Tag Archives: IMF

IMF and Zambia, 30 Years Again, by Gabriel C Banda

 

Zambia and IMF, 30 Years Again

By

Gabriel C Banda

MAY 2017 has been exactly thirty years after Zambia broke away from a harsh IMF-World Bank economic “Structural Adjustment Programme.”

In May 1987, President Kaunda announced that Zambia’s government was stopping the IMF, International Monetary Fund, Structural Adjustment Programme. It had been harsher than expected.

There had been much suffering. The quality of life of most people had worsened. Malnutrition had increased. Many persons had died due to the conditionalities. There was social tension. Riots related to food prices had occurred in December 1986. From the food protests and riots, some persons had died.

Women and children were particularly affected by the harsh conditions. Dr Kaunda had started off hopeful about the IMF programme but the nation had found it very destructive. Some gains made from independence on basic needs for all were being reversed.

Shylock

The debt conditions were like those of Shakespeare’s Shylock, who insisted on taking both flesh and blood, the lifeline, as debt service. Taking flesh and blood would kill the borrower.

Dr Kaunda announced that Zambia would embark on its own Economic Recovery Programme. The programme would be a “home grown” one sensitive and relevant to the local situation. It would be more friendly and at a stable pace.

Debt repayments ratios would be reduced so that Zambia had something for meeting basic needs instead of servicing debt to IMF, World Bank, and creditors at high ratios to national income.

Alternative

IMF, World Bank, and their allied institutions and governments, including Sweden and Norway, the Nordic normally friendly to Dr Kaunda and Zambia, were unhappy about Zambia breaking away from the IMF programme. They said there was no alternative to the harsh IMF-World Bank programme.

Although Zambia made some gains in its own economic programme, IMF and creditors came down very heavily on Zambia’s government. Sanctions were imposed on Dr Kaunda’s government.  Zambia did not have support from other debtors and partners and was thus compelled to get back to an IMF programme.

At that time, the economic powers were not as now and IMF and allies dominated and controlled the much of the lending and debt of many nations.

Riots

Under IMF and World Bank dictatorship, the economic adjustment programme continued to be harsh, leading to further food riots and deaths in June 1990.   As a result of suffering and discontent arising from the IMF programme, in June 1990, there was a coup attempt. The coup attempt failed but things were never the same again in politics and economics.

By the October 1991 elections, Dr Kaunda’s UNIP left office, letting in the MMD government of Frederick Chiluba. As in other places, an IMF programme had led to regime change. IMF was interested in governments that would follow its economic programme, however harsh the effects of the imposition.

From late 1991, the MMD government deeply embraced IMF. Again, for most people, poverty increased.

The IMF aggressively tried to promote private business and control and undermine public enterprise. Public enterprise can be through projects like state owned parastatals and cooperatives.

Yet for the health of a society, we believe that both private and public enterprises are necessary and must respect each other. There must be fairness for both business and members of the public. It is healthy to nourish both individual creativity and public enterprise.

Decline

The IMF economic policies of the 1990s led to the decline of local industries, enterprises, and formal sector employment. Local economic production was being dismantled in a de-Africanisation process.

Zambia became a market for externally produced goods, much from a South Africa just making its transition from apartheid. All sectors of society were greatly affected. And Zambia’s external debt was still very high.

These effects also happened in other places, and continents, the IMF programme was imposed in. Poverty increased. Many persons died. The quality of life declined. The integrity of society and life itself were greatly affected.

Regime Change

And there was regime change, with those getting into office being pro-big business and pro-IMF.

A global campaign against debt conditions helped Zambia and other governments with some relief in debt service. Key amongst the campaigners against debt conditions and unfair debt service was the Jubilee movement. Church and Civil Service Organisations and NGOs were major drivers of the world-wide Jubilee campaign.

Thirty Years, Now

Now, May 2017, exactly thirty years after President Kaunda’s courageous but foiled attempt to move away from a harsh IMF programme, and years after the success of the anti-debt campaign, Zambia and IMF have been preparing for an IMF economic programme.

Lessons Ignored

The lessons of Zambia and many governments of the world over the years are being ignored. Even more recent is the example of Greece, which has had huge difficulties with IMF and creditors.

Over the past two years, there have been discussions and preparations for an agreement. Signs can be noted with the recent, May 2017, introduction of IMF insisted increase in energy tariffs.

World Bank and IMF have already penetrated, and now influence, electricity production enterprises, such as members of the Southern African Power Pool, and energy regulator members of the regional RERA, Regional Electricity Regulators Association, Southern Africa.

World Bank has some projects in these, thus, as an opponent within, devouring and influencing things from within, moving the energy sector towards the IMF and World Bank vision. As before, World Bank and IMF use institutions, agents, and networks within countries to influence things in some desired direction, even if it is against the interest of the Common Good.

                                              Silent

Whereas Civil Society members were critical before and fought for the Common Good, they have now, as with “regulators,” been penetrated by IMF and World Bank. Some receive funds and resources from World Bank or associates of World Bank. Our Brothers and Sisters are now silent as IMF moves against the public.

More serious, they sometimes have voiced support for the IMF and World Bank programmes. They will also say, falsely, that there is no alternative to the programmes and to funding.

Foothold

Meanwhile, to get some foothold, World Bank has needlessly provided government with grants and loans for projects governments can do by themselves or find alternative sources with fair conditions.

The influence of IMF and World Bank will lead societies towards a vision of big business and business leaders controlling governments and politics. For Zambia, this will lead to the pre-1924 situation, where big business ran the country.

Again, after the experiences of Zambia and others, at this time when there ARE alternatives to IMF programmes and resources, why should Zambia go back to Shylock? After surviving Shylock, why would someone agree to go back to Shylock and the knife that will devour both blood and flesh?

Negative Enterprise

Sadly, Zambia’s Finance Minister Felix Mutati has expressed confidence in an IMF programme. He says it will be home-grown. This may turn out to be a naïve, even if innocent or sincere, approach.

One is not sure Felix Mutati has appreciated the tactical complexity of the IMF and World Bank negative enterprise.

I do not think Greece, from their current experience, and others would agree that IMF and creditors will allow a programme that deviates from the IMF script and template.

We wonder if IMF will allow Zambia’s government to change things according to the way things are turning out.

Future Generations

For some $1.6 billion only, the welfare and harmony of Zambia’s people and future generations are likely to be sacrificed to Shylock.

Felix Mutati should realise that, trying to deliver Zambia to IMF, he will bear responsibility for the harsh effects of the IMF programme on the society, now and in future.

From the IMF programme, what might develop in Zambia? The possibilities are that there will be hardship on the wider society. Increased energy tariffs will lead to higher costs of goods and services for the public. The various economic conditions will lead to difficulties in various sectors of life. People will be unhappy with the government.

Because of the effects of the IMF programme, the position of President Edgar Lungu and his administration will be shaky as 2021 elections approach. Some candidates favourable to IMF, World Bank, and big business will become prominent on the scene.

Those men and women may emerge from within the ruling PF party, the government, from other political parties, or from other sectors, such as business and finance.

BSA

The desired IMF-World Bank programme direction will be towards Zambia as at the time of BSA Company, although in some other forms but under the same principle of control of politics by big business. Yet there are alternatives to IMF and its negative programmes.

In May/early June 2017, when the attention of most Zambians was on the Under-20 soccer World Cup event in Seoul, South Korea, and where the Zambian team was heavily rated, the IMF team came into Zambia towards finalisation a loan agreement.

In March 2017, the IMF team also came around when people were busy on the Africa Under-20 tournament in Lusaka.

Reversing Africa’s advances

Now, the month of May enables people in Africa to pause and deeply reflect on Africa’s freedom struggles. To fix some IMF deal that reverses Africa’s advances and compromises the future is of concern.

Thirty years later, in 2017, the experiences of the government of Dr Kenneth Kaunda, other places, and the Jubilee Campaign should not be in vain.

*     Gabriel C Banda, May 2017, LUSAKA

The Author is independently involved in Writing Arts, Social Development, and observation of Conflict and Peace processes.

Following below, we share some more detailed writing we have previously done and published, among many others, on Zambia and its relationship to IMF and World Bank programmes. “IMF and Zambia, Mission March 2017,” came out on WordPress.com, at gabrielbanda.wordpress.com.

 

gcb-jan-2015_cpy

IMF and Zambia, Mission March 2017

by

Gabriel C Banda

WHILE many people have their attention focused on the Africa Under 20 soccer tournament taking place in Zambia, the IMF team has come back to Lusaka, seeking agreement over financing Zambia’s government.

As before, the arrival of the International Monetary Fund team will have great implication on Zambia’s economy and the current and future quality of life of Zambia’s people.

It will also enable us to understand how much has been learnt, or not learnt, or even unlearnt, from the experiences Zambia has had, over the decades, with IMF and its twin sister, or brother, the World Bank. It will show how much institutional and collective memories are utilised, or not utilised, in dealing with current issues. It will also reveal IMF and World Bank tactics.

                                                     World Bank, 1950s

Zambia’s relationship with the World Bank was already there in the 1950s, before independence, when Zambia was still Northern Rhodesia and neighbour Zimbabwe was Southern Rhodesia. There were some farming programmes supported.

But the big one, in 1955, was also one of the biggest in the world. This was the joint Southern Rhodesia-Northern Rhodesia Kariba Dam and hydro-electricity project, put on the Zambezi River bordering the two territories, and opened 1959. Kariba was then the biggest financing ever by the World Bank in the world.

There was a better site, at Kafue Gorge, in Zambia, yet a very costly and environmentally and socially damaging Kariba project was preferred. In 2017, close to sixty years after opening, Zambia and Zimbabwe began programmes, externally financed, to pay for the rehabilitation of the Kariba Dam wall.

(We have already written about the IMF and Zambia’s energy programme and how the World Bank, to support Zambia’s dependence on Rhodesia and apartheid South Africa, tried to prevent Zambia building the Kafue Gorge power station and, just after 2000, IMF and World Bank prevented Zesco from building some electricity generation projects, thus contributing to the vulnerability recently experienced, in 2015/2016, due to low rainfall.

IMF and World Bank are trying to promote and impose energy sector arrangements that are unstable and are costly for users. Throughout the region and beyond, IMF and World Bank have promoted, and are actually imposing, some invalid basis for the increase of household electricity tariffs).

                                                                Enter IMF

While the relationship with World Bank was earlier, Zambia’s membership of the IMF began in September 1965, shortly after Independence, October 1964.

For many years, the Zambian government did not borrow from IMF. From its own programmes following independence, Zambia had made advances in various basics, like education and training, health, and infrastructure. Quality of life increased. Life expectancy increased. Much of the resources were from Zambia’s own, with some support from partners in the West and the East.

While independent Zambia had some few helpful projects financed by World Bank on basics like shelter and schools, the first IMF lending to Zambia was linked to balance of payment pressures brought about by the Zambia-Rhodesia border closure of January 1973.

                                                                  Southern Africa struggles

Zambia, supporting independence and freedom movements in Southern Africa, was then implementing various international sanctions on neighbouring Rhodesia and apartheid South Africa. Zambia, with its big development programmes, had its economy greatly affected by the impact of the struggles for independence and freedom.

Apart from the effects of the freedom struggles in Southern Africa, Zambia was in the 1970s affected by increase in price of fuel imports. The Arab-Israeli war of October 1973 had effects on the worldwide price of petroleum. Zambia also had reduced income due to low copper prices. Zambia’s balance of payments was thus by the various factors affected.

Zambia then took its first IMF facility, of 19 million SDR (Special Drawing Rights) soft conditions loan. This was equivalent to K14.75 million Zambian currency or US $22.92 million. (The Kwacha was then stronger than the US dollar).

Then in the mid-1980s, an IMF Structural Adjustment Programme came into effect. It was meant to help pay external debt and harsh “austerity” conditions were put into place. President Kaunda pleaded for patience from the public, saying the sacrifice from austerity would lead to things getting better.

                                                                  Conditions

The IMF market forces and commercialisation programme came with particular conditions that restrained various activities. There were measures that liberalised the finance environment. Subsidies and public spending were reduced or removed. State firms were to be privatised.

Wages were frozen.  As a way of reducing costs in public service, retrenchments were done and retirement age brought forward to 55 years. Workers in government, councils, and parastatal enterprises were retrenched. Staffing establishments were reduced. These measures were to later affect institutional memory and capacities in many fields.

Schools and other institutions had maintenance staff laid off.  Councils had their staff reduced. Some important fabric components like Community Development and garbage collection were eventually reduced and even disbanded.

(The reduction of council capacities contributed to the 2017 situation were households are throwing garbage within their premises and residential areas because the commercialised and privatised garbage system is not working well for most.

Before commercialisation, garbage collection fees were added to the rent and councils, who provided the garbage service, were generally performing better in that than what is happening now. Garbage collection is a Common Good that cannot be easily carried out just by profit motivation).                             

                                                              Surgeons not Butchers

But by 1987, in Zambia, the IMF medicine, or surgery, was destroying the patient!  A true surgeon is not a butcher.  And a butcher is not a surgeon.

Thus, in May 1987, due to the worsening negative effects, President Kaunda, to prevent further destabilisation of the society, announced that Zambia was breaking away from the IMF programme while still remaining a member of the organisation.

Dr Kaunda said there was to be a home-grown alternative programme. The local “New Economic Recovery Programme” was in place in 1988. Some advances were made. But IMF, World Bank, and allied governments and institutions said there was no alternative to their killing medicine and surgery and imposed sanctions.

Through sanctions and pressures by IMF, World Bank, and allied governments, President Kaunda’s government was in 1989 forced back to some IMF programme relationship.

The hardship continued. In June 1990, with riots as a result of the IMF programme’s impact on food and basic needs, there was a coup attempt.

President Chiluba’s government that followed in November 1991 was more open and willing towards the IMF programme. In the 1990s, the programmes created much hardship in the general population.

The impacts of the 1980s and 1990s still live on in Zambia now and are in our lives in various sectors. Dubious “Health Reforms” led to the exclusion of many persons from health services and death and suffering of many persons. Maternal deaths increased. Malnutrition increased. Life expectancy declined.

                                                              HIV and IMF

The combination of IMF economic Structural Adjustment imposition with the emergence of HIV and AIDS had deadly impact.

                                                         De-industrialisation      

As in other places of the world where IMF imposed its measures, as a result of the programme, and by intention of the programme, employment in the “formal” sector reduced. The programmes led to some de-industrialisation of some societies and de-Africanisation of enterprise ownership.

                                                                Cohesion

Apart from many persons dying as a result of the measures, many persons and families went into material decline and poverty. Social stability was shaken. And social tension increased. Social cohesion was put under pressure and declined.

Many persons died as a result of the IMF measures. Protests and riots happened, with violent deaths arising. The combination of SAP measures nourished corruption.

The capacities of societies in various fields have declined. In various sectors, Zambia’s current capacities are lower than they would have been without the effects of IMF and World Bank programmes.

The IMF programmes, forcibly imposed, have been instruments of violence.  They fight the balance and integrity of life.

                                                                      Regime Change

In some places, IMF programmes have, through economic pressure and hardship, led to regime change. Governments have been voted out or removed in other ways. In Zambia, there was, in 1990, a coup attempt following riots over high food prices brought about by the IMF programme. The economic hardships experienced contributed to UNIP losing office in the elections of October 1991.

Some rulers agree to the dictatorial IMF and World Bank imposition because of fear of being removed from office.

IMF and World Bank have leaned towards politicians that can deliver economic policy and practice environments favourable to IMF and World Bank “market forces” and strong pro-business positions. Yet, we believe, both public and public sectors are needed in a healthy society.

                                                                Big Business

An extreme and strong pro-business direction may lead Zambia to the situation before 1924, when big business, the BSA Company, was government. Big business in control can decide who rules or controls a country.

                                                             Greece, Disastrous

But even when their programmes have created hardship, IMF and World Bank move away from responsibility and put blame onto the victim government and society. The IMF and World Bank enforcers have been unrepentant.

Overall, there have been bitter experiences with IMF programmes in Africa, Asia, Latin America, and even Europe, in places like Greece.

Greece Minister of Labour and Social Security told BBC Hard Talk in March 2016 that while other lenders have been considering better and more socially sustainable economic and debt measures for Greece, the IMF “insists on further measures. And it is now the IMF which is isolated, not us.”

Continues George Katrougalos: “I have the conclusion that the austerity policies applied last five years were really disastrous and we must change the mix of these policies…”

                                                              IMF in Zambia, Now

Over the recent two years, IMF and World Bank have tried to reach out to Zambia and hook a programme. There was time, especially before the August 2016 elections, those in authority, knowing the consequences experienced in Zambia and elsewhere, were cautious or even reluctant about getting involved with an IMF programme.

But IMF and World Bank are still reaching out, although they will turn things around and say the Zambian government is the one driving the interest to have assistance from them.

This will be helped by local officials calling an IMF programme “home-grown.” If an agreement is made, we do not know whether it will really be allowed to be locally visioned and driven. How far will it differ from IMF templates?

Will IMF sit back and allow Zambia’s government to drive the programme? We do not know to what extent IMF and World Bank will drive it, directly or working at the back as puppet masters. Why don’t IMF and World Bank let local persons, and whoever the local persons decide to work with, to drive their governments’ programmes?

The IMF and World Bank have taken advantage of some errors or inappropriate or inadequate decisions and actions made affecting finance and resource management after President Sata and the PF came into office in 2011.  But, we believe, the errors and their effects can be dealt with and society healed and balanced without going into some IMF programme.  An IMF programme is likely to destabilise the society.

                                                                                                                                                                                                                                                Thirty Years Now

May 2017 marks some thirty years since Zambia’s abandonment of the harsh IMF programme.

We must accept that many persons now do not recollect the harsh mid 1980s experiences invoked by IMF and World Bank conditions. Some have forgotten, or let go, the pain and anguish. Some, a huge number, only hear stories from older persons.

Some of these persons currently are in some positions of authority and take lightly the idea of implementing IMF programmes. They do not realise or know that the measures have led to death, riots, social turmoil, and reduced capacity in many parts of the world.

Some members of staff of IMF and World Bank may not be aware of their employers’ role in bringing about great negative impact through imposed policies. Not knowing the results of the actions they are working for, a danger is that they will continue contributing to the same problems their institutions have been growing.

Ill advice from IMF and World Bank, perhaps by persons with, at best, poor understanding of local situations or incompetence when related to the situation, and, at worst, following negative interests, led to inappropriate IMF measures that greatly affected quality of life and capacities of societies.

                                              Organised Hold

The IMF and World Bank continue to have influence on governments through some very organised ways. They have cultivated some sympathisers and agents, in key positions, who will influence their governments and institutions to have relations with IMF and World Bank, even where it is not necessary and will lead to negative consequences.

The IMF and World Bank have put a foot hold into governments by continuing to provide small loans and grants that enable them to stay around and have presence in government policies and programmes.

In Zambia, and other places in Africa, IMF and World Bank have penetrated the energy sector, with its huge potential, and are trying to influence it, even by doing projects with energy generators and energy regulators.

IMF and World Bank are compromising energy regulators, to switch off their role dealing with fairness between energy providers and users, so that the desires of the IMF and World Bank machine are imposed, leading to control of the energy sector by those friendly to the spirit of IMF and World Bank.

                                                                  NGOs

And years before, NGO and Civil Society organisations, including churches, were active in issues of people’s quality of life and did much to campaign against debt conditions. This was done, and to some extent achieved, through activities like The Jubilee Campaign.

These days, civil society and NGO organisations are silent on the effects of IMF and World Bank programmes. Some civil society and NGO organisations receive funding for their activities and thus will not criticise IMF and World Bank for impact of their programmes. They are embedded with IMF and World Bank.

Some organisations do not only avoid criticising IMF and World Bank, but will actively support the imposition and implementation of IMF and World Bank programmes. They will side against governments and take IMF and World Bank as their kith and kin.

Sad is that IMF and World Bank come back and forth and many times do still manage to hook governments into activities that are destructive of economies and society. IMF and World Bank bondage techniques continue to work, leading to enslavement of governments and needless hardship in societies.

Sad that those who survived the shackles and sharp blade of Shylock the money lender will some years later go back to the same Shylock, who still insists on the pound of flesh that will also drain blood from the organism.

                                                               Alternatives

Actually, there ARE alternatives, if you open up your mind. There are alternatives to IMF and World Bank programmes. And there ARE alternatives to getting support, lending or grants, to move out of economic situations. The situation now is not that of the 1980s and 1990s IMF and World Bank monopoly and bullying.

But as IMF and World Bank fear that more and more persons and governments will be seeking assistance and links elsewhere, they are getting more active in reaching persons and institutions they can use to influence the direction of governments and societies.

And a question must continue to be asked: with all hardship from the IMF and World Bank programme self-evident over the decades, and knowing that implementation is even dangerous for their societies and governments, and added the fact that there are alternatives to the conditions and partner helpers or lenders, why do governments still, even in 2017, go to IMF and World Bank for borrowing?

As the Africa Under-20 soccer tournament progresses in Zambia, let us also keep our focus on the IMF-Zambia ball play.

ginfinite@yahoo.com

February, 2017, LUSAKA

 The author is involved in Writing and the Arts, Social Development Work, Social Research, and observation and analysis of Conflict and Peace issues. For over three decades, he has researched and written extensively on basic needs and economic policies, including economic adjustment programmes. This piece is some summary of the writer’s more detailed writing on the issue. 

IMF and Zambia, Mission 2017, by Gabriel C Banda

gcb-jan-2015_cpy

IMF and Zambia, Mission March 2017

by

Gabriel C Banda

WHILE many people have their attention focused on the Africa Under 20 soccer tournament taking place in Zambia, the IMF team has come back to Lusaka, seeking agreement over financing Zambia’s government.

As before, the arrival of the International Monetary Fund team will have great implication on Zambia’s economy and the current and future quality of life of Zambia’s people.

It will also enable us to understand how much has been learnt, or not learnt, or even unlearnt, from the experiences Zambia has had, over the decades, with IMF and its twin sister, or brother, the World Bank. It will show how much institutional and collective memories are utilised, or not utilised, in dealing with current issues. It will also reveal IMF and World Bank tactics.

                                                     World Bank, 1950s

Zambia’s relationship with the World Bank was already there in the 1950s, before independence, when Zambia was still Northern Rhodesia and neighbour Zimbabwe was Southern Rhodesia. There were some farming programmes supported.

But the big one, in 1955, was also one of the biggest in the world. This was the joint Southern Rhodesia-Northern Rhodesia Kariba Dam and hydro-electricity project, put on the Zambezi River bordering the two territories, and opened 1959. Kariba was then the biggest financing ever by the World Bank in the world.

There was a better site, at Kafue Gorge, in Zambia, yet a very costly and environmentally and socially damaging Kariba project was preferred. In 2017, close to sixty years after opening, Zambia and Zimbabwe began programmes, externally financed, to pay for the rehabilitation of the Kariba Dam wall.

(We have already written about the IMF and Zambia’s energy programme and how the World Bank, to support Zambia’s dependence on Rhodesia and apartheid South Africa, tried to prevent Zambia building the Kafue Gorge power station and, just after 2000, IMF and World Bank prevented Zesco from building some electricity generation projects, thus contributing to the vulnerability recently experienced, in 2015/2016, due to low rainfall.

IMF and World Bank are trying to promote and impose energy sector arrangements that are unstable and are costly for users. Throughout the region and beyond, IMF and World Bank have promoted, and are actually imposing, some invalid basis for the increase of household electricity tariffs).

                                                                Enter IMF

While the relationship with World Bank was earlier, Zambia’s membership of the IMF began in September 1965, shortly after Independence, October 1964.

For many years, the Zambian government did not borrow from IMF. From its own programmes following independence, Zambia had made advances in various basics, like education and training, health, and infrastructure. Quality of life increased. Life expectancy increased. Much of the resources were from Zambia’s own, with some support from partners in the West and the East.

While independent Zambia had some few helpful projects financed by World Bank on basics like shelter and schools, the first IMF lending to Zambia was linked to balance of payment pressures brought about by the Zambia-Rhodesia border closure of January 1973.

                                                                  Southern Africa struggles

Zambia, supporting independence and freedom movements in Southern Africa, was then implementing various international sanctions on neighbouring Rhodesia and apartheid South Africa. Zambia, with its big development programmes, had its economy greatly affected by the impact of the struggles for independence and freedom.

Apart from the effects of the freedom struggles in Southern Africa, Zambia was in the 1970s affected by increase in price of fuel imports. The Arab-Israeli war of October 1973 had effects on the worldwide price of petroleum. Zambia also had reduced income due to low copper prices. Zambia’s balance of payments was thus by the various factors affected.

Zambia then took its first IMF facility, of 19 million SDR (Special Drawing Rights) soft conditions loan. This was equivalent to K14.75 million Zambian currency or US $22.92 million. (The Kwacha was then stronger than the US dollar).

Then in the mid-1980s, an IMF Structural Adjustment Programme came into effect. It was meant to help pay external debt and harsh “austerity” conditions were put into place. President Kaunda pleaded for patience from the public, saying the sacrifice from austerity would lead to things getting better.

                                                                  Conditions

The IMF market forces and commercialisation programme came with particular conditions that restrained various activities. There were measures that liberalised the finance environment. Subsidies and public spending were reduced or removed. State firms were to be privatised.

Wages were frozen.  As a way of reducing costs in public service, retrenchments were done and retirement age brought forward to 55 years. Workers in government, councils, and parastatal enterprises were retrenched. Staffing establishments were reduced. These measures were to later affect institutional memory and capacities in many fields.

Schools and other institutions had maintenance staff laid off.  Councils had their staff reduced. Some important fabric components like Community Development and garbage collection were eventually reduced and even disbanded.

(The reduction of council capacities contributed to the 2017 situation were households are throwing garbage within their premises and residential areas because the commercialised and privatised garbage system is not working well for most.

Before commercialisation, garbage collection fees were added to the rent and councils, who provided the garbage service, were generally performing better in that than what is happening now. Garbage collection is a Common Good that cannot be easily carried out just by profit motivation).                             

                                                              Surgeons not Butchers

But by 1987, in Zambia, the IMF medicine, or surgery, was destroying the patient!  A true surgeon is not a butcher.  And a butcher is not a surgeon.

Thus, in May 1987, due to the worsening negative effects, President Kaunda, to prevent further destabilisation of the society, announced that Zambia was breaking away from the IMF programme while still remaining a member of the organisation.

Dr Kaunda said there was to be a home-grown alternative programme. The local “New Economic Recovery Programme” was in place in 1988. Some advances were made. But IMF, World Bank, and allied governments and institutions said there was no alternative to their killing medicine and surgery and imposed sanctions.

Through sanctions and pressures by IMF, World Bank, and allied governments, President Kaunda’s government was in 1989 forced back to some IMF programme relationship.

The hardship continued. In June 1990, with riots as a result of the IMF programme’s impact on food and basic needs, there was a coup attempt.

President Chiluba’s government that followed in November 1991 was more open and willing towards the IMF programme. In the 1990s, the programmes created much hardship in the general population.

The impacts of the 1980s and 1990s still live on in Zambia now and are in our lives in various sectors. Dubious “Health Reforms” led to the exclusion of many persons from health services and death and suffering of many persons. Maternal deaths increased. Malnutrition increased. Life expectancy declined.

                                                              HIV and IMF

The combination of IMF economic Structural Adjustment imposition with the emergence of HIV and AIDS had deadly impact.

                                                         De-industrialisation      

As in other places of the world where IMF imposed its measures, as a result of the programme, and by intention of the programme, employment in the “formal” sector reduced. The programmes led to some de-industrialisation of some societies and de-Africanisation of enterprise ownership.

                                                                Cohesion

Apart from many persons dying as a result of the measures, many persons and families went into material decline and poverty. Social stability was shaken. And social tension increased. Social cohesion was put under pressure and declined.

Many persons died as a result of the IMF measures. Protests and riots happened, with violent deaths arising. The combination of SAP measures nourished corruption.

The capacities of societies in various fields have declined. In various sectors, Zambia’s current capacities are lower than they would have been without the effects of IMF and World Bank programmes.

The IMF programmes, forcibly imposed, have been instruments of violence.  They fight the balance and integrity of life.

                                                                      Regime Change

In some places, IMF programmes have, through economic pressure and hardship, led to regime change. Governments have been voted out or removed in other ways. In Zambia, there was, in 1990, a coup attempt following riots over high food prices brought about by the IMF programme. The economic hardships experienced contributed to UNIP losing office in the elections of October 1991.

Some rulers agree to the dictatorial IMF and World Bank imposition because of fear of being removed from office.

IMF and World Bank have leaned towards politicians that can deliver economic policy and practice environments favourable to IMF and World Bank “market forces” and strong pro-business positions. Yet, we believe, both public and public sectors are needed in a healthy society.

                                                                Big Business

An extreme and strong pro-business direction may lead Zambia to the situation before 1924, when big business, the BSA Company, was government. Big business in control can decide who rules or controls a country.

                                                             Greece, Disastrous

But even when their programmes have created hardship, IMF and World Bank move away from responsibility and put blame onto the victim government and society. The IMF and World Bank enforcers have been unrepentant.

Overall, there have been bitter experiences with IMF programmes in Africa, Asia, Latin America, and even Europe, in places like Greece.

Greece Minister of Labour and Social Security told BBC Hard Talk in March 2016 that while other lenders have been considering better and more socially sustainable economic and debt measures for Greece, the IMF “insists on further measures. And it is now the IMF which is isolated, not us.”

Continues George Katrougalos: “I have the conclusion that the austerity policies applied last five years were really disastrous and we must change the mix of these policies…”

                                                              IMF in Zambia, Now

Over the recent two years, IMF and World Bank have tried to reach out to Zambia and hook a programme. There was time, especially before the August 2016 elections, those in authority, knowing the consequences experienced in Zambia and elsewhere, were cautious or even reluctant about getting involved with an IMF programme.

But IMF and World Bank are still reaching out, although they will turn things around and say the Zambian government is the one driving the interest to have assistance from them.

This will be helped by local officials calling an IMF programme “home-grown.” If an agreement is made, we do not know whether it will really be allowed to be locally visioned and driven. How far will it differ from IMF templates?

Will IMF sit back and allow Zambia’s government to drive the programme? We do not know to what extent IMF and World Bank will drive it, directly or working at the back as puppet masters. Why don’t IMF and World Bank let local persons, and whoever the local persons decide to work with, to drive their governments’ programmes?

The IMF and World Bank have taken advantage of some errors or inappropriate or inadequate decisions and actions made affecting finance and resource management after President Sata and the PF came into office in 2011.  But, we believe, the errors and their effects can be dealt with and society healed and balanced without going into some IMF programme.  An IMF programme is likely to destabilise the society.

                                                                                                                                                                                                                                                 Thirty Years Now

May 2017 marks some thirty years since Zambia’s abandonment of the harsh IMF programme.

We must accept that many persons now do not recollect the harsh mid 1980s experiences invoked by IMF and World Bank conditions. Some have forgotten, or let go, the pain and anguish. Some, a huge number, only hear stories from older persons.

Some of these persons currently are in some positions of authority and take lightly the idea of implementing IMF programmes. They do not realise or know that the measures have led to death, riots, social turmoil, and reduced capacity in many parts of the world.

Some members of staff of IMF and World Bank may not be aware of their employers’ role in bringing about great negative impact through imposed policies. Not knowing the results of the actions they are working for, a danger is that they will continue contributing to the same problems their institutions have been growing.

Ill advice from IMF and World Bank, perhaps by persons with, at best, poor understanding of local situations or incompetence when related to the situation, and, at worst, following negative interests, led to inappropriate IMF measures that greatly affected quality of life and capacities of societies.

                                              Organised Hold

The IMF and World Bank continue to have influence on governments through some very organised ways. They have cultivated some sympathisers and agents, in key positions, who will influence their governments and institutions to have relations with IMF and World Bank, even where it is not necessary and will lead to negative consequences.

The IMF and World Bank have put a foot hold into governments by continuing to provide small loans and grants that enable them to stay around and have presence in government policies and programmes.

In Zambia, and other places in Africa, IMF and World Bank have penetrated the energy sector, with its huge potential, and are trying to influence it, even by doing projects with energy generators and energy regulators.

IMF and World Bank are compromising energy regulators, to switch off their role dealing with fairness between energy providers and users, so that the desires of the IMF and World Bank machine are imposed, leading to control of the energy sector by those friendly to the spirit of IMF and World Bank.

                                                                         NGOs

And years before, NGO and Civil Society organisations, including churches, were active in issues of people’s quality of life and did much to campaign against debt conditions. This was done, and to some extent achieved, through activities like The Jubilee Campaign.

These days, civil society and NGO organisations are silent on the effects of IMF and World Bank programmes. Some civil society and NGO organisations receive funding for their activities and thus will not criticise IMF and World Bank for impact of their programmes. They are embedded with IMF and World Bank.

Some organisations do not only avoid criticising IMF and World Bank, but will actively support the imposition and implementation of IMF and World Bank programmes. They will side against governments and take IMF and World Bank as their kith and kin.

Sad is that IMF and World Bank come back and forth and many times do still manage to hook governments into activities that are destructive of economies and society. IMF and World Bank bondage techniques continue to work, leading to enslavement of governments and needless hardship in societies.

Sad that those who survived the shackles and sharp blade of Shylock the money lender will some years later go back to the same Shylock, who still insists on the pound of flesh that will also drain blood from the organism.

                                                               Alternatives

Actually, there ARE alternatives, if you open up your mind. There are alternatives to IMF and World Bank programmes. And there ARE alternatives to getting support, lending or grants, to move out of economic situations. The situation now is not that of the 1980s and 1990s IMF and World Bank monopoly and bullying.

But as IMF and World Bank fear that more and more persons and governments will be seeking assistance and links elsewhere, they are getting more active in reaching persons and institutions they can use to influence the direction of governments and societies.

And a question must continue to be asked: with all hardship from the IMF and World Bank programme self-evident over the decades, and knowing that implementation is even dangerous for their societies and governments, and added the fact that there are alternatives to the conditions and partner helpers or lenders, why do governments still, even in 2017, go to IMF and World Bank for borrowing?

As the Africa Under-20 soccer tournament progresses in Zambia, let us also keep our focus on the IMF-Zambia ball play.

ginfinite@yahoo.com

February, 2017, LUSAKA

 The author is involved in Writing and the Arts, Social Development Work, Social Research, and observation and analysis of Conflict and Peace issues. For over three decades, he has researched and written extensively on basic needs and economic policies, including economic adjustment programmes. This piece is some summary of the writer’s more detailed writing on the issue. 

Mama Hillary Clinton in Zambia, by Gabriel C Banda

In 2011, Hillary Rodham Clinton, then United States Secretary of State, visited Zambia. I wrote about her in relation to some key challenges facing humanity and human relations.

Hillary Clinton, in whom many of us have for long been well pleased, has just had official endorsement as Democratic Party’s 2016 US presidential election candidate.

Of course, I differ with her on events of Libya and Syria. Unlike persons like John McCain and Sister Hillary Clinton and Bernard-Henri Levy, I believe that President Barack Obama did the right thing not to directly invade and strike Syria. If more armed pressure had been made on Syria and Assad had fallen, ISIS would have risen earlier and things would have been worse now.

On Libya, I believe, then as now, that Barack Obama, reluctant at first, should not have allowed himself to join France warlord Nicolas Sarkozy and others to invade Libya and destroy Muammar Qaddafi, leading to the chaos that will be with us for long. Western support for armed rebels in Libya and Syria, as the invasions of Afghanistan and Iraq, has created difficulties and some instability for the whole world, including Western societies.

And in the view of many of us in various parts of the world, Hillary Clinton will definitely make a good president for the United States.  The rule of Barack Obama has dignified America in the world and managed to make many outside the United States appreciate the projection of a United States that has a more friendly and humane nature, a society that is surely a close family member of humanity rather than its boss and bully and actor for the Superpower idea, “Superpower” being a myth that cannot be achieved in nature by any government or group. 

Hillary Clinton would more likely continue the improvement of human relations than, say, a person like Donald Trump, a personality that may lead to increased tension and division in human relations. Already, Hillary Clinton has made some remarkable contributions to the Common Good. More good than bad will arise from Hillary Clinton’s rule.

Here, I reproduce, courtesy Post Newspaper, Lusaka, the piece published on my then “Another View” column in the Post of Saturday June 18, 2011:

 

Mama Hillary Clinton’s Challenge

By

Gabriel Banda

“ALL too often, we were doing programs that continued year after year, and we, frankly, did too much of the talking and not enough of the listening, ”said Mama Hillary Rodham Clinton, USA Secretary of State, in our city Lusaka, Friday, June 10, 2011. She was closing the AGOA, African Growth and Opportunities Act countries, forum.

She observed that, “despite the best of intentions, for too long, in too much of our development work, the United States was not focused on the kind of partnerships that should be at the root of development,”

And Mrs Hillary Clinton said the United States administration of Barrack Obama aims to be more sensitive.

“In this Administration,” said she, “We have embarked on a new way of doing business.” And, “Our approach is based on partnership, not patronage.”

Also, “Ultimately, it is aimed at helping developing countries chart their own futures and, frankly, end the need for aid at all.”

Sister Hillary Clinton’s words in Lusaka highlight some key problems in human relations and development. These issues face not only people in USA and Africa relations, but governments and persons all over the world. It is about patronage or true partnership.

Problems of patronising attitudes and practices affect various fields. Besides the social development field, in politics example is the George W Bush administration’s March 2003 invasion of Iraq. The results of the invasion continue to affect not only the United States and the Middle East, but all of us, worldwide. Tensions increased.

Before invasion, the Bush regime had been cautioned, by many worldwide, of unjustness of the actions and the likely negative effects. These came to pass. Even now, clearly, instead of using the United Nations system to broker peace, in Libya the current external governments’ military role, which does not meet “just war” criteria, will bear huge negative effects worldwide. The war lord attitude has not been restricted to Bush rule.

But in development, trade and business, civil society, and other fields, actions arising from the patronage mindset are still with us.

Apart from other variations in nature, human variation is noted in issues like skin colour, being male or female, religion, ethnic link, culture, language, nationality and citizenship, and location.

Variation in many aspects of the world contributes towards a more whole earth and life. That there is variation on earth is great resource for us to learn and grow from many angles. This variation actively contributes to the making of the whole and the balance of that whole.

Each individual part is unique and gifted. Each we must appreciate. I believe that none is inherently superior or inferior by being born in some particular community. I believe a person born in the deserts of Africa can learn to fly a Boeing 747 while a person born in the skyscrapers of Manhattan can learn to live well in a desert.

We need to open ourselves to other persons. There is no stranger in the world. And the earth being circular, each point of the world is the centre of the world. Each individual or place is important for the maintenance of the whole world. Wherever you are is the centre of the world.

And wherever each person is, they must actively contribute their skills, experiences, and thoughts. A problem is when we are doing “too much of the talking and not enough of the listening.” This has meant closing, or limiting, ourselves off from the skills and experiences of others.

Often projects and activities are tackled without the active consultation and involvement of the ones who live the practical situation. This has led to projects not working well. Even where much money is poured in, lacking the essential human ingredients, the projects have reached less than they would have had they involved input from a wide variation.

Some who handle cash and resources tend to control the direction of projects and activities. They leave out the thoughts, skills, experiences, and visions of others they consider less able because those persons in material, finance, resource, and background situations are thought to be lesser than controller’s.

Many projects do not take in input of local persons as the projects merely implement templates designed from outside. In Zambia, Africa, and elsewhere, work against HIV and AIDS could have advanced further or earlier had there been more listening to others. The resources would have reached and done further. This is a bigger problem in mono-donor situations, where some donors dominate particular fields. They stifle creativity and growth.

Various talents, skills, and experiences willingly shared can contribute to the benefit of many. We are fortunate that with some six billion persons, male and female they are, we have chance, if we open ourselves to them, to live some six billion lives and deep experiences.

Slavery, slave trade, and apartheid have been evils because of pain and working against preferred choices of the enslaved as things are directed to service of the slave masters. Left to their own choices, enslaved persons could have contributed greatly, in many other ways, to the world. Slavery made the world lose out in growth and opportunities.

Currently, there are so called “experts” who are not competent, while some have skills but are not very appropriate, relevant, to the situations. Some do not do “enough of listening” and allowing other persons.

IMF and World Bank and their allies have shown arrogance, bullying, incompetence, and dictatorship. They pushed aside local views and imposed some inappropriate programmes. They kept imposing their activities through various sanctions and threats against governments and society.

The fruits of IMF programmes include increased poverty, crime, corruption, environmental impact, and inequalities around factors like ethnicity, cultures, gender, and regions. Their programmes have caused reduced capacity of societies. The programmes worked against growth and opportunities of societies. The activities have acted against peace and the integrity of life.

They have not organised resource and other reparations to redress the damage they have done to societies and humanity. Perhaps some recent debt write-off may be considered silent reparations. But the organisations still control economic programmes which are still inappropriate for societies

But, even though many have sought it and others been assigned, in this unitary and interdependent world, there can be no superpower. Superpower is a temporary human created myth without basis in truth.

Now or in other generations, the action of one in one place affects all others everywhere. To grow, we should be moving towards relationships of mutual respect, growth, and realisation that the work of all of us on earth seeks to eventually pull together towards a common good.

The world will flourish through partnership and creativity, not through patronage. It is important to allow others. Every one will nourish and grow. Many should listen to, and practice, some of Mama Hillary Clinton’s words!

END

– GCB June 2011, LUSAKA.

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IMF and Zambia’s power, by Gabriel C Banda

IMF and Zambia’s power

By

Gabriel C Banda

TODAY, we will consider some efforts of the IMF and World Bank duad in actually preventing the building of electricity generation capacity and increased consumer access in Zambia.

Over the decades, besides writing on conflict and peace building issues, we have written much on interaction of economic policies and practices with the situation of basic needs in Zambia and worldwide.

Recently, considering the IMF, International Monetary Fund, and World Bank late 2015 and early 2016 courtship visits to Zambia, I have written reflection and analysis on the dynamics of Zambia’s relationship with IMF and World Bank. The writing has covered the early lending relationship, impact of the economic measures in the short term and long term, and Zambia’s current situation.

We covered the anti-austerity protests and riots that resulted in Zambia and elsewhere. We considered effects on the stability of individuals, households, and societies. We have brought out questions about economic policy dictatorship.

We have also shown some similarities of Greece’s current stressful experience with Zambia’s earlier ones involving IMF, World Bank, and creditors.

An interesting angle we are dealing with today is the forgotten, unheard, ignored, underrated, or hidden influence of IMF and World Bank in the electricity energy situation that Zambia is currently in, in the year 2016.

World Bank before Independence

Now, while Zambia became a member of the International Monetary Fund, IMF, in 1965, a year after Independence, World Bank had some relationship with Zambia before independence. In mid 1960s, the World Bank’s opposition to Zambia building its own power station at Kafue Gorge was in major part linked to the Bank’s own activities in the 1950s.

Besides some railways and agriculture projects, the World Bank had actually been involved in the funding of the Kariba Dam and its hydro-electricity power station jointly owned by two Federation of Rhodesia and Nyasaland members Northern Rhodesia and Southern Rhodesia, now Zambia and Zimbabwe.

In June 1956, the World Bank loaned 80 million US dollars to the Federal Power Board. A huge amount then, this was one of the biggest lending World Bank had ever made. Amongst the basket of lenders, it was one of the biggest loans towards the Kariba Dam and power station.

Even after the 1963 breakup of the Federation, Zambia’s independent government was over the years liable to servicing its part of the loan to the World Bank. The payments were to be through the Central Africa Power Corporation, which entity later, linked to the 1963 dissolution of the Federation, replaced the Federal Power Board.

Siting Kariba against Kafue Gorge

The siting of the dam for the power station was itself a controversy. While Kafue Gorge, in Northern Rhodesia, may have been a better site in terms of impact on humans, environmental impact, and other factors, the Federation’s affairs were tilted in favour of Southern Rhodesia, which had a big and influential White settler community, the site was eventually fixed for the Zambezi River at the border at Kariba.

The Kariba Dam, which became the biggest artificial lake in the world, had massive human, social, and environmental effects – still living with us today, almost sixty years after building. And there are earthquake and seismic effects still happening.

Perhaps it was the times or available technology and terrain factors, but we may argue that Zambia’s later Kafue Gorge power station system has had less impact than Kariba and has delivered very high returns in electricity generation. Kafue Gorge had a built capacity of 900 Mega Watts while Kariba South bank started with 705 Mega Watts.

UDI

In September, 1964, a month before Zambia’s independence, another World Bank loan was approved for CAPCO to embark on a second transmission line from Kariba to the Copperbelt and other capacity expansion works. The guarantors of the loan were the United Kingdom, Northern Rhodesia, and Southern Rhodesia.

But the cooperation of Zambia and Southern Rhodesia was to be greatly affected. In November 1965, Ian Douglas Smith and his white team illegally, against the colonial authority of the British government, forced Southern Rhodesia’s Unilateral Declaration of Independence, UDI.

This led to tension in the region and the world. United Nations economic and other sanctions were declared against rebel Rhodesia. This meant that Zambia’s ties with Rhodesia were broken or not the same again.

When Rhodesia threatened to block off Kariba electricity, whose control was on the South bank, the Rhodesia side, from flowing to Zambia, President Kenneth Kaunda’s government made urgent efforts to have an own power station. An immediate site for a station was at Kafue Gorge, which had been rejected during Federation.

World Bank against Kafue Gorge

However, when Zambia’s government started making arrangements, the World Bank tried to block it. The World Bank’s reasons seem to have rested on the fact that World Bank had invested hugely in the Kariba Dam and power station. In September 1964, they had even approved another loan for the join CAPCO.

World Bank’s preference was for Zambia to continue relying on the jointly owned dam and power station and ignoring the difficult situation of the politics of UDI. Just as Zambia had approached Western governments to help build the TAZARA railway line as a way of keeping with the United Nations sanctions and links with Rhodesia and the West refused to help, now the World Bank did not want Kafue Gorge power to be built by Zambia.

As on TAZARA, there was an assumption that the situation of UDI and Zimbabwe becoming independent could be solved in a short time. But UDI took some fifteen difficult years and war to settle.

An official remembers that President Kaunda’s government, unhappy with the World Bank position, appealed to the USA president. Dr Kaunda, fresh from a mindset of achieving Independence, sent a message to President Johnson, saying Zambia had an independent government and the World Bank had no authority to prevent Zambia from building a power station.

USA, then in good books with the anti-UDI Africa and world movements, told World Bank not to block Zambia and to allow Zambia to build. Thus the Kafue Gorge power project went ahead. Supported by civil engineering from Yugoslavia and electricity generation machinery by Sweden, it was a huge but efficient engineering project.

Zambia, in those days part of the Non-Aligned movement, and proclaiming a “mixed economy,” dealt with both Eastern and Western governments that were themselves in their own hostilities of the “Cold War.”

Kafue Gorge power station was build with Itezhi Tezhi dam further away, at Namwala. Built for the future, Itezhi Tezhi dam was built with a provision of a power station, which was fulfilled by Zesco and Tata in early 2016.

Zesco

Meanwhile, in 1970, Zambia consolidated electricity supply by local authorities into an enterprise, Zambia Electricity Supply Corporation, Zesco. This was publicly owned, with government shares, a “parastatal,” which IMF and World Bank have been against. They believe business, especially utilities, should be “private sector driven.”

After Kafue Gorge’s opening in early 1970s, Zambia also built Kariba North Bank on the Kariba Dam. Kariba North Bank was also built with the future in mind, with provision of adding a Kariba North Bank Extension station. Zesco was to over the years go into other capacity building projects.

Meanwhile, in the 1970s, World Bank’s role in Zambia included involvement in a Lusaka housing upgrading programme and a useful scheme of building low cost material schools as Zambia’s government implemented its focus of increasing most people’s access to basic’s like education, health, water and sanitation, and infrastructure.

Southern Africa, Petro, and Copper prices

In the early 1970s, some key factors affected Zambia’s balance of payment and the whole economy. There was the January 1972 border closure by Rhodesia in the South. This led to further re-routing and other costs.

Meanwhile, the 1973 Arab-Israeli war led to higher oil prices. Around the same time, prices of copper, Zambia’s key export, fell. Economic pressures of sanctions and supporting the anti-racism and anti-apartheid struggles in Africa affected Zambia’s economy. Balance of payments was affected.

Thus Zambia for the first time got involved in borrowing from the IMF. The SDR (Special Drawing Rights) 19 million, which was then US $22.92 million, or K14.75 million with the Kwacha being stronger than the US dollar, was some soft loan to cover the economic impact of the Rhodesia border closure.

Structural Adjustment

The IMF and World Bank followed on with other lending. They then implemented tougher “Structural Adjustment Programmes.” As in other parts of the world, as in Greece recently, these led to hardship amongst a wide population. Protests and riots, as currently in France, Greece, and Chile, happened over basic needs.

People have died as a result of IMF economic policy conditions. Social foundations have been shaken and societies destabilised. The integrity of life is affected. Zambia tried to leave the IMF programmes but facing IMF and World Bank organised sanctions and, isolated, Zambia was forced to go back to some IMF programme.

Over the years, even when they are not lending money, IMF and World Bank have got close into government and public body systems. The World Bank and IMF have penetrated electricity utilities. They get involved in administration, management, strategic planning programmes, and studies.

World Bank and Tariffs

In the 1990s, World Bank and IMF pushed for Zesco to increase electricity tariffs to so-called “cost levels.” Into 2016, World Bank and IMF have kept on pushing for increase. The World Bank and IMF are doing the same push with other SADC governments and utility providers. Individual governments are told their tariffs are the lowest in the region and in Africa.

At one time, in Zambia, with huge water resources and hydro-electricity potential, Zesco worked on plans of building power generation and export projects while keeping tariffs affordable to households.

In the early 2000s, as Zesco was about to implement some major projects, World Bank and IMF stopped Zesco, saying it was not right for a publicly owned utility firm to be involved in the electricity generation projects. World Bank was calling for private sector running of electricity utilities.

This has been the IMF-World Bank call and their aim, even now, and in the future, where the enterprises will be removed from public ownership and taken to private sector ownership. Yet it is known that both public and private owned enterprises are useful for society. Some can be co-owned.

IMF and World Bank stopping Zesco from building power facilities contributed to Zambia having limited capacity especially in times of drought, like the recent one of rain season 2014/2015.

Had the Zesco power generation projects been done in the 1990s and early 2000s, Zambia would have been in a stronger position now. In drought, electricity imports could have been minimised or avoided.

Business incentives

Another way in which IMF and World Bank policies affected Zambia’s power generation was through the imposition of incentives and concessions to help bring in investments. Mining investment to enable privatisation was targeted for concessions.

Firstly, the selling prices of the mines were very, very, low. Then business taxes were made favourable to the new mine operators.

And the mine operators could export 100 percent of earnings as foreign exchange. The tax system was later to create controversy between government and mine investors.

Government tried to reverse things, but not in a stable and fair way to both the mines and the public and thus things still have to be worked out and to be fair to both mine operators and the society.

The mines were given concessions in electricity tariffs for some ten years. This means some of the cost fell on house hold users, in some ways subsidizing the big businesses. The incentives measures benefitted mines and other investors but were unfair on the public purse.

We find that IMF and World Bank incentivisation measures for investors on mines and other enterprises contributed to limitations in resources for citizens and the public. The electricity field was greatly affected.

Generators and Regulators

Using supporting and financing of projects and tools like cost and tariff studies, World Bank and IMF penetrate energy regulation boards, including the regional RERA association of regulators. Sadly, instead of being fair to both producers and electricity users, electricity regulators, “watchdogs,” are now favourable to producers’ demands and are on the road to increase of tariffs.

Zambia’s electricity capacity built after independence now provides most of the available electricity generation capacity, which is now at slightly over 2,000 MegaWatts.

But Zambia continues to be an attractive energy and electricity potential that others envy. And in recent times, as before, IMF and World Bank have been pushing for the increase of tariffs. We believe the call is based on shaky premises. It uses the situation of monopoly and potential cartels to increase tariffs.

The IMF and World Bank promote “market forces,” yet in the electricity field they are promoting the fixing of prices through monopolies and cartels they support. But we believe that, with good management of enterprises, good capitalisation, and not the raising of prices and tariffs by monopolies and cartels, can answer some situations.

Cultures and Prejudice

Key is the attitude that says people in places like Zambia do not like paying for things and have some culture of getting things for free. This constant World Bank attitude is sometimes driven by prejudice against persons of some cultures or groups.
In electricity, the production costs, history, cultures, and other factors, such as the relationships of ownership and public resource investment in projects are complex in Zambia.

Effects Now

The effect of high IMF induced tariffs will be great impact on households and businesses. As with other energy price increases, all sectors of the economy and society will be negatively affected by price increase. The sectors will in turn increase their prices, while wages remain low, thus leading to higher price levels in society, levels which may be difficult to come down from. Tariffs increases will also have big bearing on trees and the environment.

Factors like drought, such as the one of the 2014 to 2015 rain season, will continue to be excuse used to talk about investment in power generation. Drought and flood often follow some cyclical patterns and should be considered in various production activities.

However, current house hold tariffs, considered low by IMF, are NOT the cause of limited electricity generation in Zambia. IMF and World Bank have contributed to limitations in Zambia’s electricity sector.

Alternatives Now

The IMF and World Bank should not be allowed to bully governments. Governments have responsibility to run affairs in independent and relevant ways. IMF and World Bank have worked through imposition and dictatorship.

They have often evaded responsibility for the negative effects of their economic policies and measures. But governments and societies do not have to suffer from IMF and World Bank. They can choose not to be limited by IMF and World Bank.

Recently, the Africa Development Bank, AfDB, has unveiled plans for supporting energy projects in Africa. We hope that, in economic policies, funding, and bonding, funders like AfDB do not become partners and agents of World Bank and IMF negative policies. Yet things have changed. There are alternatives to policies and borrowing from IMF and World Bank, the negative machine.

ginfinite@yahoo.com
– Based in Lusaka, Zambia, the Author is involved in Writing and Arts, Basic Needs issues, Social Development, and observation of Conflict and Peace issues.

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GCB, Jan – May 2016

 

 

 

Greece Debt Measures and Us, A View from Africa, By Gabriel C Banda

Greece Debt Measures and Us,

A View from Africa

Gabriel C Banda

By

Gabriel C Banda

THE recent situation of Greece and the referendum on further austerity measures for further lending by IMF and Europe governments is a major development in economic relations and, generally, human relations in the world.

Greece’s government and many in the population felt that the measures imposed by Greece’s lenders and anchored by the International Monetary Fund, IMF, were too strong and brought about great hardship.

In the five years of austerity measures imposed by lenders, unemployment increased, incomes were reduced, access to basics was reduced, and, for many persons, hardship set in. The young, the pensioners, whose incomes were reduced, and others in society have been greatly hit.

The IMF and European lenders insisted on harsh measures before Greece can get more loans to help overcome the harsh economic situation, much of the situation brought about by the loan conditions imposed by the lenders.

The government of Prime Minister Alexis Tsipras, with his passionate finance minister Yanis Varoufakis, put to a national referendum the question of going through further harsh economic measures. The result has been a big “No.” Most people in Greece do not want the harsh measures.

Now, some officials from the lenders are upset with the Tsipras administration while some officials reluctantly say they recognise that the No had expressed democratic voice but it may not be easy to work on different measures. What has followed is Greece’s government and lenders sizing each other to have their way.

Greece is saying they will only agree to some reforms that are socially fair, healthy, and sustainable. They do not want the destructive economic policies that have greatly impacted their society and other people.

However, many officials from the lenders have continued saying there is no alternative to the harsh measures. Some even bring out their personal stereotype negative attitudes towards Greek persons. They consider Greece a burden that may need to be dropped.

In the negotiations that cannot be avoided, both sides will bring out various tactics and dynamics. Both Tsipras and lenders will be sizing up, reacting, and playing to each others’ positions while also considering the positions and attitudes of their populations.

                                                        Greece and Unlikely Exit

However, it will involve a lot of adjustments if Greece ends up leaving the Eurozone, and possibly the European Union. The lenders should not be in denial and cheat themselves into believing that a Greece exit will have minor effect on the Eurozone and the European Union. They should also think about NATO. Economies and people in the region and beyond will be greatly affected.

Actually, I believe it is not in the interest of the lenders to have Greece exit its common monetary bonds with other Europeans. Many things unknown will come into play, affecting the other Eurozone and European Union members. Already, the position amongst the creditors’ bloc is not unanimous. Some are concerned about Greece possibly falling away, something they would not like, and are prepared to come to some settlement with Alexis Tsipras and team.

                                                                       IMF Consistent

But the current standoff involving IMF, lenders, and borrowers is not new. At various stages of their debt relationship, from the time of negotiation for first lending to implementation and review for further loans, IMF and lenders have applied pressure on needy borrowing governments.

What IMF and lenders are doing over Greece is consistent with their bullying actions on governments in Africa, Asia, Latin America, and other places. What is significant is Greece standing up to IMF and creditors and refusing to bow to pressure for further destructive conditions.

This Greece position of courage and bravery is significant not because others before them have unwillingly followed IMF, but because the sanctions and consequences imposed on dissenting governments by the consortium of IMF, World Bank, and lenders have been harsh and meant to make governments yield even when it is known the imposed measures have been very destructive.

                                                           IMF and Zambia

Another case of standing up to IMF, World Bank, and lenders happened in Zambia in May 1987. President Kenneth Kaunda announced that the IMF and World Bank “Structural Adjustment Programme,” SAP, measures had brought deep suffering to the population. He said Zambia was breaking off from the programme while retaining membership of the IMF organisation. He said Zambia would still service its debt, but in a manageable way that did not bring great social hardship.

From imposition of the austerity measures, suffering of Zambia’s people had even increased. The society was unstable. Zambia had reduced gains made from independence in 1964 in fields like health, education, and access to basic needs. Life expectancy fell. Infant mortality increased. Maternal mortality increased. Malnutrition increased. Deaths increased. Zambia’s capacity in many fields was declining. Structural Adjustment was a killer. In fact, in 1986, there had been riots over food when IMF and World Bank economic measures, imposed to service debt and reduce budget deficit, reduced people’s quality of life and access to basic needs.

Back to that time in May 1987, Dr Kaunda said Zambia would cut off from the IMF programme and implement its own that would lead to growth. Local economists, advisors, and persons from various sectors got involved in making the home-grown programme. When it was implemented, Zambia recorded some growth.

But the IMF and World Bank took on some position of ensuring that Zambia would be put under great economic pressure and get back to an IMF programme. IMF and World Bank acted with other governments to put economic sanctions against Zambia. Even governments that were friends to Dr Kaunda and Zambia abandoned the African government and fell in line with the IMF sanctions position. Even respected Gro Harlem Bruntland’s Norway administration acted with IMF and World Bank against Zambia’s position of abandoning harsh Structural Adjustment measures.

Kenneth Kaunda’s government was isolated. Many rulers of governments, sympathetic to fellow governments undergoing harsh economic measures, are silent. They fear receiving collateral economic pressure on them, with that pressure leading to unrest and removal of their governments from office.

In this inter-dependent world, no government or society can live without the support and collaboration of others in the world.Eventually, without practical support from friends who may have been sympathetic but fearing to oppose IMF and World Bank, in order to survive, Zambia was forced to get back to some IMF and World Bank programme. In June 1990, under continued economic austerity, further riots took place, leading to an unsuccessful coup attempt.

                                                                 Integrity of Life

In many places, SAP and austerity conditions have acted against peace and stability. The austerity conditions fight the integrity of humanity and life itself. The programmes to be followed were harsh. The debt service interests, ratios, amounts, and other conditions were unfair. Many people have suffered and died from IMF programmes. The austerity programmes lay seeds of discord and violence.

People have reacted through protests and violence. Protests and unrest have happened in Africa, Asia, Latin America, and even Europe. Many in Zambia, Africa, and elsewhere have died from protests against governments and harsh economic conditions.

When things do not work out or have created further problems, IMF says the medicine is still on its way to working, that there was light at the end of the hardship tunnel, or that instructions have not been well followed by the government. They turn around and make the governments take the blame.

Due to the harsh austerity conditions, some governments are voted out by their citizens. The new government, often by those who were critical of the conditions brought about by harsh measures, ends up also following the IMF and creditor conditions. Complaints continue while IMF watches in the background, shielded from their contribution to the situation of hardship.
Referendum has Worked

Thus, Greece’s current situation is interesting for the whole world. It is a landmark for debt and financial relations involving governments and lenders, multilateral or individual governments. Greece getting a fair deal, that allows a programme to be done with minimal impact on members of the public, especially the vulnerable ones, will encourage others to also be courageous and decline or renegotiate IMF and creditors’ conditions.

In many ways, Greece has won some renegotiation. The referendum of 2015 has worked. Of course, IMF and the creditors will try to show that the lenders are in control of the situation and are continuing to push Greece to debt service and restructuring. But the reality is that Alexis Tsipras, Yanis Varoufakis, their team, and the people of Greece have won the advance towards renegotiation of the loan and debt conditions.

Used to bullying and twisting others, IMF and creditors had not expected the referendum tool to come up. When it did, they were wishing, against reality, that Alexis Tsipras would be shown to be unreasonable. Media said there was a tie between Yes and No support while the truth was that an overwhelming number of persons was against the measures.

The referendum tactic worked well. Alexis Tsipras and Yanis Varoufakis showed that they had significant numbers of their fellow citizens behind them. They show that even when abandoned by IMF and the Eurozone system, Greece will for some time receive the support of its public in other alternative programmes that may be embarked upon. Public support is important for any political or economic decision.

Most people in Greece had experienced so much hardship that they were prepared to endure the consequences of creditors’ sanctions than continue suffering. It is better to suffer and assert your human dignity than to continue being enslaved.

In other countries facing harsh IMF conditions, there has been no referendum on whether to follow or continue with IMF programmes. The programmes to be followed were harsh.

                                                        Greece Turning Point

The Greece experience of 2015 should mark some turning point in IMF, World Bank, lenders, and borrowing governments. The experience shows that it is possible, as Dr Kaunda did in 1987, to stand up to the bullying and thug behaviour of IMF and World Bank. Further, it is possible to get citizens openly participate in the decision about the way forward. With people’s voices openly registered and measured, the IMF and World Bank will fail the moral test.

                                                                                Shylock

The IMF and World Bank have been like Shakespeare’s Shylock. Shylock wanted to cut a pound of flesh, as agreed, from his defaulting debtor. But the problem was that cutting the pound of flesh was going to make the debtor lose blood. Blood had not been written into the loan and debt service contract. It was thus difficult to implement the pay back of flesh. But the history of IMF, World Bank, and some lenders has been that of cutting flesh with the blood in it. Societies have suffered.

Many societies of Africa are still handicapped by the forced IMF and World Bank measures of the 1980s and 1990s. The societies would have been stronger had they not been shaken down by the economic measures.

The frustration and even annoyance with which some creditor officials have in recent days responded to Greece people’s majority choice for “No” about continuation of austerities is example, though mild one, of how IMF and lenders have responded to Africa’s governments.

                                                                Stick

There are similar tactics of using a stick to try to bring governments back in line to the harsh policies and conditions the lenders, falsely or by error, say have no alternatives. IMF and creditors impose harsh measures. Then they insist on continuation of harsh programmes even when there is decline in quality of life.

They continue to say the harsh medicine is path to recovery. They punish governments refusing to further punish their people, punish them by refusing further funding.

The IMF and creditors will also make lenders and non-lenders not to do businesses with the dissenting borrower. IMF and lenders act as consortium and cartel imposing sanctions on some dissenting government.

SAP works through dictatorship. SAP is dictatorship. SAP has been imposed through the dictatorship of the IMF and World Bank against unwilling governments and peoples. IMF officials impose harsh measures against fellow human beings who are considered objects. One is not sure the IMF officials themselves can comfortably live under the conditions they subject their fellow brothers and sisters in many parts of the world.

                                                               Alternatives

Actually, there ARE alternatives to IMF programmes. Saying “there is no alternative” is narrowness and blocking creativity in self and others. It acts against the possibilities and progress of humanity. Currently, in Britain, the Conservative government, with a huge budget deficit, a deficit bigger than Greece and other European governments added on, is thinking of budget cuts for some items but, wisely, will not touch health and education.

Governments of Africa and other places were forced to cut spending on essentials, including food, education, health, and other basics. This contributed to capacity difficulties whose effects are still with us now and societies are still to recover from.

The Greece referendum of 2015 reminds us that economic austerity measures mainly work through imposition and dictatorship. In many countries, put to some vote, the measures would have been rejected. IMF and World Bank would have been forced to support more sustainable alternatives.

The Greece debt situation also reminds us that governments can be strong. Factors at hand will move towards some settlement between Greece and creditors. That will be healthy for all parties involved.

From the Greece experience of 2015, IMF and Company will now fear that other governments will follow Greece and now start invoking referenda. Should this not be some fair direction in democracy and governance by consent and participation? For instance, if it seems very contentious, shouldn’t people in other European societies have the right to vote on whether there should be landmark cuts on social welfare?

The IMF and creditors should also remember that now there are other significant governments and organisations that provide grants and loans at fair conditions. The current Greece debt situation shows us that the IMF, World Bank, and other creditors can no longer continue to intimidate and coerce governments and societies of the world. Shylock does not always win.

Contact email: ginfinite@yahoo.com

Based in Lusaka, Zambia, the author is involved in writing and the arts, social development, and peace issues. He holds an MA in Peace Studies, University of Bradford.

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GCB, June/July 08th, 2015