Harsh conditions in many African countries, many of which have been chronicled in news media and public reports, are not different from the narratives of the 10/16/2013 NY Times article called “Poverty And Stigma Give An Edge To Disease.” In this article, as well as in previous ones, the writers narrated the issues of corruption, incompetence and limited resources as the root causes of Africa’s plaques, including high infant mortality rate, poor education, etc. Also, the writers have and continue to discuss the generous efforts made by individuals, groups and, or international organizations such as the World Bank, but, nonetheless, conditions continue to deteriorate year after year.
While African Countries (Its Clients) Got Poorer
So, why are conditions deteriorating in poor countries, but the World Bank continues to make huge profits? First, what is the World Bank? Established in 1945, it is now owned by 185 countries. Its primary goals range from the eradicating of poverty, fighting disease, and corruption. It is perceived as Africa’s partner in striving to spur development. Over the years, it has executed policies such as Structural Adjustment, Deregulation and Privatization, the Millennium Development Agenda, Poverty Reduction Strategy as the tools to fight corruption, inefficiency, etc.
So, if these policies are successful in some of the 185 countries, then why are the clients of the World Bank failing? Is there any poor country that has emancipated to prosperity because of the World Bank’s policies? If not, are of the tools of the World Bank ineffective or are African leaders, unlike other leaders, inherently corrupt? Certainly, many African leaders are corrupt, but does the profit-making motive of the World Bank play a role? For instance, is the idea to profit from lending money to its clients on the one hand, and on the other hand serve as an adviser to the debtor-country creates an environment for the lender to maximize its profits at the expense of the debtor-country? Further, does a third-party, big business, (Bridgestone, Firestone's Parent, ExxonMobil or Chevron) whose money is indirectly lent to the debtor-country, demand a favor from the debtor-country?
In fact big business, indirectly, owns the World Bank. This is because a significant portion of the money the World Bank uses to generate its income is borrowed from big business through the sale of bonds. But such a business transaction, without other factors, does not explain the World Bank made huge profits, while its clients continue to fail yearly.
For example, while conditions in poor countries continue to deteriorate, the World Bank reported a combined profit of $2.9 billion (930 million in 2011; ($1,077 Billion) in 2010; and $3,114 billion in 2009), according to its 2011 Annual Report. So was most of its revenue generated based on its conflicting role; an adviser and a lender? Nigeria was one of the victims of such a loan arrangement. According to NY Times Editorial, a $5 billion dollar debt generated $43 billion dollar profits for the creditor over several years.
Well, guess what, the World Bank has, implicitly, admitted that it did ill-advise poor countries in the past to undertake gigantic projects such as the Akosombo Dam of Ghana or Hotel Africa of Liberia. Predictably, its guilt did help for its board of directors to accept the idea to reduce or cancel billions of external debt of about 39 countries under the program called High Indebtedness of Poor Countries (HIPC).
The million-dollar question is not whether the World Bank has changed from being a profit-making institution to become a philanthropic organization. But whether it has limited its role to being either an adviser or a lender? Not so, says Robert Sirleaf, President Ellen Johnson's son. In fact, it has increased its profit-dealing-conflicting role, if the recent revelation is true. The new information implies that it is not only advising and at the same generating interest income on loans borrowed to debtor-country, but it is also written agreements between its own-creditor (big business) and its borrower (poor country).
The World Bank wrote the Liberia’s oil concessionary as a consultant, says Robert Sirleaf, former chairman of the board of directors of the Liberia National Oil Company during an interview with AllAfrica, a Liberian Web Site. If true, it means that the World Bank got fees from writing the Liberia oil concessionary agreement, earned fees from serving as Liberia's adviser, and generated income from lending money to Liberia.
Implicitly, It also means that the World Bank did write provisions that favor big business (Chevron), a de facto owner of the World Bank and, or Chevron did dictate the terms of the oil agreement that the first-tier borrower (World Bank) or the second-tier borrower (Liberia) could not resist. I guess, for the World Bank, such a triplet business arrangement, where big business, the de facto owner of the World Bank, is indirectly dictating the provisions of concessionary agreements, is transparent and balanced for both the poor country and big business.
The Oil concessionary agreement, the latest concessionary agreement, approved by the Liberian Senate, but is still yet to be approved by the Liberian House of Representative, provides that Liberia will receive 7% of the net profit. The Chevron’s dictated Liberian seven percent ownership and other provisions are considered not in the interest of Liberia, according to some members of the House of Representatives and expert witnesses. In fact, this famous Block Thirteen was yanked away from an arch rival of the Chevron, a Russian Oil Giant Company. Unlike Chevron, the Russian Oil Company had promised to do more for Liberia, including electrifying the entire Monrovia and its environs than stipulated within the current agreement, according Edwin Snowe, former Speaker of the House of Representative and a member of the Liberian House of Representative.
Africa, endowed with natural resources, is a cash cow for a profit-making institutions, and the World Bank is no exception. More so, the World Bank, a profit-making institution will do nothing to reduce its profit margin in spite of complaints and reforms. So, starting with financing their choice of leaders, such like President Ellen Johnson Sirleaf, writing favorable provisions within concessionary agreements, size of the projects and terms of the loans, the World Bank will arrange things that wouldn’t reduce poverty, increase employment, improve literacy, etc. of African countries, all because the profit-margin MUST IMPROVE.
So, for Liberia the choice of a future leader should not be based on candidates who are preferred by the World Bank and, or big business, rather leaders whose activities are directed at fighting for the interest country. Importantly, Liberians must, I say must, begin to establish institutions, including political institutions that will create necessary environment for bureaucrats and voters to be trained.
J. Yanqui Zazay, Contributor