Recent maneuvers have shown the International Monetary Bank (IMF) and the World Bank are taking fully-fledged advantage of the new economic architecture and the current geopolitical fever that have engulfed Africa. The outlook behind the Bretton Woods system, the International Monetary Fund and the World Bank have become the principal instruments through which the agenda of neo-liberal capitalism will largely remain with Africa.
The IMF and the World Bank perspectives on Africa’s contemporary economic situation looks extremely positive. Undeterred by the criticisms from anti-Western world, IMF has indeed embarked on an economic engagement with partners across Africa. A glimpse at the reactions to shift and twisting politics in continent shows African elite and the middle-class are hopeful it would lead to recognizing their economic discrepancies often blamed on colonialism, and further dream of economic uplift – leave behind the deal on renewed growing neo-colonial tendencies.
After delving deeply, with some kind of dedication, into the intricacies and real-world insights of Africa’s diverse developments, the United States and European Union remain as its equal geopolitical development partners, while United Arab Emirates, Japan, India and Turkey are also, with a specific emphasis on support for economic sovereignty, appear on Africa’s block.
There is no doubt that Africa, most probably, stands to benefit from external players scrambling for resources. Since the exit of Russia out of Africa three decades ago, China has heavily invested in infrastructure and industry, and raising trade levels while its soft power has hit the skyline. Russia claims to flex shoulders with China on the platform of BRICS, described as “an informal association” of emerging economies and now consists of ten members, but crawling into Africa’s landscape. Russia’s pledges are rising without practical little results on the continent. BRICS Development Bank, most equated with the least error to the IMF and World Bank, is yet to prioritize its activities and burgeoning operations involving Africa.
China has played its admirable role for these three decades, but now Chinese financing is seemingly dwindling. Surprisingly, African leaders are very adamant to resolving their development weakness with their ‘huge untapped resources’ which always claimed… have been exploited since the birth of their grandparents. Considering Africa’s ambiguous economic situation and its lust for external finances, the World Bank and IMF are still Africa’s legitimate darling. We have obviously noted that, during these couple of previous years, there have been World Bank/IMF agreements with several African countries.
For those reading this article and weary about IMF and the World Bank, their new economic outlook reports focus on deep-seated corruption, anti-money laundering and combating the financing terrorism, and financing risk especially in West Africa. The observations and recommendations in the reports were based on discussions with regional and national authorities and the private sector as well as a review of relevant economic templates.
Nonetheless, media reports monitored by this author indicated that IMF and World Bank have pledged to support African governments in transforming the economy. The reports, however, warned about slow-down in 2024, primarily due to on-going Russia-Ukraine and Israel-Palestine conflicts, as well as persistent internal ethnic complexities inside Sub-Saharan Africa. Growth in the region is expected to fall to 3.3% this 2024 slightly lower than from 4% last year, the IMF said in its World Economic Outlook report. The IMF and the World Bank clearly set wide ambitious aims, including eliminating extreme poverty, engaging in post-pandemic economic diversification, dealing with sectoral unemployment, healthcare issues and boosting education.
With the most difficult stage of development, both global financial institutions will certainly continue to work as always on multidirectional issues, consolidate the governance structures and comprehensive socio-economic performance across Africa. In fact, the IMF and World Bank representative offices, the directors and senior staff have carried out indepth research with a focus on bolstering Africa’s economic capabilities through cutting-edge technology by granting loans. Kristalina Georgieva, Managing Director of the International Monetary Fund (IMF), praised the agreements as “substantial milestone” for Africa.
Later in her article published by the Business & Financial Times, Kristalina Georgieva, with clapping hands, pointed a “stronger voice” at the International Monetary Fund as it offered a third seat on the global lender’s Executive Board. “Ultimately, what it means is (a) stronger voice for Africa, as a significant step to tackle the thorny issue of institutional reform,” the IMF’s managing director added, at the October 9-15 meetings in Marrakesh, Morocco, and with high expectations for some brighter prospects for sub-Saharan Africa.
The Sahara-Sahel region, in particular, has been the scene for more than a decade of jihadist insurgency that has fuelled military takeovers in Burkina Faso, Mali and Niger. Despite the coups, Georgieva defended the IMF’s decision to maintain aid to those countries due to humanitarian concerns. “We have a responsibility to make sure there is at least minimum financial capacity, because the regimes are not there sufficiently for their people, it’s not an excuse for us to forget about the men, women and children who need us,” asserted Georgieva.
The implications from above show that the Bretton Woods financial architecture is bound to stay and operate, even stronger than previously, within the system of the emerging multi-polarity. The financial institutions’ programmes will allow the allocation of financial resources for critical public investments, particularly in healthcare, education, and infrastructure development. Beneficiary African countries, 26 in total, include South Africa, Ghana, La Cote de Voire, Burkina Faso, Senegal, Kenya, Mozambique, Rwanda, Burundi, Algeria, Egypt, Namibia, Zambia, Tanzania et cetera.
In other words, the well-structured and established multinational financial institutions are continuing to build Africa’s economy, as these African leaders considered them strategic partners. For the most considerable part, African political leaders’ quest to witness their dominance in the continent. Without much doubts, the leaders often express highest satisfaction for addressing economic challenges and seize new opportunities to play effectively strategic roles across the continent.
In October 2023, Governor of the Bank of Ghana, Dr. Ernest Addison, spoke at the IMF-African Caucus Meeting at the World Bank/IMF Meetings held in Marrakech, Morocco. In his lengthy presentation, Dr. Addison emphasized the importance of strengthening multilateral coordination and regulatory efficiency for sovereign debt resolution in low-income countries (LICs) through the creation of a robust Global Sovereign Debt Roundtable (GSDR).
Further down the presentation, Governor Addison made several recommendations for consideration: including the IMF adapting its lending toolkits to changing global conditions; and aligning access thresholds with those of the GRA to ensure uniformity of treatment. Additionally, he emphasized the importance of deepening the Fund’s tailored capacity development and surveillance support in collaboration with other international partners, to address member-specific bottlenecks and restore public debt sustainability.
In the southern African region, IMF and the World Bank are very active. For instance, the IMF has now returned with a set of new funded programmes to Mozambique, six years after the lender halted its previous deals in the wake of a financial scandal involving three fraudulent security-linked companies, and two banks – Credit Suisse and Russia’s VTB. It has granted debt relief for a number of African countries including Chad, Ethiopia, Ghana and Zambia.
In addition, IMF has its own conditionality and it is a set of policies or conditions. Some of these conditions for structural adjustment can include: structural reforms, cutting expenditures or raising revenues, also popularly known as austerity measures. Some experts further suggested African countries have to take steps for a greater transparency to boost investor confidence and trust if they wanted to attract foreign investment.
There were various expert (political and economic heavyweights) panel debates and discussions at the World Economic Forum (WEF) in Davos, Switzerland. According to the International Monetary Fund, more than half of the low-income countries in the region now assessed to be at a high risk of or already in debt distress. Ethiopia became the latest African to default on its debt after it failed to make an interest payment in December, joining a league of non-paying nations that includes Zambia, Ghana and Sri Lanka.
Reports from IMF and World Bank show that, despite the enormous challenges and risk, both institutions are seeking to mend fences and strengthen their footholds intended to transform the economy, especially this era when multipolar world is fast-developing and catching up with Africa. With geopolitical confrontation and tensions deepening, the key global players are swiftly turning their focus on Africa. Nevertheless, there is no point to discriminate, there is no point to shy away from development offers as it an existing geopolitical reality. The world’s reconfiguration comes along with its own opportunities.
As the world’s first-class prestigious financial institutions, World bank and IMF continues building corporate trust, support strategic reforms for economic growth and, both institutions display uttermost commitment by undertaking the fundamental challenges towards achieving development goals for the growing population in Africa. These external players and foreign institutions offer opportunities which Africans can capitalize on and take full advantage to develop the continent, the world’s second-largest and second-most populous, with approximately 1.4 billion people.