Just between you and me, shouldn't the World Bank be encouraging more migration of the dirty industries to the LDCs [less-developed countries]?... I think the economic logic behind dumping a load of toxic waste in the lowest wage country is impeccable and we should face up to that...I've always thought that underpopulated countries in Africa are vastly under-polluted, their air quality is probably vastly inefficiently low compared to Los Angeles or Mexico City...The concern over an agent that causes a one in a million change in the odds of prostrate cancer is obviously going to be much higher in a country where people survive to get prostrate cancer than in a country where under 5 mortality is 200 per thousand...The problem with the arguments against all of these proposals for more pollution in LDCs (intrinsic rights to certain goods, moral reasons, social concerns, lack of adequate markets, etc.) could be turned around and used more or less effectively against every Bank proposal for liberalization.
- Lawrence H. Summers, chief economist of the World Bank, in an internal memo dated December 12, 1991. Summers went on to become the U.S. Treasury Secretary in the Clinton Administration as well as president of Harvard University. (See Appendix).
The World Bank and the International Monetary Fund (IMF) are the two most powerful institutions in global trade and finance.(1) Since 1980, the United States government which dominates both bodies, has used them to economically subjugate the developing world. The World Bank and the IMF have forced Third World countries to open their economies to Western penetration and increase exports of primary goods to wealthy nations. These steps amongst others have multiplied profits for Western multinational corporations while subjecting Third World countries to horrendous levels of poverty, unemployment, malnutrition, illiteracy and economic decline. The region worst affected has been Africa.
For two decades the World Bank and the IMF have forced developing countries to create conditions that benefit Western corporations and governments. These conditions are known as Structural Adjustment Programs (SAPs). SAPs require governments to: cut public spending,(including eliminating subsidies for food, medical care and education); raise interest rates, thus reducing access to credit; privatize state enterprises; increase exports; and reduce barriers to trade and foreign investment such as tariffs and import duties. These measures are supposed to generate export-led growth that will attract foreign direct investment and can be used to reduce debt and poverty. (2)
According to a three-year, multi-country (including three African countries) study released in April 2002 by the Structural Adjustment Participatory Review International Network (SAPRIN), which was prepared in collaboration with the World Bank, national governments and civil society, SAPs have been "expanding poverty, inequality and insecurity around the world. [They have] torn at the heart of economies and the social fabric...increasing tensions among different social strata, fueling extremist movements and delegitimizing democratic political systems. Their effects, particularly on the poor are so profound and pervasive that no amount of targeted social investments can begin to address the social crises that they have engendered."(3)
SAPRIN explains this damning indictment by identifying four ways in which reforms under SAPs have impoverished people and increased economic inequality. Firstly, trade and financial sector reforms have destroyed domestic manufacturing leading to massive unemployment of workers and small producers. Secondly, agricultural, trade and mining reforms have reduced the incomes of small farms and poor rural communities as well as their food security. Thirdly, labour market flexibilization measures and privatizations have caused mass lay-offs of workers and resulted in lower wages, less secure employment, fewer benefits and "an erosion of workers rights and bargaining power." Privatization of major national assets and essential services has also allowed multinational corporations to remove resources and profits from countries as well as increase rates for water and electricity which has hit the poor the hardest. Fourthly, the cutting of health and education spending under SAPs and the introduction of user fees for these services, when combined with higher utility rates, has resulted in "a severe increase in the number of poor as well as a deepening of poverty."(4)
In the following sections we look at the effects of conditions imposed by the World Bank and the IMF's SAPs, on Africa generally and on three African countries, Zimbabwe, Ghana and Cote d'Ivoire, in particular. But first an overview of the World Bank, the IMF and structural adjustment.