Which way forward as West, IMF fight China over Africa?

Argentinians demonstrate against the government's negotiations with the International Monetary Fund (IMF), in Buenos Aires, on May 17, 2018. The IMF aimed at promoting international monetary cooperation. PHOTO | EITAN ABRAMOVICH | AFP

What you need to know:

  • Come the 1990s and beyond, China has since emerged as the greatest challenge to both the United States and the West.
  • We must be prepared for massive and painful sacrifices by the present generation, to overcome the serious developmental deficit.

The 1884 Berlin Conference divided Africa into spheres of influence among European Nations.

For 79 years, Kenya was a subject of the United Kingdom, and our development depended on the goodwill of the colonial government.

By 1963, we were merely producers of primary goods and our development occurred only to the extent it served the interests of the colonial authority.

In 1944, the International Monetary Fund (IMF) and World Bank were created, supposedly as a framework for economic co-operation and development which supposedly would lead to a more prosperous and stable global economy.

WORLD BANK
The IMF aimed at promoting international monetary cooperation and to provide policy advice that would help countries build and maintain strong economies. The World Bank, on the other hand, was intended to promote long-term economic development and reduce poverty by providing technical and financial support to help countries reform certain sectors in the long term.

What should be appreciated, however, is the two Bretton Woods institutions were created primarily by Western countries to serve their interests.

Consequently, no single country is a model of development as per IMF/WB prescriptions.

The evidence of the above is glaringly expounded in the Globalisation and its Discontents and The Roaring Nineties by Prof Joseph Stiglitz, the former chairman of Clinton’s Council of Economic Advisers and Chief Economist World Bank.

DEBTS

In the two books, Prof Stiglitz has examined how the IMF and World Bank handles Africa and other developing economies.

The financial crises in the 1990s that engulfed South East Asian countries like Korea, Thailand, Malaysia and Indonesia resulted from adopting IMF prescriptions.

Another illustrative book is the Confession of an Economic Hitman by John Perkins.

This is a narrative of how the IMF, World Bank and Western corporatocracies have ravaged the economies of developing nations through unsustainable debts calculated not to achieve the stated objectives but the enslavement of the recipient countries through poor design of loans on purpose.

Perkins outlines in graphic terms the roles played by the economic hitmen, having been one of them.

CHINA
Why the above narrative? It is a good contrast in order to understand the China factor.

For many decades, European powers dominated Africa, treated it as a by the way as evidenced by the fact that there is not one African country under any of the imperial powers that developed its potential.

However, come the 1990s and beyond, China has since emerged as the greatest challenge to both the United States and the West.

China has been generous with its loans to African countries, Kenya being a key beneficiary.

This is causing jitters among Western countries hence the ongoing debate on borrowing and the campaign by the IMF to influence legislators on interest rate capping.

DEVELOPMENT
Europe developed through massive injection of capital under the US Marshal Plan.

Further, without US military cover and capital, both Korea and Japan’s miracles would not have happened.

Africa has, however, not had a similar benefactor. However, to be beneficial, our borrowing must be for development only, coupled with financial management prudence.

We must be prepared for massive and painful sacrifices by the present generation, to overcome the serious developmental deficit, despite the ever growing population demands.

The China factor, therefore, is a critical nexus in defining Kenya’s way forward.

China is the only country today that is run like a corporation by a sophisticated and forward looking political class, with determination to rollout State loans without the conditionalities associated with the West.

DEPENDENCY

As we formulate our foreign trade and strategic policies, we must determine who are our facilitators for development and what is in our best national and security interests.

More importantly, we must define the time frame within which we must cut the umbilical cord of dependency.

The West is unlikely to help us in this quest. As Perkins says, the tool kit of economic hitmen remains “false economics that included distorted financial analyses, inflated projections, and rigged accounting books; secrecy, deception, threats, bribes and extortion; false promises that we never intended to honour; and enslavement through debt and fear”.

We must recognise that time is up for grants and aid.

Conversely, loans intended for development, not for consumption, are not a matter of choice but fact.

The question is for what purpose are we borrowing and are the debt ratios within our capability to service the loans or are we going to be visited by the Greek Scenario?

Mr Kabage is an Advocate of the High Court. [email protected]