Tuesday, December 11, 2007

Do As I Say, Not As I Do

Finally, a President from the impoverished continent of Africa had the courage and the good sense to disregard the advice of the World Bank, which has an atrocious record for helping poor nations end their hunger and economic problems. In an unprecedented move, Bingu Wa Mutharika recently elected President of Malawi decide to go against the dire predictions of the World Bank and other rich agriculture countries and start subsidizing his country’s farmers for fertilizer and seed. I have been quite vocal for years against the policies of the World Bank and other agencies run by the industrialized nations for being unrealistic and in many instances detrimental to the economies and especially the agriculture of the states they are suppose to be helping.

LILONGWE, Malawi — Malawi hovered for years at the brink of famine. After a disastrous corn harvest in 2005, almost five million of its 13 million people needed emergency food aid.
But this year, a nation that has perennially extended a begging bowl to the world is instead feeding its hungry neighbors. It is selling more corn to the World Food Program of the United Nations than any other country in southern Africa and is exporting hundreds of thousands of tons of corn to Zimbabwe.

Farmers explain Malawi’s extraordinary turnaround — one with broad implications for hunger-fighting methods across Africa — with one word: fertilizer.

Over the past 20 years, the World Bank and some rich nations Malawi depends on for aid have periodically pressed this small, landlocked country to adhere to free market policies and cut back or eliminate fertilizer subsidies, even as the United States and Europe extensively subsidized their own farmers. But after the 2005 harvest, the worst in a decade, Bingu wa Mutharika, Malawi’s newly elected president, decided to follow what the West practiced, not what it preached.[1]

It has long been my contention and now being proven that these policies are designed to keep the impoverished, poor and dependent on the large food subsidies being supplied by these nations. By keeping these poor nations reliant on the agricultural subsidies of the richer nations, it allows these richer nations to continue to subsidize their own agricultural industries. The very thing they tell the poorer nations is wrong and will lead to ruin. Apparently it will only lead to ruin for the poorer nations because the rich nations don’t seem to be having any trouble feeding their people. It works so well they are even able to send out millions of metric tons of excess to the poorer nations.

In what has turned into a viscous cycle of greed the rich nations led by the US, subsidizes its agriculture industries and then sells the excess to aid organizations who gives it to the poorer nations. On the surface this appears to be a good thing, they are after all helping to fight hunger. In the short run it is true, but in the long term growth of a nation it is not good. Instead of supporting the development of the poorer nations own agriculture industries it floods the market with cheap food, depressing their already suffering markets. Because they are not developing their own markets, they are dependent on the donor nation’s good will to feed their people.

There are two problems with this scenario in my opinion. The first is that it allows the donor nations to exercise too much control over the poorer nations, their politics, and their economies. So long as the poorer nations support the policies of the donor nations, everything is cool. However, should the poorer nations decide to exercise their own sovereignty, there could be issues with the donations. The donor nations are able to keep the poorer nations in line through dependency on food subsidies. Should the people elect a leader that is not supportive of the donor countries policies, the aid could and sometimes does evaporate. This was the basis for much of the Cold War strategy.

The second problem with this scenario is that it is short-sighted and smacks of racism. It keeps the poorer nations in a state of begging. This constant state of poverty and begging reduces their national pride and personal growth. Because many of the poorer nations today are brown or black, it prevents these dark skinned people from playing a role on the international stage. This keeps their issues and concerns from coming to the forefront in international circles. The strategy appears to be, “keep them barefoot and hungry”. When your belly is empty, you don’t have time for international concerns. As a result most global policies are being created by and for the rich nations, with little concern for their effects on the poorer nations.

Recent increases [in foreign aid] do not tell the whole truth about rich countries’ generosity, or the lack of it. Measured as a proportion of gross national income (GNI), aid lags far behind the 0.7 percent target the United Nations set 35 years ago. Moreover, development assistance is often of dubious quality. In many cases,

Aid is primarily designed to serve the strategic and economic interests of the donor countries;

Or [aid is primarily designed] to benefit powerful domestic interest groups;

Aid systems based on the interests of donors instead of the needs of recipients’ make development assistance inefficient;

Too little aid reaches countries that most desperately need it; and,

All too often, aid is wasted on overpriced goods and services from donor countries.[2]

Not only has Malawi demonstrated the ability to feed itself using the subsidies, they were able to provide excess to other countries just like the donor countries. So what are we to make of this news? That too often impoverished nations are kept impoverished for economic and political reasons. It is time that the IMF and the WB provide policies that actually aid the impoverished and not the rich nations. Policies that allow the poor nations to provide for their citizens and build for their futures are what is needed. We can no longer continue to subsidize our industries on the backs and the bellies of the hungry and the poor.

It is time for the US and other rich nations to stop being obstacles to the development of these poorer nations for the sake of their own political and economic ends. It is time to support real reforms to how we provide aid and food to developing countries. These nations deserve our help in creating their own markets and development, not our being an impediment to their futures. If we don’t change how we support others, eventually there won’t be enough food for everyone and then what.

Malawi’s determination to heavily subsidize fertilizer and the payoff in increased production are beginning to change the attitudes of donors, say economists who have studied Malawi’s experience.

The Department for International Development in Britain contributed $8 million to the subsidy program last year. Bernabé Sánchez, an economist with the agency in Malawi, estimated the extra corn produced because of the $74 million subsidy was worth $120 million to $140 million.

“It was really a good economic investment,” he said.

The United States, which has shipped $147 million worth of American food to Malawi as emergency relief since 2002, but only $53 million to help Malawi grow its own food, has not provided any financial support for the subsidy program, except for helping pay for the evaluation of it. Over the years, the United States Agency for International Development has focused on promoting the role of the private sector in delivering fertilizer and seed, and saw subsidies as undermining that effort.[3]

[1] http://www.nytimes.com/2007/12/02/world/africa/02malawi.html?em&ex=1196830800&en=8767515f8a8ac086&ei=5087%0A
[2] Pekka Hirvonen, Stingy Samaritans; Why Recent Increases in Development Aid Fail to Help the Poor, Global Policy Forum, August 2005
[3] http://www.nytimes.com/2007/12/02/world/africa/02malawi.html?em&ex=1196830800&en=8767515f8a8ac086&ei=5087%0A

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