International Monetary Fund

This Week in the World of Conflict… March 5th-12th, 2012.

  • Brandeis University in Massachusetts is offering a Master’s Program in Coexistence and Conflict with several scholarship opportunities. The program is geared towards professionals.
  • The Summer Peacebuilding Institute in Harrisonburg, Virginia is still open for the 2012 year. The institute offers courses in development, humanitarian assistance, monitoring awareness, restorative justice, social movements, community organizing, trauma awareness, mediation and many others from May 7th– June 15th.
  • The Italian branch of the hacking collective Anonymous reportedly took down the Vatican website on Wednesday in retaliation for the “corruption of the Roman Catholic Church. It was revealed this week that a leader hacker with the Anonymous-linked LulzSec allegedly agreed to work with the American FBI after pleading to 12 charges of computer hacking last August.
  • Columbia University’s Jeffrey Sachs announced his intention to be the next president of the World Bank as the current head is near the end of his term. Sachs hopes to change the mistakes of the past and provide a leadership of development experts instead of Wall Street, bankers and politicians. On Wednesday, an insider in the Obama administration said that former American White House adviser Lawrence Summers, diplomat Susan Rice and PepsiCo Inc CEO Indra Nooyi are on a “short list” of possible American candidates to head the World Bank.
  • Several Muslim and African countries reportedly walked out of a Human Rights Council panel set up to tackle the issue of murder and violence against gays and lesbians around the world.
  • The German Chancellor announced on Tuesday that she had received assurances from the Brazilian President that Brazil would take part in a recapitalization of the International Monetary Fund. Brazil has urged Europe to stabilize the euro before the IMF can boost its own capital and release more funds for struggling euro zone states like Greece.
  • The UN Development Programme released a report on the need to strengthen justice and security for peace around the world.
  • UNICEF and the World Health Organization released a report on Tuesday that claimed that the world had met the Millennium Development Goal target of halving the proportion of people without access to safe drinking water, well in advance of the 2015 deadlines.
  • New psychological research at Cornell University suggests that people don’t always have the capacity to recognize the best political candidate or policy idea, especially if they incompetent in the subject, which results in democratic elections that produce mediocre leadership and policies.
  • In the wake of March 10th‘s International Women’s Day, many sites reminded us of statistics showing how the gender imbalance is still alive and thriving, particularly in the aid sector; while the US State Department chose 10 honorees for the 2012 International Women of Courage ceremony. Top UN officials proposed a UN global conference on women for 2015, 20 years after the last women’s summit in Beijing.
  • The UN cultural agency UNESCO voted on Thursday to remove the name of Equatorial Guinea’s President from the Obiang Prize for science and replace it with that of his country, bowing to pressure over his human rights record.
  • UN Secretary-General Ban Ki-moon announced that the world has been able to meet some of the UN goals of reducing poverty and raising living standards in developing nations, though some regions are not reaping many benefits.
  • The United Nations unveiled new guidelines on Friday to help mediators address the problem of sexual violence in conflict by placing the issue high on the agenda when brokering peace agreements and ceasefires.
  • Judge Song was reportedly re-elected as President of the International Criminal Court and judges Monageng and Tarfusser elected as First and Second VPs. Several other new judges were sworn in as well, after being elected last December.
  • A new report by the UN warns that a “radical new approach” to managing the world’s water resources is needed to mitigate increasing scarcity. The report was issued to coincide with the opening of the World Water Forum in France, held every three years.
  • AidData released a report recently discussing how foreign aid affects armed conflict. The report suggests that aid can affect the likelihood of violent armed conflict by influencing a state’s ability to credibly commit to an agreement that averts war at present and into the future.

Election fury.

The presidential elections are less than 2 weeks away here in Cote D’Ivoire. Massive billboards began lining the highways advertising the three main candidates since campaigning began on October 15th. On the boulevard and bridge crossing the lagoon in Abidjan wave the blue, pink and white flags of current leader Gbagbo’s newly formed La Majorite Presidentielle (the Presidential Majority) party. Cell phones are bombarded with texts exclaiming the virtues of each candidate, and the papers are awash with stories of the presidential hopefuls. The police seem to be out in full force, with increased roadblocks and checkpoints.

What a choice to make.

The candidate most likely to “win” is former history professor Laurent Gbagbo, who has recently polled at around 46% of the popular vote. Gbagbo has been in the presidential role for most of the last decade and despite a constitutional rule that one can only be elected president for two five-year terms, Gbagbo is able to circumvent the constitution since he has never actually been elected to that role. Following a successful 1999 coup planned by General Robert Guei, which resulted in the overthrow of one of the other current presidential candidates, Henri Bedie, Gbagbo ran for the Presidency. According to his followers Gbagbo received some nearly 60% of the vote in that election, however Guei claimed victory and violence ensued. Gbagbo’s FPI (Ivorian Popular Front) revolted in the streets, forcing Guei to flee and allowing Gbagbo to seize power. He has remained there ever since. In an attempt to separate himself from the past violence of the FPI, Gbagbo now runs under the Majorite Presidentielle name.

We are told that Gbagbo is “L’homme de la situation” (the man for the job), even though his last ten years in office have been marred by corruption, civil war, elections stalling and political posturing, and that he has previously been jailed for inciting public violence. A 2002 coup attempt against Gbagbo resulted in a fracturing of the state into north and south divisions and the arrangement of a new temporary unity government, which was to remain in place until a 2005 election could be held. The election was repeatedly delayed, primarily it was reported because of the stalled disarmament of the northern rebels and lack of identity cards for voters, but many suspected that Gbagbo was determined to keep his place for as long as possible by stalling. The stalling worked for over 5 years.

Alassane Ouattara, a former economist with the International Monetary Fund (IMF) and Central Bank of West African States (BCEAO), is the President of the Rally of the Republicans (RDR) and was the Prime Minister during the Presidency of much loved first President Houphouet-Boigny. Following Houphouet-Boigny’s death, Henri Bedie (another Presidential hopeful) and Outtara battled it out for Presidency, with Bedie prevailing. Ouattara is often associated with the rebels of the north, where his base and primary support system lies, and is often suspected of inciting rebellion among the northerners. During his time as PM, Ouattara cut subsidies to farmers (as recommended by the WTO) while EU and US farmers were receiving heavy subsidies, and on IMF recommendation dismissed more than 10,000 state employees, reduced the salaries of the remaining state employees by 40%, eliminated transportation and basic health care services for students, imposed fees for basic health care services, initiated the devaluation of the currency, aggressively pursued taxes from Lebanese and Mauritian merchants, and allegedly sold off state-owned property to his wife’s clients and friends at severely devalued prices, angering students and workers, including Gbagbo, into rebellion. Rumor circulates that while Ouattara filled in for the ailing President Houphouet-Boigny, millions of dollars from the state treasury mysteriously disappeared, allowing Ouattara to amass one of the largest fortunes on earth. Some rumors suggest that he has strong ties to the Jewish lobby, even going so far as to claim that his wife is a MOSSAD agent, to the fear of many Lebanese merchants and industrialists in the region (who make up some 2% of the population and own a large percentage of industry).

Henri Bedie is a former President (1993-99) and leader of the Democratic Party of Cote D’Ivoire- African Democratic Rally (PDCI-RDA), who now ironically claims he will unite the country from its fractions, lower taxes and restore the economy. Under Bedie, the government began its xenophobic Ivorite (or pure Ivorianess) citizenship policies in an attempt to politically exclude his competition Ouattara from the Presidency for being the son of Burkinabe parents. The policies effectively resulted in many people from the north of the country being denied of national identity papers, passports or being harassed by security forces. The north and the south became divided and in December of 1999, the national army staged a successful coup, on the pretext of non payment of due salaries, while Bedie fled to Togo and then on to Paris. He is widely known as a drunk and corrupt politician, who has little chance of regaining the Presidency. Bedie has announced that this will be his last attempt at the power position if he loses.

So who to choose? It seems to come down to the lesser of evils. I will be spending the day before the election and election day safely within my home, and hoping that violence does not mark the transition.

Friends tell me they have received multiple texts from all the candidates. So far, I have only received ones from Bedie and Gbagbo. Here are some of the recent texts I have received from the Bedie and Gbagbo campaigns:

“Yes we can! Henri Konan Bedie l’a dit longtemps avant Obama. Avec lui le progres pour tous et le bonheur pour chacun etait une realite. Ceux d’en face ont braque le pouvoir pour nous imposer le bonheur pour eux seuls et la misere pour le …peuple. Le disordre, les coup d’etat, la chienlit, les dechets toxiques et l’ecole gratuitement chere font egalement parti de leur programme de gouvernment. Il est temps de mettre un terme a cette situation qui n’a que trop dure. Fier ivorien, le 31 octobre, le pays t;appellera pour un vote historique. Il faudra faire le meilleur des choix. Le choix du progres pour tous et du bonheur pour chacun. Choisi le candidat Henri Konan Bedie pour la construction d’une Cote d’Ivoire de valeurs. Yes you can. Faites passer le message.”

“Si tu aime la Cote D’Ivoire. Si tu veux la paix vote Bedie candidat du PDCI = RDA! Nouvelle Generation d’Attecoube pour H.K.B. Partagez ce message avec vos proches et amis. Que DIEU nous accorde cette PAIX des temps PDCI=RDA!”

“Ivoirien <ne> tu as marche pour dire NON au coup d’etat et a la rebellion, Si tu as marche pour dire NON a la barbarie francaise, alors VOTE GBAGBO pour donner un sens a ton combat. Merci de passer le sms aux autres.”

The “kindness” of the International Financial Institutions.

“Working for a World Free of Poverty”- The World Bank

“The International Monetary Fund (IMF) is an organization of 185 countries, working to foster global monetary cooperation, secure financial stability, facilitate international trade, promote high employment and sustainable economic growth, and reduce poverty around the world.”- The International Monetary Fund

The world is so lucky to have such caring institutions as the World Bank and International Monetary Fund. If you can’t tell, that last statement was said in sarcasm. If one were to read these institution’s own boasting they would believe that world poverty has been reduced because of their influence, rather than partially created and continued by them. These institutions, commonly referred to in international development circles as the Bretton Woods institutions or International Financial Institutions (IFIs), have helped to ensure that many countries will remain in poverty through their loans and structural adjustment programs (SAPs) for years to come.

The World Bank and the IMF are responsible for supporting the economic and financial order between governments. They were developed in the 1940s as a way of financing economic development for war-torn Western Europe. Over time, they have extended outside of Europe to any poor or war-torn nations, lending over $330 billion since their inception.

The OPEC oil crisis of the 1970s caused major worldwide inflation, significantly raising the price of gas and increasing the cost of goods produced in the richer nations. Many economies of the poorer nations of the world could no longer afford to pay for their imports and began to run on major deficits, resulting in a significant balance of payment deficit. Due to deteriorating terms of trade, these economies needed to look for more resources to pay for their imports; because essentially they were receiving much less for their products, and paying much higher costs for any manufacturing.

Prior to the oil crisis, the IFIs had “assisted” many of the poorer nation’s economies by offering loans to their governments originally borrowed at minimal interest rates of about 1-2%. By the 1980s these loan’s interest rates had climbed to about 16%, and many of the countries were taking on increasing loans to help pass them through the crisis. The rise in the use of synthetics and new agricultural techniques during this time reduced the need for many of the raw materials and agricultural products; an economic staple of many of the world’s poorer nations. During the early 1970s, more than 80% of these nation’s external revenues were created by the exportation of raw materials, dropping to only 34% by 1993.

Many of the richer nation’s banks were required by the IFIs to open lines of credit for the poorer nations that were in distress, and these commercial banks began giving out more money in loans than they actually had. Many of the poorer countries were now left with extreme debt that was growing larger and larger each day as the interest compounded. Many countries owed millions of dollars per month in interest; money that they could sorely afford and in some cases amounts that surpassed the nation’s earnings. These payments were only touching the interest on the loans and barely cracking the surface of the actual debt, ensuring these countries would owe for the long-term.

By 1985, many Latin American countries were suggesting that they were going to default on their loans and just disown their debts. Scrambling to not bankrupt the richer countries’ commercial banks and cause a massive economic meltdown, the “generous” IFIs decided on a plan to help reduce the poorer nations’ debt; on the condition of structural adjustment. The debtor nations would be required to implement stabilization packages supervised by the IMF, that would dictate their government’s spending.

Several plans were implemented to help reduce debts, and failed miserably; leaving many nations with still massive and overwhelming debt. Interestingly, with all the debt reduction projects during this period, the debt of the poorer nation’s between 1984 and 1994 had not been reduced at all, and was in fact only steadily increasing. It was soon decided by those at the IFIs that state-run services in the debtor countries were the reason for the economic crises and that the solution was to be found in removing all state intervention and socialist/communist approaches to government in these nations. The IFIs began demanding packages of fiscal disipline, trade liberalization, exchange rate adjustments and privatization of state services in the debtor nations as a way to stop the crises.

The removal of trade restrictions, including import licenses, quotas, and tariffs in the debtor nations, allowed the lending nations’ governments to fix their prices and dominate the global markets. The IFIs insisted on the devaluation of the local currency in the debtor nations as an incentive for local producers to produce more export commodities. Massive public sector layoffs ensued, as the governments were required to reduce their spending. All public enterprises were to be sold off and export was to be promoted through incentives such as easier access to foreign exchange.

Many of these loans were (and are still to this day) granted to nations ruled by authoritarian depots who use much of the monies to secure their own position of power or build their armies. Overall inflation in many of the nations was reduced by the SAPs and the nation’s earning increased; reducing their debt to earning ratio. The social costs of these economic changes however, had a devastating effect on the populations. All public services were now gone, or were pay-for-use services. The number of people living in poverty in these debtor nations dramatically increased, as did unemployment.

After much world-wide protest, the IFIs decided they must try to reduce the debts to more sustainable levels and focus more on the poverty and social costs that their decisions were having. Several countries qualified for loan reduction initiatives to help reduce these social costs. A number of initiatives were tried and failed, and all now included a poverty reduction strategy paper (PRSP), a plan that would detail what the nations would do with the money they were now “saving” from loan payments. This allowed the richer nations to have a large say in the running of debtor nation’s governments. Many nations, including many of the world’s poorest, found they could not qualify for the loan forgiveness programs and so remained completely devastated with debt payments and running further and further into absolute poverty.

The debt initiatives had the effect of reducing some of the total stock of debt from the qualifying nations, however, it also resulted in successful litigation by commercial and bilateral creditors who sued some of these governments for their debt, despite their promised forgiveness by the IFIs. So the IFIs came up with new and even “better” plans, that would involve mandated country-driven and specific programs that were implemented with the purpose of benefiting the poor. In reality, the nations were often given little say into what programs would actually be implemented and were forced to democratize in a western way and create capitalist economies that would serve the richer nations. It had the desired effect. “Democracy” spread from 27.5% of the globe in 1974 to cover 61.3% of the world’s nations in 1995. By the late 1980s, the IFIs had decided that “good governance” was now to become a condition of any loan and much aid, institutionalizing the rule of law and democracy in debtor nations. Elections became staged affairs in order to meet conditions, often held in the face of intense structural and direct violence that suppressed any and all opposition.

Loans continue to be made, and debt forgiveness of only a handful of nations has had little effect on reducing the overall poverty experienced in these nations. The originally mandate and purpose of these financial organizations has been completely lost, as they are creating more devastation than they are repairing. The poorest populations are those who suffer the most. Many who once had governmentally funded education, water and extensive health services are now reliant on international aid and NGOs for even basic necessities. They are left with nothing and no hope for the future.

The colonial grips have changed. Instead of being held in servitude by imperial powers, regions are now being controlled by the IFIs and are forced to go along with the lender nation’s political agenda. The richer, more powerful nations continue to extract the resources of the poorer nations at a tremendous discount for themselves because of their financial situation, ensuring the poorer nations will always be their cheap supplier and be willing to bend to their demands for many years to come.

For further details on the effects of structural adjustment in some of the more “successful” nations see here and here.

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The other side of assistance: The neoliberal agenda in Uganda

Uganda has been hailed as an economic success story and the “development darling” of Africa by many international donors. Despite successes in certain sectors and the adoption of an official Poverty Eradication Action Plan (PEAP) sponsored by the World Bank (WB), the poorest of the poor in Uganda have not necessarily experienced ‘poverty eradication’. Sustained growth in the country has averaged 7.8% since 2000, and official World Bank statistics say that as a result of this economic growth, poverty declined from 56% in 1992 to 31% in 2006 (WB, Country Brief, 2008). Positive statistics are so often used by the international financial institutions (IFIs) to inflate their current projects and to play up the successes of neoliberal reforms to serve their own gain. The focus on economic growth and its ‘success’ in Uganda has resulted in ignoring massive human rights violations being committed by the Ugandan government on its own people (with development overtaking peacebuilding) and the impact that conditional aid has actually had on the poorest of the poor. Loan debts will be paid by the poor and not the human rights abusing government who borrowed it through structural adjustment programs that guarantee the international community will continue to have a hand in Uganda for decades to come.

            Uganda has been embroiled in conflict with regional parties and the cult-like rebel group the Lord’s Resistance Army for decades. The 1960s were years of euphoria as Africa experienced its so-called “decade of independence” from colonial rule. A series of successive dictatorships (including Idi Amin and Milton Obote) and their quest for power prompted periods of political instability and insecurity, causing the economy to go into a tailspin. Structural adjustment reforms were first implemented under Obote, who prioritized the external logic of the global markets over the long-term developmental needs of the national economy (Kiiza et al., 2003; 5). Comprehensive pro-market economic reforms were implemented in the late 1980s under Museveni, reducing the onerous taxes and economic restrictions that were in effect (Selassie, 2004; 5).

Uganda experienced declines in industrial production and agricultural output by the mid 1980s as a result of economic mismanagement and the pursuit of interventionist policies that were ill-suited to the level of existing state capacity, skill and political instability (Pitcher, 2004;383). Museveni took over the country in 1985 after a successful coup, and immediately launched an economic recovery program which included a comprehensive package of currency devaluation, control over inflation and spending and a reduction of state intervention in the economy. The Ugandan government haggled over the conditions attached to the loans, reluctant to push ahead with reforms they felt were not designed by them but the IMF. By 1992, the Ugandan government began “owning” its reforms, controlling inflation to achieve higher growth rates and to attract private sector investment[1]. By 1998 the government had mostly privatized its assets, crafting an intense ideological message that emphasized the gains of privatization to improve the perception of the policies among the public. The government even went so far as to hire a drama group and public relations firm to do this (Pitcher, 2004; 385).

The Usefulness of Debt Relief

            Since the 1960s, the WB has made more than $4.8 billion in loans and credits and about $600 million in grants to the government of Uganda (WB, Country Brief, 2008). This aid was often conditional on the implementation of certain structural adjustment programs by the Ugandan government, which involve two main components: macroeconomic reforms and institutional reforms. Macroeconomic reforms include the removal of trade restrictions, the devaluation of local currency, reduced subsidies and public sector wage freezes. The institutional reforms involve the privatization of public enterprises, the trimming of the civil service, and the promotion of export through incentives. Uganda qualified under the WB’s Highly Indebted Poor Countries (HIPC) initiative in 1997, making it eligible to try and reduce its debt to a sustainable level. The conditions of the HIPC involved implementing structural adjustment for three years non-stop, at which point debt would be reduced by 67%. The debt payments remained unsustainable, making Uganda then eligible to enter stage two of the HIPC, where it faced another 3 years of structural adjustment. At the end of this adjustment, the debt was then to be reduced by 80%. Uganda at this point was still overwhelmed with debt, making it eligible for the Enhanced HIPC initiative offered by the WB in February of 2000 (WB, Country Briefing, 2008).

After facing criticism from many parties the World Bank revamped its initiatives to be more reflexive of the poverty faced by the supported populations and to include poverty reduction strategies in their plans. The Enhanced HIPC initiative insisted that eligible countries develop a Poverty Reduction Strategy Paper (PRSP), a plan showing exactly what the country planned to do with its savings with the poorest of the poor allegedly in mind. The PRSP is mandated to be country-driven, results oriented, comprehensive, partnership oriented and based on the long term perspective of poverty reduction. The PRSP prescribes four broad goals and transformations involved in eradicating poverty: creating an enabling environment for sustainable economic growth and transformation, promoting good governance and security, directly increasing the ability of the poor to raise their incomes, and directly increasing the quality of life of the poor (Nyamugasira and Rowden, 2002). Uganda also received the supplement to the HIPC initiative, the Multilateral Debt Relief Initiative (MDRI) in 2006, aimed at providing 100% debt relief by the WB, the IMF, and the International Development Association (IDA) to help Uganda attain its Millennium Development Goals (MDGs). In reality this 100% debt relief, meant only for loans contracted prior to 2005, left Uganda with an estimated debt service payment of over a million dollar a month that is only steadily climbing with time (WB, Estimated Debt Service Payments, 2008).

The PRSP is flawed, and there seems to be little institutional learning from evaluations of previous SAPs in new policy designs. The PRSP supports major privatization and deregulatory reforms in health, education, water and sanitation sectors, arguably the most important sectors to poverty reduction. New loans extended by the WB and IMF neglected the impact of privatization of water on people’s access to clean water. Privatization led to increased prices of water for individuals, reducing their access, and undermining the health-related poverty-reduction goals of the PRSP. The trade sector was also conflicting as the WB and the IMF lending policies contradicted external processes and institutions such as the World Trade Organization (WTO). For example, IMF and WB loans insisted that Uganda must privatize key utilities and markets stipulating that regulation “will eventually follow”. WTO rules, which Uganda is subject to, do not permit Uganda to develop the adequate regulation prescribed by the IMF and WB (Nyamugasira and Rowden, 2002).

            Structural adjustment resulted in the IFIs having a permanent hand in the running of the country. The extent of the IMF and WB’s involvement in Uganda went so far as pushing the Ugandan government to refuse program funding from the Global Fund for HIV/AIDs, Malaria and Tuberculosis (Ambrose, 2004). The rationale for refusing funding for a major health epidemic (when at least 6% of the population is still infected by HIV/AIDs, and malaria rates are as high as 396 cases per 100,000 people; Reuters, 2008), is that raising government expenditures on healthcare is thought (by the IMF) to distort internal markets, possibly leading to inflation (Ambrose, 2004). Health care and education declines[2], while the inflation rate has remained below 8% since 1994 (dropping from inflation rates of several hundred percent in the late 1980s). So why has the quest for actual poverty reduction been sidelined for economic growth and the “trickle down” effect usually attributed to this growth? Were the IFIs serious in their claim to want to reduce the poverty in the world, or were fancy schemes made to try to silence the international resistance and continue on with “business as usual”?

A Neoliberal Success Story?

            The government revels in the chance to flaunt certain aspects of its record, such as the increase in primary education enrollment rates from 62.3% in 2000 to 91.4% in 2007, the reduction in the prevalence of HIV/AIDs from 19% (in 1992) to around 6.4% (in 2000; which has since remained stagnant or possibly increased[3]), and the robust growth rate averaging at close to 7% over the 1990s (WB, Country Brief, 2008). In fact, the Structural Adjustment Participatory Review International Network (SAPRIN) which studied the effect of Structural Adjustment Programs (SAPs) implemented in Uganda through PRSP and PRGF (a line of credit to write the PRSP) reforms found otherwise. This study shows that access to affordable quality of services did not improve, and in fact, had actually worsened under SAPs (Nyamugasira and Rowden, 2002).

Privatization reforms mandated by the SAPs exacerbated inequality and failed to contribute to macroeconomic efficiency since the sale of state assets under privatization was marred by corruption. No property-owning middle class was created, as had been anticipated and large shares of former state properties were now in the hands of foreigners. Workers that were laid off during the privatization process suffered from inadequate compensation and retraining, resulting in greater job insecurity and income inequality (Nyamugasira and Rowden, 2002). In spite of improvement in coverage of health care facilities and an increased number of doctors and nurses (which still remains incredibly low and concentrated in organizations caring for ‘popular’ issues such as HIV/AIDs and Malaria to the detriment of general health initiatives; Garrett, 2007;26-8), less than 50% of children aged 1-2 years has been immunized. The current HIV program remains completely unsustainable since more than 94% of costs are covered by floating international donors (Nakkazi, 2005).

Concerns about the public involvement in PRSP policy writing contradicted the PRSP mandate to be country-driven. Ugandan NGOs complain that they were invited to provide input on the development of poverty-reduction goals, but not to discuss the nature of the policies necessary to achieve these goals or to be present during the writing of policies. The actual policies attached to loans were determined by IMF and WB representatives in consultation with small technical teams within the Ministry of Finance and the Central Bank of Uganda. NGOs felt they hadn’t been heard although the IMF had promised that all macroeconomic policies would be “subject to public consultation” (Nyamugasira and Rowden, 2002).

 The proportion of Ugandans living below the $1 per day benchmark for extreme poverty has remained mostly constant (Nakkazi, 2005), even though the WB says poverty has declined (WB, Country Brief, 2008). A high level of population growth (3.2%) means that even though poverty may have declined statistically, the number of people living in extreme poverty has remained relatively unchanged (Nakkazi, 2005).  The provision of teachers and educational facilities has not kept pace with the nearly doubling of students (62.3% enrollment in primary education in 2000 to 91.4% in 2007; WB, Country Brief, 2008), resulting in a decline in the quality of education. Poor completion rates in education are attributed to the introduction of fees for certain services implemented under the SAPs (Nakkazi, 2005).

Privatization, implemented through SAPS, was used by Ugandan government officials to build constituencies of supporters for state policies and to dispense patronage (Pitcher, 2004; 381). Economic elites and political insiders with connections to the state have controlled the entire privatization process, gaining massive advantages for themselves. Yoweri Museveni, the President of Uganda, and his National Resistance Movement (NRM) used the economic restructuring as a chance to distance themselves from past regimes, removing political elites who were entrenched in state enterprises through civil sector layoffs prescribed by the SAPs. In 1996 about 7,000 Asians returned to Uganda injecting over $500 million into the economy. Museveni agreed to return the assets taken from the Asians under the Amin regime in the late 1970s, also favoring them for several large privatization deals to gain personal advantage (Pitcher, 2004; 387).

The Situation in Northern Uganda

The focus on the economic situation by the government, international donors and aid agencies ignores the continuing conflict in the north of the country where close to a million people have been displaced by violence. This continued violence costs the Ugandan economy a minimum of $100 million per year in lost production alone and is preventing sustainable growth. The conflict was entirely ignored by the World Bank Country Brief who referred to the “situation in Northern Uganda” only in passing (Yanacopulos, 2004; 7-9). Museveni and the government of Uganda are guilty of genocide and crimes against humanity with their campaign of murder, torture, threats, bombing and burning down villages which interned of an entire section of the population (mostly Acholi) into displacement camps for “their own protection”. These camps lack even the basic necessities and are constantly terrorized by the Lord’s Resistance Army (LRA) who has abducted more than 25,000 children to be used as soldiers, workers and sex slaves from these camps. More than a quarter of all children in the northern area do not attend school at all because of violence (McCormack, 2006). The WB and IMF are guilty of complicity to these crimes by supporting Museveni and by not recognizing this interned population, and instead hiding the reasons for displacement. Aid comes in to conveniently labeled internally displaced persons (IDPs), instead of condemning the government for its massive human rights violations (Branch, 2008).


            As a land-locked resource scarce country what possibilities does Uganda have for poverty reduction in combination with sustained economic growth in the future? Paul Collier stresses that land-locked resource scarce countries such as Uganda should look to specialize in regional trade, giving priorities to policies on rural development (Selassie, 2008; 6). Conflicts in neighboring Sudan, Rwanda, and the Democratic Republic of Congo (DRC) have so far not caused significant negative spillovers to economic growth in Uganda; but they have had the effect of limiting regional trade suggested by Collier. Regional alliances also threaten to disrupt trade. Compared to sustainable economic “success” stories (mostly in Asia), Uganda has a per capita income on average 2 ½ times less (Selassie, 2008; 9) at only $370 per year (WB, Country Brief, 2008), limiting its chances for success. The growth rates in the Asian countries have also been significantly higher than Uganda’s, and the level of industrialization in Uganda (up from 12% in 1990/1 to 24% in 2005/6) is still much lower than countries like Chile and China (at around 35%). Urbanization also presents a problem to sustained success in Uganda. Urbanization in Uganda is low at around 12% of the population, not increasing much over the past 20 years despite industrialization (compared to around 40% urbanization in successful Asian economies). The underdeveloped financial sector shows financial liabilities to GDP at around a third of the level observed in successful Asian economies, and private sector credit (the ratio of private sector credit to GDP) stands at one-eighth the level of the Asian economies (Selassie, 2008; 9). These numbers suggest that while Uganda has had reasonable success for an African country, it is hardly to be touted as a “success” quite yet.

            While Uganda has been reasonably successful in sustaining a relatively high level of growth, especially compared to other African nations, it has completely failed in its quest for poverty reduction. The poorest of the poor are little better off than they were decades ago, and although loan forgiveness has been granted; loan repayments remain unsustainable. The government of Uganda is reliant on international donors for about 40% of its budget (Nakkazi, 2005), making sustainability questionable. The lack of concern by the IFIs for human rights abuses by aid-receiving governments is appalling, as the government of Uganda has gained considerable strength from these monies and ensured for themselves and their followers, positions of power and wealth. The debts owed by these loans will be paid on the backs of the poor, and not those who borrowed it or decided how it should be spent. The IFIs’ attempt at ‘poverty reduction’ is laughable, since clearly this is not their main priority. These institutions should be condemned for their lack of concern for their people, and their continual disregard for studies that contradict their desired image. Human rights abuses in Uganda will continue as long as the international community looks the other way and continues to support the government, making long-term poverty reduction and sustainable growth unrealistic.







Works Cited:

1)      Ambrose, Soren. April, 2004. Resisting market fundamentalism! Ending the reign of extremist neo-liberalism. Economic Justice News Online. Vol. 7, No. 2.

2)      Branch, Adam. June 8, 2008. Uganda’s interned victims living in wretched squalor. Enough. The Center for American Progress.

3)      Garrett, Laurie. January/February 2007. Do no harm. The global health challenge. Foreign Affairs. Vol. 86, No. 1; 14-38.

4)      International Monetary Fund (IMF). October 31, 2008. Uganda: Financial position in the Fund. Finance Department.

5)      Kiiza, Julius; Mubazi, John; Kibikyo, D.L. and Kigongo, Aloysius. February 27 2003. Understanding economic and institutional reforms in Uganda. Global Development Network. 

6)      McCormack, Pete. 2006. Uganda Rising. Canadian Independent Firm and Video Fund. Mindset Media. (Film).

7)      Nakkaz, Esther. 2005. Millennium Development Goals in Uganda. OneWorld Uganda Guide. 

8)      Nyamugasira, Warren and Rowden, Rick. April 2002. New strategies, old loan conditions: Do the new IMF and WB loans support countries’ poverty reduction strategies? The case of Uganda. African Action. 

9)      Pitcher, Anne. July 2004. Conditions, commitments, and the politics of restructuring in Africa. Comparative Politics. Vol. 36, No. 4, p. 379-398.

10)  Selassie, Abede Aemro. September 2008. Beyond macroeconomic stability: The quest for industrialization in Uganda. IMF Working Paper. 

11)  World Bank. September 2008. Country Brief. Development Results.

12)  World Bank. September 30, 2008. Uganda: Estimated Debt Service Payments Summary.

13)  Yanacopulos, Helen. March 17-20, 2004. A think piece in dilemmas in conflict and development: The Uganda Case. International Studies Association Conference. Montreal, Canada

[1] Private investment as a percentage of GDP went from 5.4% in 1986-7 to 13% in 1998-9 (Pitcher, 2004; 383)

[2] Health and education spending accounted for only 2% of WB lending. The other lending went to energy/road development (57%), the agricultural sector (13%), the financial sector (10%), the private and public sector (shared 10%), local governance structures (10%), and social protection (8% ; WB, Country Brief, 2008).

[3] A recent country report on the MDGs warns that there are anecdotal indications of an apparent increase in HIV prevalence and incidence during the last few years despite claims of reducing the rate. American donor presence pushed leaders in 2005 to promote the ABC approach to sex (Abstinence, Be faithful, and Condom use). This placed a greater emphasis on abstinence and restricted the distribution of condoms and has been attributed to the increase in prevalence of HIV/AIDs in recent years (Nakkazi, 2005).

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