The G20 leaders who met in London this week to discuss the global economic crisis made sure that enough was said about Africa to appease those who had called for the world’s financial powers not to forget the continent.
Experts question the role of the IMF and World Bank in Africa
But while promises were made to secure development aid and pursue a new global trade deal which would, in theory, create a fairer system, the G20 summit, like many meetings before it, failed to address the balance in the decision-making processes in international financial institutions (IFIs) such as the World Bank and International Monetary Fund (IMF).
Many experts believe that African influence in World Bank and IMF decisions which affect the continent is currently minimal despite a number of Africans holding prominent positions in those institutions.
"I highly doubt that we have any influential African people that help determine African policies at the IMF and World Bank," economist James Shikwati, director of the Inter Region Economic Network (IREN) a Nairobi-based non-governmental organization (NGO) told Deutsche Welle. "However, we do have influential African people, who by virtue of the offices they hold, help implement IMF/World Bank policies in Africa. And these are African heads of state, finance ministers and central bank governors."
Development finance expert Allan Duncan, an economist working in East Africa, agrees. "Next to nothing actually goes on with African leaders and the World Bank," he told Deutsche Welle. "The decision-making within the bank and the IMF is based on the size of contributions they receive, so countries like the United States and Britain have a large say in the policies and direction of the bank and IMF policy development, whereas the African countries are only recipients."
Todd Moss, a senior fellow and director of The Emerging Africa Project at the Center for Global Development, a Washington-based NGO, says that a number of high profile positions in the IFIs are held by Africans but concedes that ultimately the decision makers are the national governments themselves.
Africans hold top positions but ultimate influence is minimal
"The policies of the IFIs are set by the board and its management," he says. "Africans hold a few seats on each board, plus there are many Africans in the high levels of the IMF & World Bank management. Liberian Antoinette Sayeh is the head of the IMF Africa Department, the Africa vice president at the World Bank is Nigerian Obiageli Ezekwesili, and the managing director, effectively the number two at the Bank, is Ngozi Okonjo-Iweala. But the governments themselves ultimately decide what policies they pursue. The World Bank and IMF can nudge them in a certain direction, but they rarely have leverage to force anything."
Despite the minimal influence at these IFIs, African countries have seen some progress in recent years in the way they receive development money from the World Bank and the IMF. There is no longer the "one size fits all" approach of the 1970s and 1980s where loans or grants were just forced down the throats of developing nations without specific grants and loans tailored to individual requirements.
These days, both the IMF and World Bank hold negotiations with the governments to assess what is needed and whether the country in question qualifies for the loan or grant they are applying for.
However, according to both Duncan and Shikwati, due to the minimal influence African nations have over these organizations, there are still unaddressed, institutionalized problems within both the IMF and World Bank which promote a Western-orientated focus. This is something meetings such as the G20 summit and Doha trade talks should discuss.
"The World Bank and the IMF have been very clear on the fact that they support countries that adopt market liberalization," Shikwati says. "On the surface, the term 'market liberalization' is an innocent term and an ideal that the world ought to go for. The fact of the matter however is that, whereas African countries get lectured on open market systems, these institutions have in place a planned global market economic system that relegates Africa to producers of labor and raw materials."
Some say the institutions have a western bias
"There is still an ideological bias towards western neo-conservative liberalization in the reforms that are asked for by the bank when loans are being offered," Duncan says. "This is one of the main problems with what a number of people see as the strategy of both the institutions where the direction and priorities are potentially beneficial to the West."
Todd Moss, of the Emerging Africa Project, rejects the idea of a Western bias but concedes that international financial institutions "skew their assistance to countries that follow sound economic policies, as those institutions define them and which are set by the board and management."
Economists are skeptical whether more African influence in the World Bank and IMF would actually make a difference and improve the distribution of development funds and grants. Allan Duncan believes that even if the level of influence is improved, barriers further down the chain would still prevent Africa's development.
More than African influence needed
"On the face of it, increasing African involvement in the decision making and policy development within both institutions should lead to improved allocation of resources within the various projects that both institutions carry out," he says. "This unfortunately is based on the idea that African leaders both know and care about the development and well-being of their populations which, from the various examples from Nigeria, Kenya and Zimbabwe, show that the imperatives of the political classes and the needs and aspirations of the citizens do not necessarily go together."
James Shikwati of the Nairobi NGO, advocates more dramatic action to increase African influence: removing the World Bank and IMF from the equation entirely.
Some believe Africa should be allowed to help itself
"Africa needs to divorce itself from the World Bank and the IMF if it is to make any significant strides in development that will uplift productivity of their own people," he says. "The point then is not to influence these institutions, because they work under the direction of their major shareholders. It will be expecting too much for these institutions which have for close to 70 years perpetuated policies that keep Africans as providers of labor and raw materials to suddenly have a change of heart. African needs a new global economic dispensation.
"If Africa succeeds in getting rid of the World Bank/IMF role as planners of global market economy, it will lead to increased productivity on the continent and increased market access globally of African goods," he adds. "Under the prevailing economic scenario, the World Bank and IMF push African countries to open their markets while allowing their shareholders to engage in both subtle and explicit protectionism that prevent migration; access to wealthy country markets and limiting productivity by planning and dictating policies to African countries.
"One has to recognize that under the current economic order, Africa is not part of the global economic architecture; it simply follows dictates of wealthy nations and international agencies supervised by the World Bank and IMF," Shikwati concluded.
Successes offset by financial burdens
While Allan Duncan, the development finance expert, doesn't go as far as supporting the idea of 'divorcing' Africa from the IMF and World Bank, he suggests that the institutions' successes are offset by the burdens arising from their influence that Africa has to shoulder, which in turn hinders the continent's development.
Sometimes development aid comes with a high price
"I think a number of people within the NGO community would seriously question the value of the interventions of both the institutions' work within Africa, stating that their intervention is inappropriate and they leave countries with large unsustainable debt burdens," he says.
"They do tend to do large scale infrastructure projects within Africa and elsewhere, such as roads, dams etc, which can lead to improvements in economic activity through improving market access," he adds. "However, these tend to be poorly maintained, if maintained at all, and service minor areas of countries that are desperately in need of basic service provisions such as health care, education or security. So although they can service the aspirations of the recipient country in terms of prestige they may not necessarily be what the county actually needs or should be prioritizing for the investment that is undertaken."
If and when the balance in decision-making at the World Bank and IMF is discussed at a global level, it is obvious that many other complicated and interdependent factors will have to be taken into account before Africa has an influential say in its developmental future.
Author: Nick Amies
Editor: Trinity Hartman