price, steps in with “balance of payments support” and the country slowly sinks into debt and its borrowing needs increase.
George says there seems to be a mistaken belief that the IMF is a “development” organisation. It is not. Its articles of Agreement clearly state that its vocation is to finance trade.
Because of the way the World Bank and the IMF are promoting export-led growth, she says, they are now bill-collectors for creditor countries which are increasingly taking a hard line on debtor nations.
The problem of the debt crisis in the Third World is amply demonstrated by UNICEF figures which say an extra 500 00 children die every year because of the debt crisis yet neither the World Bank nor the IMF have argued that debt relief would be the best initial step to prevent the total economic and social collapse of sub-Saharan Africa. This is in spite of the fact that the World Bank had a net income of US$1.2 billion in 1991.
Greatly reduced debt, she argues, would imply greatly reduced interest on the US$1 billion a month sub-Saharan countries were paying in 1989 and 1990. This is, therefore, not likely to be allowed to happen because “greatly reduced interest payments would, in turn, mean far less pressure to stress exports. Without debt and the structural adjustment programme it entails, without the need to invest so heavily in the export sector, Africa could put its resources into building infrastructure, into feeding, educating and caring for its own populations. Such choices would, however, only serve Africans and, even more serious, would violate the doctrine of maximum integration into the world economy,” she says.