How The World Bank and IMF Control Poor Nations.
What is the World Bank?
The World Bank is one of the most important financial institutions in the world, and the largest source of development loans for poor countries. Created in 1944, the World Bank and its sister institution, the International Monetary Fund (IMF), use the loans they provide to developing countries to prescribe policies and major reforms in the economies of these countries.
Why is the World Bank Important?
Over the past two decades, the poorest countries in the world have turned increasingly to the World Bank and IMF for financial assistance, because their impoverishment has made it impossible for them to borrow elsewhere. The World Bank and IMF use this leverage to dictate these countries' economic policies, and attach strict conditions to their loans which give them great power over borrower governments. The World Bank provides loans to over 80 countries, and currently manages a loan portfolio of more than US$200 billion.
Who Controls the World Bank?
The World Bank is controlled by the world's richest countries -- the U.S., the U.K., Canada, France, Germany, Japan and Italy, also known as the G-7. Combined, these powers hold more than 40% of the votes on its Board. They set the institution's agenda and the World Bank acts in their interests, promoting a model of economic growth (called neo-liberal) that pushes free markets and that benefits the richest countries and the international private sector.
How did the World Bank gain influence in Africa?
In the 1980s, as market prices for export commodities slumped, and international interest rates sky-rocketed, many African countries found themselves in economic crisis, unable to repay mounting foreign debts. In desperate need of new loans to pay off these debts, they turned to the World Bank and IMF, who were very willing to lend them money, as long as they instituted certain economic reforms in return. These reforms, called "structural adjustment programs", adjusted the economies of borrower countries to suit the interests of the wealthiest players in the global economy. African countries, in need of these loans, had no choice but to accept the conditions attached. Over the past two decades, Africa's debt crisis has worsened, and the failure of World Bank and IMF economic reforms has left African countries more dependent than ever on new loans. The World Bank and IMF, now major creditors to African governments, have gained huge control over the running of African economies.
What does the World Bank do in Africa?
The World Bank uses its structural adjustment programs to effect economic policy reforms in African countries. These reforms cut back government services to the people, reduce trade barriers, and turn economies into sources of cheap raw materials and cheap labor for multinational corporations. The results have been a decline in average incomes, worsening conditions of poverty and underdevelopment, and an increase in Africa's foreign debt. Last year (2000-2001), the World Bank provided loans totaling some US$3.4 billion to countries in sub-Saharan Africa, though this was still at least US$250 million less than it took from African countries in debt repayments. The World Bank claims to promote economic growth and development in Africa - in reality it takes far more from the continent than it gives.
How has the World Bank denied Africa's Right to Health?
How has the World Bank denied Africa's Right to Health?
- Forced cut-backs in spending on health care Over the past two decades, as part of structural adjustment, the World Bank has forced African governments to reduce government spending on health care. This has resulted in the closure of hundreds of hospitals and clinics, and has left the remaining medical facilities under-staffed and lacking in essential supplies. Under the tutelage of the World Bank and IMF, in the 42 poorest countries in Africa, spending on health care fell by 50% during the 1980s.
- Privatization of health care services, and introduction of "user fees" The World Bank has forced African governments to privatize government-held services such as health care, and to introduce "user fees" for receiving basic care. This has created a two-tier system, and has denied access to health care to the poor, who cannot afford to pay these fees.
- Demanding debt repayments take precedence over health Across Africa, governments are forced to spend more money on debt repayments to the World Bank and rich country governments each year than they do on health care for their own populations. The current debt relief framework has not changed this fact, and Africa's AIDS crisis continues to escalate.
- Intensification of poverty and underdevelopment
The World Bank's structural adjustment programs have not fostered
economic growth and development in Africa, but have instead
exacerbated conditions of poverty, food insecurity, and ill-health.
There has been an increase in the spread of poverty-related diseases
such as tuberculosis, and malnutrition has led to weakened immune
systems, particularly among children. Since the 1980s, the
devastating spread of HIV/AIDS has been facilitated by widespread
poverty and the lack of access to health care facilities. More than
17 million Africans have died of AIDS, and more than 25 million are
currently infected with HIV.
Africa Action's Position:
Health is a fundamental human right. Over the past two decades, the right to health of Africa's people has been consistently undermined by the policies and prescriptions of the World Bank and IMF. Structural adjustment programs and Africa's worsening debt crisis set the scene for the current health care crisis, and now have made it impossible for Africans to deal with the massive health emergency with which they are faced. The World Bank must take a large degree of responsibility for this situation. It is an institution that represents global minority rule, and it has used its power to exploit African countries for the benefit of its stakeholders, and to deny Africa's people the right to health. Africa Action calls for an immediate end to World Bank policies that have caused such devastation to the people of Africa.
What Can You Do? Boycott World Bank Bonds!
In the same way that the divestment movement helped to break the power of the Apartheid regime over South Africa, the World Bank Bond Boycott Campaign aims to break the power of the World Bank over developing countries. The World Bank gets 80% of its funding from the sale of its bonds on private financial markets. Boycotting World Bank bonds therefore attacks both its primary source of financing and its public image. Africa Action calls on you to ask your university, religious institution, or city council to pass a resolution that it will not purchase World Bank bonds. It is time to stand up for Africa's Right to Health, and to demand accountability from the institutions that uphold global apartheid.