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Africa in IR Assignment
Africa in IR Assignment
Bank and the International Monetary Fund (IMF). They were set up July 1944 at a meeting of 43
countries in Bretton Woods, New Hampshire, USA with the aim of helping rebuild the shattered
postwar economy and to promote international economic cooperation. The IMF and World Bank
have an important role to play in making globalization work better this is through economic
cooperation among countries. They were created to help restore and sustain the benefits of global
integration. Today, they pursue, within their respective mandates and functions, the common
between the International Monetary Fund and the World Bank lies in their respective purposes
and functions. The IMF focuses on short term goals in that it oversees the stability of the world's
monetary system, while the World Bank is focused on long term goals by reducing poverty
through offering assistance to middle-income and low-income countries, the semi-periphery and
In order to understand peripheral role played by the BWIs, it’s important to understand Africa’s
position in the world. According to Marxist scholar Immanuel Wallenstein, the world economy
can be divided in three classes, the core or Global North. Semi-periphery and the periphery also
referred to the Global South. The core is made countries with industrialized economies such as
U.S.A, Britain, and France. The semi-peripheral areas are somewhat intermediate, being both
exploited by the core and take some role in the exploitation of the peripheral areas countries such
as Brazil. The peripheral areas are the least developed; they are exploited by the core for their
cheap labor, raw materials, and agricultural production and this is where Africa lies. ( Wallenstein,
1994) Africa’s position in the world economy has been hugely credited to the Bretton Woods
Institutions.
Structural under-representation of African countries. Bretton Woods Institutions were
formed primarily to regulate finance and Trade relations between Europe and the US and by their
very structure and internal balance of power, to be controlled by the Western powers- Countries
at the core. Voting in the BWIs is determined by the financial contribution each member state
while as ‘First Class’ decisions require 80% of the total votes. For instance the USA has a 23%
voting percentage which was cut down from 36% in the 1940’s. This poses a huge blockage for
Africa who don’t have the votes and most of their policies get blocked due to lack of voting
power in these institutions that they depend on for monetary assistance. This can be depicted by
how the US combined with Canada, the UK, France and Germany make up a majority in the
BWIs thus no decision can be passed without their approval. (Acheson et.Al, 2001)
primary vehicle through which the World Bank provides conditional loans for development
through them, a country only receives loans if it adopts certain policies laid out by the BWIs.
The policies are designed to tackle the root cause of the problem and provide a framework for
long term development and long term growth. The BWIs come with the promise of free trade,
privatization, and transparency in the African exports and related operations. They also argue
that these free-market reforms are essential for promoting a more open and efficient economy,
which ultimately help to improve living standards and reduce relative poverty. This is not the
case as it turns out anti-poverty measures by the World Bank for instance through building roads,
dams, provision of electricity have in fact increased poverty in African countries. Privatization
has meant that Multinational Corporations have been able to buy state enterprises at very low
costs. Tax reforms under SAPs typically have meant tax cuts for the wealthy lowering taxes on
profits for example and shifted the tax burden onto middle and low-income groups a good
example of this would be how Multinational Corporation’s in Kenya get a 10 year tax relief in
Kenya. This is set up so as to attract these cooperation’s to invest in Kenya. (Kenen et all, 2008)
Dependency and Conditional debts. African states are poor and their economies are small as
compared to those of the Global North, as a result, these Institutions come and offer help in form
of grants and loans with the promise of improving the African economies like those of the Global
North. These loans come at an expensive repayment price in that their interest rates are very
high, repayment is in form of hard currency and not resources This has made African countries
dependent on countries at the core in that, them being poor cannot afford to repay in time hence
need more loans to sustain their economies and repay their loans. These countries experience
liquidity problems in that their wealth value is more in their exports which are raw materials for
the industrialized core countries. Since these countries are unable to meet their debt deadlines,
this creates more debts for them which leads to these African states asking for more loans and in
the long run, this creates a huge problem to such a rich, vast continent since these states cannot
survive without financial assistance from these institutions. This creates a problem of
dependency of the African states on these institutions where they get into more and more debts
(Adedeji, 1995)
Environmental Impact. As seen earlier, the BWIs expect loan repayments in hard currencies
these loans and bailout packages are paving the way for natural resources exploitation on a
staggering scale. The BWIs does not consider the environmental impacts of lending policies and
environmental ministries and groups such as the United Nations Environment Programme
(UNEP) are not included in any policy making. The focus on export growth to earn hard
currency to pay back loans means unsustainable liquidation of natural resources which is
hazardous to the environment. Government cutbacks inevitably target the environmental ministry
as one of the first agencies to come under the budget axe through SAPs. (Kurtz, 2004)
Flawed development model. Unlike the path followed by most industrialized countries, the IMF
forces countries from Africa to prioritize export production over the development of a diversified
domestic economy. This is so as to create markets for their finished goods in the African
countries. Nearly 80% of all malnourished children in the developing world live in countries
where farmers have been forced to shift from food production for local consumption to the
production of crops for export to the industrialized countries. The BWIs also requires countries
to eliminate tariffs and provide incentives for multinational corporations such as reduced labor
and environmental protections. Small businesses and farmers can't compete with large
multinational corporations, resulting in sweatshop conditions where workers are paid starvation
wages, live in inhumane conditions, and are unable to provide for their families. The cycle of
Political interference. The strategic interests of the major powers in the Global Norh have
influenced the disbursement of BWIs financial resources, while regimes seen as hostile to the
major powers have been deprived of loans on the pretext that they failed to meet the BWIs’
criteria. A good example of this would be the axing of Zimbabwe under Robert Mugabe’s
regime. Since their creation, the IMF and the WB have violated international pacts on human and
labour rights, and have had few qualms about supporting dictatorships, in Africa for instance,
Congo-Kinshasa, even though these regimes did not meet official criteria and violated human
rights. (Peter, et al, 2008). Environmental protection laws put aside by respective governments
are seen as blockades to free markets and make the states not legible for loans from the
institutions, while the free markets don’t apply to these African states when roles are reversed.
Their goods are seen as substandard and the Global North states have quotas and protectionism
In conclusion, these institutions undermine African countries economies through their functions.
That is, in using a blue print system of the Global North to the Global South creates more harm
than good. There is an urgent need for inclusion of these African states in the decision making
and deciding their development programs without coercion or SAPs, more representation in
these forums to create a democratic platform for the African countries otherwise, the cycle of
African exploitation will continue despite the best efforts by the BWIs.
REFERENCES
Bernstein, E.M., Broches, A. & Polak, J.J. (1994). The making and remaking of the Bretton
Woods system: a fiftieth anniversary retrospective, Washington, D.C. Professional Bankers
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Wallerstein, Immanuel. (1974). The Modern World-System: Capitalist Agriculture and the
Origins of the European World-Economy in the Sixteenth Century. New York: Academic
Press.
Acheson, A., L. Keith, John F. Chant, and Martin F.J. Prachowny. (2001) “Introduction. In
Bretton Woods” Toronto: University of Toronto Press.
Adedeji, Adebayo. (1995). An African Perspective on Bretton Woods. In The UN and the Bretton
Woods Institutions: New Challenges for the Twenty-First Century, London, Macmillan
Press Ltd.
Kurtz, M.J. (2004). “The Dilemma of Democracy in the Open Economy” World Politics London,
MacMillan Press Ltd
K. Peter, S N. Durlauf, L. E. Blume. (2008), ( 2nd ed.) “Bretton Woods System, In The New
Palgrave Dictionary of Economics, London, Palgrave and Macmillan Press Ltd
Kent Jones. (2004). “Who’s Afraid of the WTO” New York, Oxford University Press.