Africa: World Bank and Africa Policy, 04/05/01

Africa: World Bank and Africa Policy, 04/05/01

Africa: World Bank and Africa Policy Date distributed (ymd): 010405 Document reposted by APIC

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Region: Continent-wide Issue Areas: +political/rights+ +economy/development+


This posting provides two brief notes on issues where World Bank policy continues to clash with alternatives proposed by African civil society organizations and governments. The first, from Jubilee 2000-Zambia, concerns the use of loans rather than grants to address the HIV/AIDS pandemic. The second is an update from Joe Hanlon reporting that the IMF and World Bank are still resisting Mozambican efforts to protect its cashew industry, despite apparent concessions earlier this year (see for earlier posting).

The posting begins with a brief cover note from Africa Action executive director Salih Booker.

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Who Pays for Damages?

The documents below are two examples among many of specific policy areas exposing the 'democracy deficit' in the World Bank and other multilateral institutions which in practice make many key decisions for African countries. The balance of power in making decisions is tipped decisively towards decision-makers in Washington, yet those who pay for policy failures include patients seeking health care from impoverished health systems and unemployed cashew workers.

An internal Operations Evaluation Department report of the World Bank's health projects concluded that the Bank 'has performed poorly in analyzing the factors that lead to ill-health among the poor.' (Cited in John Gershman, The World Bank and Health - Bank-imposed user-fees (required in nearly 75% of the Bank's health projects in sub-Saharan Africa) have driven the poor away from health care, thereby fueling the HIV/AIDS pandemic. More than three years ago, Mozambican and international critics identified the damages from Bank policy to Mozambique's cashew industry and called for the Bank to pay compensation (

Who owes whom? The precise figures may be hard to calculate, and the international legal system does not yet provide for juries to award damages as in domestic civil suits. But can there be any doubt that those who imposed failed policies should be liable to pay?

Salih Booker

P.S. In response to the most recent developments on the cashew policy, Representative Cynthia McKinney has initiated a congressional letter to U.S. Treasury Secretary Paul O'Neill on the issue ( Along with several other organizations in Washington, I am writing to the Department of Treasury to request a meeting to ask that the U.S. use its influence against this continuing pressure on Mozambique.


Jubilee 2000 - Zambia

3 April 2001



For more information: Chrispin Mphuka Coordinator, Jubilee 2000-Zambia Campaign Jesuit Centre for Theological Reflection P.O BOX 37774 Lusaka, Zambia. Tel: 260-01-290410 Fax. 260-01-290759 E-mail: Web:

Loans will not solve the AIDS/HIV pandemic that Zambia is currently facing. As Jubilee-Zambia, we are concerned with the World Bank's insistence that Zambia should acquire loans to tackle the AIDS problem. The World Bank should realise that Zambia is actually losing more lives as a result of servicing debts for the loans that we are being encouraged to borrow.

Responding to press article in which World Bank Country Director for Zambia and Zimbabwe Yaw Ansu justified the need to borrow in order to overcome the problem, Jubilee-Zambia Acting Co-ordinator Charity Musamba explained that if indeed the World Bank is concerned about AIDS in Zambia, then it should change its approach to this crucial matter - HIV/AIDS.

Loans are not the main option especially if "thousands of people are dying" as Mr Ansu noted. Instead, it would be important to empower countries such as Zambia to tackle this problem in a more sustainable way. The most critical question the World Bank must respond to is "why are thousands of people dying of HIV/AIDS in Zambia today?" Secondly, if the World Bank's concern is true, the solution to this problem should be "people-centred" as opposed to the current strict "monetary and commercial" approach the Bank is promoting.

It is true that Zambia needs an urgent solution to the AIDS crisis but the solution is not "more loans." We are all aware of how loans affected our country today and one of the major results is that we are now failing to deal with the crisis. More loans will only continue to undermine the prosperity and opportunities of Zambia to deal with the AIDS crises and the related challenges such as poverty.

Zambia is poor and heavily indebted to effectively deal with the problem at hand. Zambia needs grants and other non-exploitative forms of external assistance. World Bank can play a key and positive role by facilitating debt cancellation for poor nations so that they are empowered to take charge of challenges such as AIDS/HIV. Only when this is done will Zambia confidently acquire, effectively utilise and repay loans.

As partners in development, let us show commitment to true human development by encouraging sustainable approaches in dealing with the crises that heavily indebted poor countries are facing. Serious and real assistance to Zambia will aim at avoiding any chances of worsening the country's debt problem. Let us fight AIDS by avoiding debt traps!

Charity Musamba Acting Co-ordinator: Jubilee-Zambia



article and clippings by Joseph Hanlon 17.03.01

Mozambique has been forced to back down somewhat on its ban on cashew export ban. In January we reported that "Mozambique has banned the export of unprocessed cashew nuts, ending a five-year battle with the World Bank and International Monetary Fund." But we appear to have been over-optimistic.

According to Mozambican sources, the IMF was "furious" and demanded that Mozambique deny the that a ban existed. In late February, UTRA, the agency in the Ministry of Planning and Finance responsible for customs, told the press that there really never had been a ban, and that exports were permitted with restrictions.

The World Bank and IMF had forced Mozambique to allow the free export of unprocessed nuts if India was prepared to pay a higher price than local industry. As predicted, once the factories in Mozambique closed, the Indian price plummeted to less than half the earlier price. But UTRA concluded that there was under-invoicing, and that traders were reporting export prices well below the real price, and were putting the difference in foreign bank accounts (and not paying local taxes on the difference). So UTRA agreed to allow exports only if exporters, in effect, allowed an independent adjudication of the export value.

Nearly all of the cashew factories are now closed, and 8500 of 10,000 cashew processing workers are unemployed. while peasants are earning less than they were before. So, despite claims by the World Bank that making 10,000 cashew workers unemployed would bring higher earnings, both peasants and workers are now worse off.

Meanwhile, last year there were two articles in US newspapers. In the New York Times economist Paul Krugman claimed that those of us who oppose World Bank cashew policy say that "the World Bank is evil, then, because it tried to end a policy that not only made Mozambique as a whole poorer, but directly hurt millions of impoverished small farmers."

The response came in an article in the Washington Post, by a journalist who actually visited Mandlakaze in Mozambique, rather than writing from a US university, and generally supported the critics, calling the World Bank policy "a less than helpful hand".

The Statistical Assessment Service (STATS) then gave the Krugman article one of its "Dubious Data 2000 Awards" for "The Top Ten Silliest, Most Misleading Stories of the New Millennium". It wrote: "Cashew, Cashew, We All Fall Down New York Times columnist Paul Krugman found another way to criticize anti-globalization protestors in his April 19 column, "A Real Nut Case." He claimed that the World Bank's intervention in Mozambique's cashew industry benefitted the country's poor farmers, who had suffered compared with the nation's 10,000 nut processing workers. Unfortunately for Mr. Krugman, and for Mozambique as well, investigations later in the year by the Washington Post ("A Less Than Helpful Hand; World Bank, IMF Blamed for Fall of Mozambican Cashew Industry," Oct. 18) and Knight Ridder ("World Bank Policies Had Mixed Results in Mozambique," Sep. 17) found that the World Bank's policies had not only put over 7,500 factory workers out of a job in one of the world's poorest countries, but that the farmers who were supposed to have benefitted had lost out to nut speculators, many of them foreign."

But the World Bank jumped to defend its policies, issuing on 13 November 2000 a "Briefing Note on Cashew Policy in Mozambique" which used Krugman's article to defend itself against the Washington Post article. The briefing note contained a number of errors.

[The full text of the World Bank briefing note, with comments by Joseph Hanlon, will be available in the web archive version of this posting, at]


The background to the cashew dispute is detailed in an article "Power Without Responsibility: the World Bank and Mozambican Cashew Nuts" published in the Review of African Political Economy 83 March 2000. The article is on the web at (Copies of my 30.01.01 note - see - are available on request from



Maputo, 23 Feb (AIM) - The Mozambican government has once again authorised the export of raw cashew nuts, but the exporters, who are suspected of evading the export surtax on the nuts, must pay a deposit while customs investigates the real export price being paid.

In late January, the independent newsheet "Metical" reported that the government had slapped an embargo on the export of raw nuts because it could not believe the low FOB prices that the exporters were quoting.

Raw nuts pay an 18 per cent export surtax - a measure designed to protect Mozambique's near moribund cashew processing industry. There is therefore an incentive for exporters to lie about the prices paid for their nuts (all of which are exported to India).

Exporters shipping unprocessed nuts out of the northern port of Nacala were quoting FOB prices that varied between 335 and 440 US dollars a tonne. But the current FOB price for raw cashews on the world market should not be less than 650 dollars a tonne.

On Friday "Metical" reported that, after lengthy negotiations, UTRA, the customs restructuring unit in the Finance Ministry, has allowed the nuts to be exported - but only against a deposit, which takes the form of a banker's guarantee that will not be cashed if UTRA eventually concludes that the exporters are not trying to defraud the state.

The traders will pay the 18 per cent surtax on the declared FOB prices - but they must also provide a banker's letter of guarantee pledging payment of surtax on the difference between the declared price and 650 dollars a tonne.

The exporters claim they are paid low prices because the quality of Mozambican nuts is "very poor". Customs clearly finds it hard to believe that the nuts are so bad that the exporters can only pick up between a half and two thirds of the normal market price for them.

So studies to ascertain the real price are to be undertaken. If the conclusion is that the nuts really are worth no more than the price the exporters have declared, then the banker's guarantee will not be claimed. If, however, customs concludes that the nuts have been underinvoiced, then the money will be claimed.

A senior UTRA spokesman objected to "Metical"'s original use of the term "embargo", which had doubtless annoyed the IMF and World Bank ideologues who object to effective protection for the cashew processing industry. (AIM)


Message-Id: <> From: "APIC" <> Date: Thu, 5 Apr 2001 12:14:43 -0500 Subject: Africa: World Bank and Africa Policy

Editor: Ali B. Ali-Dinar

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