As Tanzania prepares to host the World Economic Forum, African Chapter early next month, World Bank President Robert Zoellick has in the past few months laboured to generate an understanding on a new multilateralism, of a bipolar world where the notion of a ‘first, second and third world’ is no longer relevant. CORRESPONDENT MIKI TASSENI has been studying one of his addresses, and sees gaps in bringing about effective development strategies in Africa, the theme of the Dar es Salaam WEF meeting. Taking up the World Bank president’s remarks at random, rather than follow on the script of one recent address and a write about it in the US media, he for instance noted that the World Bank is working with Africans and Chinese to create industrial zones.He said that Chinese companies can be encouraged to relocate manufacturing for both domestic production and export. These manufacturers bring know-how, machinery, as well as access to marketing and distribution networks.
Since this is a new source of capital and new destination for capital as a whole, he said early investors are sensing the promise in Africa and are not dissuaded by the risks, noting that ‘after Lehman Brothers and Greece, investors know developed markets can be risky, too.’.He insisted on the fact that changes in government policies can create opportunities for private sector growth, which in turn offers services to other entrepreneurs. ‘In the ten years to 2008, the private sector has invested more than $60 billion in information and communications technology in Africa; 65 percent of Africans are now within reach of wireless voice services, and there are 400 million mobile phones in use in Africa.
“IFC, the World Bank Group’s private sector arm, is helping catalyze this business revolution. A new IFC equity fund has attracted $800 million from sovereign wealth and pension funds to invest in companies in Africa, Latin America and the Caribbean,” he elaborated.That summarises, in part, the more optimistic side of things, while reflections on how the new multilateral environment in world economy can be managed by the Group of 20 on a collegial basis and in terms of a sense of shared responsibility remains problematic.
The G20 at Pittsburgh in the United States and difficulties there, as well as those encountered at the world climate change conference at Copenhagen, tended to sober up the picture somewhat. Comparisons that Zoellick drew with US President Woodrow Wilson’s rather naïve optimism after World War I and the catastrophe that followed 20 years later was a rueful reminder of what is really passing in his mind, as to global consensus prospects.The bank president says the G-20 should operate as a “Steering Group” across a network of countries and international institutions. ‘Take financial reform: the world has paid a big price for the breakdowns of the global financial system in lost jobs and ruined lives,’ he says, and then reflects on the derivatives on Wall Street as the bete noire of commentators on global financial meltdown, but stridently seeks to take the sting out of radical criticism, the Obama type ‘greed of bankers’ sort of analysis that bankers detest.
He says significantly that ‘financial innovation, when used and supervised prudently, has brought efficiency gains and protected against risk: the World Bank has pioneered livestock insurance for Mongolian herders; a Malawi weather derivative against drought; and the Caribbean catastrophe insurance pool.The latter gave Haiti an immediate $8 million in January when its earthquake struck – faster money than from any other outside source.’ In other words Africa has a lot to gain from financial innovation – and let it be added for Tanzania in particular, plenty of the money for exploration of oil, diamonds, uranium and jatropha farming steeply diminishes without the derivative, futurist lending. ‘Wall Street has exposed the dangers of financial innovation, and we need to take heed and serious actions. But development has shown its benefits. A G-7 populist prism can undercut opportunities for billions,’ he pointed out, noting further that the developing countries need support and finance to invest in cleaner growth paths.About 1.6 billion people lack access to electricity, so ‘the challenge is to support transitions to cleaner energy without sacrificing access, productivity, and growth that can pull hundreds of millions out of poverty.’ Harsh statistics can help radical thinking, as proof of their logic.This is the point when one starts seeing analytical drawbacks in the position of the bank president, namely that it isn’t as yet steering clear of typical of World Bank presentation; it doesn’t see issues in terms of the credit mechanism tied to property relations, but a plurality of financing needs in the development process.
Only the European Union-dictated economic partnership agreements with Africa figure this sort of situation, where property ties are created at the grassroots level in Africa, not by offering titles to land as occupational right but as private property that can be exchanged or contracted in any manner, bought out by whoever it is, without a state prerogative to choose who can buy.Thus it is important for the World Economic Forum to start polishing its analytical outlook to get out of the perennial ethos of the ‘need for support and finance for cleaner growth’ and start thinking in terms of the sort of property relations where the land on which the project (investment plan) will stand becomes collateral for that business idea. Continuing to rake the mind for ‘laws’ to make banks lend to ‘indigenous businesses’ messes up the business climate still further, to earn populist plaudits in the ruling party.
Zoellick says that ‘while we must take care of the environment, we cannot consign African children to homework by candlelight or deny African workers manufacturing jobs. The old developed country prism is the surest way to lose developing country support for global environment goals,’ which implies that environment goals are basically negative when high rate of growth are required.Two aspects are missing in this view, that put this way, no country will afford to pay for environment needs as loss of jobs isn’t just an African problem, even if an added piece of drama about ‘doing homework by candlelight’ is specifically Africa. Are oil lamps as romantic as candlelight, anyway.
The second missing aspect is that cleaner technology also represents technological innovation and when marginally encouraged by government action – for instance by applying tax benefits for such technology – it can work in Africa as it works elsewhere.In that case this view of things would reinforce the argument for multilateralism where the sense of responsible environmental policy is applicable all over the world, not the Doha and Copenhagen hide and seek methods of the newly resurrected ‘Group of 77’ which was seeking that the United States, Europe and Japan should foot the bill, chiefly.When one starts accepting that developing countries - and it will be hard to exclude monstrous polluter China from that consideration - should be leniently treated in relation to environment, no consensus, or ethic, can emerge on what can be done about world environment.
And at the same time the argument about jobs and candlelight etc is only protectionist in character, and accepting its core premises is akin to a foreclosure of reform in this aspect as well. World Bank leniency on reform is at the core of stagnation. Zoellick says developing countries need summits for the poor, that they do not just want to discuss high debt in developed countries, but “they want to focus on productive investments in infrastructure and early childhood development.” Here the bank president is immersing himself in the most traditional of World Bank ethos, namely contempt for ‘high debt in developed countries’ and elevating infrastructure and ‘early childhood development’ to investment status, and in equal measure.While the financing of road construction or electricity generation isn’t ‘investment’ if it isn’t anchored in a profit-bearing context, within the private sector, adding nutritional needs as part of investment and not welfare or a result of higher rates of growth, reinforces traditional faulty thinking.He affirms interestingly enough that developing countries ‘want to free markets to create jobs, higher productivity, and growth. Many are exploring how to use the innovation and efficiency of private markets to help provide and maintain public sector infrastructure and services.’
One wonders if Zoellick is saying that developing countries want free markets as such, or ‘free markets’ for their goods as such, that is, as a mercantile conception of free markets that targets the ability of ‘the poor’ to sell their goods – where one can’t exclude the leading G-20 developing countries like China, India or Brazil in demanding a preferential regime with regard to demands of creation of proper free markets.That is why in that respect as well, despite its obvious shortcomings as relates to requiring that land ownership be shifted to freehold rights, EPA of the European Union is still the best model so far on the sort of reform Africa needs to start taking up for high rates of growth.
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