(LUSAKATIMES) World Bank/IMF ripping off Africa through fabricated statistics and hidden agendas

Sunday, April 15, 2012

(LUSAKATIMES) World Bank/IMF ripping off Africa through fabricated statistics and hidden agendas

COMMENT - Repetitive stuff from Field (House?) Ruwe removed. For 2 decades (a generation), the IMF/WB have been cooking the books in favour of globalisation, specifically the impact of FDI on developing economies. For instance they switched from measuring economic growth in GNP (economic activity by citizens at home and abroad) to GDP (economic activity within a country's borders, irrespective of who benefits from it or their nationality - highly deceptive when most of the mines are foreign owned). (Watch: former World Bank Chief Economist Joseph Stiglitz on Problems With GDP As An Economic Barometer.)

World Bank/IMF ripping off Africa through fabricated statistics and hidden agendas
TIME PUBLISHED - Sunday, April 15, 2012, 9:50 am
By Richard Mgamba

In explaining the story of Tanzania’s natural resources and how the Bretton Woods institutions forced us to accept a raw deal that will finally leave us with crumbs, I chose the conversation between the Zambian journalist and his companion, a white man.

Very soon, Tanzania will start producing natural gas and, if God wishes, in the next few years we shall have black gold or oil if you like. That’s why I feel obliged to remind my fellow Tanzanians, Africans and especially our leaders, about what IMF and the World Bank did for this country in the early 1990s during the rush for gold.

Hopefully, I will have enough time to narrate the current rush for natural gas and oil and how Tanzanians can avoid the previous mistakes done by the Benjamin Mkapa regime in the name of attracting foreign direct investments.

Behind the statistics

The World Bank and the International Monetary Fund measure economic prosperity by statistics, sometimes fabricated to justify their agendas or are ill-prepared. However, in reality, these statistics are misleading and contradict the actual situation on the ground.
For instance, a local English tabloid quoting statistics from the WB reported last month that gold was the number-one foreign exchange earner, having overtaken tourism.

This is because gold exports, buoyed by the surging price, grew to $2.2 billion by the end of last year, up from $1.48 billion earned in 2010. During 2011, according to a Bank of Tanzania report, gold accounted for 32 per cent of Tanzania’s $6.7 billion exports in 2011.

Now, these are shameful lies because, according to the available details, gold is mined and exported from Tanzania, but in reality the money earned by foreign companies doesn’t come back to this country. It’s therefore misleading to say that gold was the number-oneforeign exchange earner for the Tanzanian economy while in reality that wasn’t the case.

African Barrack Gold operates only in Tanzania where it controls about 60 per cent of the lucrative gold industry, but its headquarters is in London while its financial hub is in Johannesburg.

Whatever earnings that ABG or Anglo Gold Ashanti get from their gold exports go to their foreign or offshore accounts. To the Tanzanian economy, what comes back is just a small chunk called operational cost.

I have always argued that if, for instance, $2.2 billion was returning to the local banking system, the impacts would have been felt and our currency would have been very strong. It’s therefore appalling to see the WB, IMF and sometimes even our central bank (BoT) shamelessly claiming that gold is now the number-oneforeign exchange earner for Tanzania.

In theory these statistics are correct but, in reality, they are wishful thinking.

Though we are told by economists that statistics don’t lie in most cases they actually do. When we boast of being the third largest gold producer in Africa we are normally supported by statistics but, in reality, we are far from the truth.

The gold that makes us number three in Africa comes from Nyamongo, Geita, Kahama, Biharamulo and Nzega. Now do the living conditions in these areas reflect the statistics issued by the WB, IMF and BoT?

This is the curse of statistics often cited by the WB, IMF and their local puppets to justify their failed economic theories in Africa.

It’s the same old story of Ogoniland in Nigeria, the land of black gold famously known as oil, but which shelters the poorest people in Nigeria. It’s the same story of the Democratic Republic of Congo whose, we are told, total value of its minerals is equal to the combined gross domestic product (GDP) of the United States of America and Europe in a single year.

But, in reality, DRC is the poorest country in Africa, having seen more guns and soldiers than teachers and books or doctors. This is the curse of statistics often cited by the WB, IMF and their local puppets to justify their failed economic theories in Africa.

Nigeria is the third largest oil producer in Africa, but imports more oil than the countries which don’t have oil. If statistics don’t bring bread and butter to the table, or pay school fees for the poor, then there’s no growth.
There’s no WB or IMF in the United Arab Emirates, but still the Arabs have managed to turn their desert land into a prosperous nation, thanks to the proper management of the oil billions
.

For instance, Geita hosts Africa’s largest open-cut gold mine, but its schools and health centres reflect the opposite. It’s the same situation in all minerals-rich areas in Tanzania and elsewhere in Africa, except Johannesburg and Royal Bafokeng Province in South Africa.

What people don’t know is that there wasn’t any WB or IMF in these areas, let alone in South Africa, until the 1990s during the end of apartheid but, still, the people managed to use their resources, mainly minerals, to bring development.

Johannesburg is known as ‘Egoli’ or a place of gold, while Royal Bafokeng is called the Platinum Province. These are some of the very rare examples in Africa where proceeds from minerals have been used to build the local economy.

There’s no WB or IMF in the United Arab Emirates, but still the Arabs have managed to turn their desert land into a prosperous nation, thanks to the proper management of the oil billions.

Show me one country that was developed by the WB and IMF policies and I will tell you hundreds which have been devastated by their policies. When the World Bank and International Monetary Fund were pushing Tanzania into the controversial Mineral Policy, it wasn’t in the best interest of this country but in the best interests of the Britton Woods institutions.

For instance, the biggest lender of foreign mining companies which came to Tanzania was the International Finance Corporation, which is the lending arm of the World Bank. At the same time, the company that acted as insurer or guarantor of these companies was none other than the Multilateral Investments Guarantee Agency (MIGA), which is another branch of the WB.

In their article, ‘Why the Developing World Hates the World Bank’, Rayal Parekh and Oren Weinrib wrote, “The World Bank was created in July 1944 with the aim of creating a stable global economic system. It quickly became the dominant financial institution for lending to developing countries. It usually acts by making long-term loans to governments for projects such as dams or bridges, or to support economic reform programmes.

“The World Bank has 177 member countries, but the governing structure of the Bank is not democratic. The principle: one dollar, one vote. Therefore, China and India represents 39 percent of the world’s population but have only 5 percent of the total votes. Six countries — the United States, Canada, Japan, Germany, the United Kingdom and France — control about 45 per cent of the decision-making power. The Bank works under a veil of secrecy and is not required to reveal its internal documents.”

According to a research conducted by the Heinrich Böll Stiftung/Foundation (HBF), the World Bank and the International Monetary Fund have played significant roles in the general economic path taken by Tanzania since the 1980s and were central in developing the blueprint for the country’s mining sector and the financing of large-scale mining activities.

The World Bank (1989) emphasised the strategic importance of Foreign Direct Investment and repeated attention was drawn to FDI as a critical component of formal private sector capital. Foreign capital was portrayed as the bearer of innovation, technical know-how and market intelligence. Dropping restrictions on foreign investment was thus a key ingredient of ensuring an “enabling environment”.

Significantly, according to the research, the World Bank strategies were hostile to small-scale or artisanal mining. The Bank downplayed the latter’s contribution to the GDP and employment and instead argued that artisanal mining was responsible for problems of law and order, safety, environmental degradation and loss in potential government revenue.

If the WB was really advocating economic empowerment to the people in the Third World then it wouldn’t have blessed and orchestrated the dismantling of small-scale mining in Tanzania.

I was surprised when I learnt three years ago that the WB was planning to give millions of dollars to the government of Tanzania in order to support the development of the small-scale mining sector, which it had dismantled about eighteen years ago.

To justify their motive, the WB has always used statistics to defend its wrongdoings or failed policies in many countries, especially in Africa. That’s why today, in terms of statistics, large-scale mining seems to have benefited the country.

But beyond these statistics lies a shocking reality. The Kigoma North MP, Zitto Kabwe, who is also chairman of the Parliamentary Public Organisations Accounts Committee, said recently that the country’s mining sector growth rate had declined from 30 per cent in 2000 to 1.7 percent presently.

Speaking at a stakeholders’ forum, Kabwe, who also doubles as shadow Finance minister, blamed the trend on the lack of significant local investment, especially in exploration. He said the growth of the sector had for a long time depended largely on foreign direct investment (FDIs), and now the country was witnessing a sharp drop of sector growth from double digit in the mid 2000s to hardly 2 percent.

The growth we want now isn’t about how much has been invested in the sector, but rather how does it bring economic prosperity to the country as claimed by the World Bank and IMF in their strategic paper of 1994.
Obviously, we expected the investment to decline after completion of the acquisition of all rich minerals areas because the investment had reached its peak by the end of 2008, especially in gold mining.

By the end of 2010, total investments in mining, especially gold, reached $5 billion, or 60 per cent of Tanzania’s annual budget of 2011. However, the impacts of this huge amount of money to the people of Tanzania, as claimed by the WB, remained minimal.

For instance, while foreign mining firms invested a total of $5 billion between 1997 and 2010, mineral exports between 2009 and 2011 reached $4.55 billion, whereby the government earned only $196 million in taxes and royalties.

To put things into perspective, the total value of mineral exports between 2000 and 2011 is twice the total investments in the mining sector, and the battle is still far from over.

Those defending this sector have tried endlessly to give me statistics about how the economy has benefited, the number of people employed, taxes paid and the amount of money injected into the community through corporate social responsibility. They have mentioned the total foreign direct investments that came to Tanzania through the mining industry as well as the surging exports of gold revenues earned during the past decade.

In return, I have always advised them to go beyond the statistics. I have always urged them to see a bigger picture beyond the statistics in order to understand the story behind the numbers.

Tanzanians are not interested in statistics. They want to see positive results in their lives. They want to see modern roads, schools, medical centres and many more built by mining revenues so that one day they would tell their grandchildren that ‘once upon a time there was gold, diamond and tanzanite, which built what you see here today.”

I have visited all the mines except tanzanite mines, and what I saw was a contradicting image. While within the mining premises I saw modern life enjoyed by local and foreign workers, just a few kilometers from each mine I was confronted by devastated faces struggling to earn bread in a land of plenty.

I have met internally displaced residents whose land was grabbed by large-scale miners, but were either not compensated or were paid peanuts under the Land Act. I have seen the struggling local small-scale miners who are usually treated like criminals by the large-scale miners.

But I am yet to see the prosperity promised by the pimps of globalization during their campaign to push Third World countries like Tanzania to open its borders for the scramble for its resources.

Source: GUARDIAN ON SUNDAY

Labels: IMF, NEOCOLONIALISM, TANZANIA