Brown’s plan won’t save Africa

Submitted by Anon on 20 February, 2005 - 3:54

By Paul Hampton

The Make Poverty History rally in Trafalgar Square on 3 February launched a year of campaigning on Africa. Make Poverty History is a coalition of over 200 charities, campaigns, trade unions and others that is calling for “trade justice, drop the debt and more and better aid”.

The focus on Africa is important because the continent remains desperately poor. Despite over ten per cent of the world’s population living there, Africa is the only continent in the world where income per head has been in decline in the last twenty years and where nearly half its people live on less than $1 a day. Africa accounts for only 2% of world trade and 1% of foreign direct investment.

Tony Blair and Gordon Brown have raised expectations by promising to tackle poverty in Africa. Blair’s Commission for Africa is due to publish its final report in March 2005 and promises to set out “solutions which are sufficiently radical to make a real difference to the people of Africa”. Brown has called for a “Marshall Plan” to help the world’s poorest countries and publicly thanked Make Poverty History for its efforts.

On aid, the British government wants members of the G8 and other rich countries to make an annual contribution of 0.7% of their national income in aid — a UN target first laid down in 1970. Brown wants to increase the flow of aid through an international finance facility (IFF), a financing mechanism to increase up-front aid by issuing long-term bonds. A tax on air travel and the use of the IMF’s gold reserves have also been mooted as means to raise funds.

On debt, Britain wants individual developed countries to assume and pay for a share of the debts owed to international financial institutions, such as the IMF and the World Bank, as well as forgiving any debts owed directly by sub-Saharan countries. Brown has announced that Britain will pay off 10% of the debts owed to the institutions, as well as forgiving the debts owed to it by several other countries.

On trade, most of Britain’s plans are going through the European Union (EU), in particular through trade commissioner and Blair’s friend Peter Mandelson. At the Hong Kong WTO ministerial summit in December, they plan to announce a date for the EU to end export subsidies.

But none of these plans are guaranteed to happen. Neither the US or Japan — the world largest aid donors — are keen on the 0.7% target or the IFF. The World Health Organisation says to develop basic health services in Africa will cost $65 billion over the next ten years — far more than the G8 will pay in aid.

According to the UN, industrialised countries‚ farm subsidies cost developing countries between $125 billion to $310 billion annually in lost sales and lower prices, with Africa one of the main losers. Most of these subsidies will remain, what ever else happens this year.

The debt write-off is not agreed upon either, has been promised before and excludes some heavily indebted countries such as Nigeria — which pays over 20% of its budget in debt servicing.

In Birmingham in 1998 the G8 promised to cut $100 billion of the $375 billion debt owed by the 52 poorest countries. However, the Jubilee debt campaign says that less than half ($46 billion) of the promised write-off has been delivered. Jubilee says only eight of the world’s most impoverished countries have seen a significant cut in their payments, and four were actually paying more five years on than in 1998.

And all these aid, debt relief and trade policies have strings attached. Countries have to follow World Bank and IMF policies to qualify for relief. So, for example, Senegal has had to privatise its peanut industry, and Zambia its banking system, while Ghana has had to raise VAT and fuel prices and Rwanda cut its public spending.

Brown has stated that the government will require poor countries to open up their markets to foreign imports as a condition of receiving aid under the IFF. The UK, through the EU, is imposing Economic Partnership Agreements (EPAs) that are designed to open up the markets of African, Caribbean and Pacific countries to EU exports, and threaten to expose small-scale producers in those countries to competition from the world’s most powerful multinationals.

The Department for International Development (DFID) uses the UK aid budget to set up new financing mechanisms such as the Emerging Africa Infrastructure Fund to lever private sector investment into public services in these countries.

The Commission for Africa sums up the weaknesses of Blair and Brown’s approach. Its consultation is full of pious phrases about “good governance”, security and “inclusion”. But it has no mention of the role of trade unions, even though there are 56 union centres with over 12 million members in Africa, with powerful organisations such as COSATU in South Africa and the Nigerian Labour Congress.

Overall, as organisations like the World Development Movement point out, the UK government’s policies are a major barrier to the fight against poverty. In fact, Blair and Brown’s plans will only add to Africa’s problems, not bring about the necessary solutions.

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