The World Bank’s Scare Amid VP Kamala Harris’s Visit to Africa: BRICS Bank offers Hope to Global South
By Alan Collins Mpewo
There was a time when the World Bank and its ilk ruled the world economy fluidity without much or any rivalry. In fact, this prompted them to dictate the loan terms and conditions (regardless of how steep) and the loan receivers only stood on the far side without any pleas being given much audience. The tides have significantly changed in the recent times with the rise of the Eastern economies. As the largest contributor and member of the BRICS (Brazil, China, India and South Africa) Bank or the New Development Bank, China has significantly led the league of dominant economies and as rightly foreseen by some analysts such as O’Neill, J. in his 2001 Economic Paper entitled; Building Better Global Economic BRICs. Goldman Sachs Global Economic, China has consequently become a scare to the world bank. It happens more often, as a rule on basic dominance that a stronghold for decades can run at unease with any challenge to their foundational dominance. It’s a proper adoption of the rules of the jungle. Survival for the fittest has greatly been undertaken by the West, while Beijing has constantly harnessed the “round circle” doctrine. This is to the effect that there shouldn’t be any dominance by whoever they seek to partner with, but rather a round table formation of diplomacy which enables having an all-round talk while setting fair attention to all pleas.
The President of the World Bank, David Malpass, has recently been skeptic on the loans issued by China to Africa. BBC was the medium of his scares, and he had a lot to state as regards to his worries for the growing economies in the Global South. His address was hinged on what he described as nontransparent terms and conditions. He added a call for such terms and conditions to be increased in transparency. However, if we critically analyse this, Malpass cherrypicked facts. For example, he ignored other facts such as that in most cases when countries are borrowing, they request to include privacy terms which cannot be unilaterally ignored by China because Malpass so suggested. Actually, such terms are common terms used by other lenders including some members of Organisation for Economic Co-operation and Development (OECD). A March 2021 joint report by AidData, Peterson Institute for International Economics, Georgetown Law, Kiel Institute for the World Economy of Germany, and Center for Global Development concluded that seven percent of OECD official creditors sampled have some sort of privacy terms and use contract tools and repayment security devices to ensure loan repayments.
Of course, some onlookers will agree that Malpass’ statements have some validity, but without context, it all comes as distress signaling in as regards the World Bank’s long-standing economic dominance. So, for purposes of proper analysis, I’ve elected to dress my opinion with a juxtaposition in regards to ‘what was’, and ‘what is’, to better understand the outcry.
In what many would agree to, China has provided an alternative. Previously, there was basically one direction to look at for economic support, when domestic and regional interventions failed. The World Bank would then come with a pool of excess funding, but for their conditions. In fact, there isn’t much in most countries that they can show for what the funding then was being put to use for. To be fair, most was spent on lavishing the corrupt whims of those who sit in the highest echelons of the borrowers. Be that as it may, with most loans from Beijing, loan restructuring tries as much to encompass accountability on a ‘target/goal hit’ basis. Sometimes, it goes ahead to additionally offer expatriate support in order to secure the project completions. This modus is greatly parallel from how the World Bank has in recent times operated.
The starting point of the Ills had always been with the propagation of the loan disbursement to be through either the Euro or dollar currencies. In turn, and sadly a reality for most of the world borrowers, loan repayment has often been expensive due to the changes and fluctuations in the contract currencies in light of the economic instabilities globally. While the World Bank cited Zambia and Ghana as examples to support its allegations, it was inconsiderate in noting that Beijing has since recent times lent debt writing off for not only both countries, but also numerous other countries in the global south. In March 2021, researchers at Johns Hopkins University noted that between 2000 and 2019, China wrote off accumulated arrears of 94 interests’ free loans for African countries that totaled over 3.4 billion USD. A move by the same bank would in the past still hinge on some undesirable conditions. It was always a winner and left no much room for the Global South in the bargain. While rules on international lending are a guidance on desirable practices, the same rules have often been penned by the allies and this has been a major point of disagreement for China. Debt management shouldn’t be a tool at a disposal for wanton sinking of other global players, but perhaps with a facelift, should be looked at, and used, as a way of supporting the not so economically sound nations.
While this has been China’s objective, to the West, it has always been met with antagonism. This has been witnessed by the visit of the U.S Vice-president Harris Kamala to over 3 countries in the global south, in a move to pulling those nations and possibly their neighbors through promises of economic support. Promises were among other countries, made to Tanzania and Ghana, and evidently, the tone in U.S’ tone towards Africa is significantly changing from “what the U.S can do for Africa,” to “what Africa and U.S can do together.” With the various turns in international politics, there’s much attention on what this new tone would seek to mean to the Global South. It’s in the alternative evident from the climate change trends and rapid alliances, that there’s a great need for natural resources as a move for mitigation of the effects. Nickel still ranks among the most sought minerals, and without a doubt, Africa is still a virgin ground with isolated deposits. For leading manufacturers of electric cars as alternatives to carbon emitting machinery, the visit to isolated nations has raised eyebrows and rather than agreeing with China’s mutual respect doctrine of diplomacy, a move to merely discredit Beijing through channeled antagonism. Arms crossed for what’s next.
Alan Collins Mpewo, is a lawyer and a Senior Research Fellow, Development Watch Centre.
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