"While reductions in tariffs and duties are not likely to disturb the IMF... it is more likely to be concerned about Biya’s pledge to review fuel price policies... A “benchmark” under the plan for evaluating Cameroon’s compliance with IMF conditions is price hikes for gasoline, oil, and diesel."
In her book on Development and Good Governance in Africa, Rita Abrahamsen argues that in Africa, "economic liberalization creates problem for the majority - who democracy seeks to serve. Leaders therefore are confused about whether to satisfy external donors or to satisfy the aspirations of its people for both are irreconcilable constituencies".
She adds that "Demands of economic liberalization by donor institutions have eroded democratic standards because they bring poverty to the people through SAP. SAP denies the masses benefits from the government, thereby threatening 'the consolidation of democracy by exacerbating social conflict and differentiation, while at the same time undermining the state's capacity to respond to domestic demands'" (Cited in African Studies Quarterly ).
I recently came across an interesting article about the recent wave of riots that have rocked a number of countries which gives credence to Abrahamsen's argument. Thus, while acknowledging the well-documented internal / political reasons for the recent riots in Cameroon, the article also points to externally-dictated liberal economic policies as one of the main culprits. Which leads us to wonder - rhetorically of course - if Cameroon is now being run ("governed" would be an inappropriate word in these circumstances) from Washington, DC by donor agencies... Here is the article in question in its entirety:
Food Riots Hit West and Central Africa
Rising global food prices have led to outbreaks of civil unrest in West and Central Africa. While the International Monetary Fund (IMF) and the World Bank plan their responses to the growing crisis, Cameroon, site of worst strife, relaxes IMF policies on wages and prices.
A global rise in food prices has led to several outbreaks of civil unrest in West and Central Africa over the last few weeks. In Cameroon, Reuters reports that at least 24 people have been killed; over 1600 people have been arrested since February 25, and already 200 have been tried and given jail sentences of up to three years. Civil society organizations have protested the secretive summary trials.
The events in Cameroon were preceded by riots in several towns in Burkina Faso. The governments of both Burkina Faso and Niger have reduced or eliminated tariffs and duties on food imports in an attempt to combat the effect of the price hikes.
In Cameroon, in addition to the harsh crackdown, President Paul Biya’s government has slashed duties on imports of food and cement imports, and increased wages for public sector employees by 15%. Biya has also promised a review of fuel prices, telephone rates, and bank fees.
Biya’s strongly-worded promises of government intervention can probably be credited to the fact that he is now campaigning for a controversial change to Cameroon’s constitution that would allow him to run for another term to extend his 25 years in office. Many protesters expressed anger about both the price increases and Biya’s maneuvering.
The Cameroon Tribune reports that the riots broke out while a joint mission of the International Monetary Fund (IMF), World Bank, and African Development Bank was in the country. Dhaneshwar Ghura, an IMF spokesperson on the mission, was quoted as saying his institution had taken “note of the preoccupations of the population and was glad that government is already preparing a number of measures to address some of the preoccupations.” It was not clear whether the IMF had acquiesced to the policy adjustments announced by Biya; Gura, speaking a day before Biya’s address, said that the institution is “open to discussions."
Under normal circumstances, the IMF would be unlikely to approve the steps Biya announced. Cameroon’s November 2007 “letter of intent” laying out its agreement with the IMF under a Poverty Reduction & Growth Facility (PRGF) loan indicates a planned increase of about 10% in the country’s public wage bill. Although the specific terms of the promised 15% wage hike are unknown, it seems unlikely that such a move would be compatible with the terms of the IMF agreement – especially given the government’s planned new hiring and payment of salary arrears to some employees.
While reductions in tariffs and duties are not likely to disturb the IMF, which is committed to “free trade,” it is more likely to be concerned about Biya’s pledge to review fuel price policies. Cameroon’s PRGF includes an elaborate plan for reducing fuel subsidies and ensuring that retail prices reflect the real cost of oil. A “benchmark” under the plan for evaluating Cameroon’s compliance with IMF conditions is price hikes for gasoline, oil, and diesel. It even specifies that retail price increases are to take effect on the first day of the month.
The causes of the increase in world food prices go beyond any IMF program. They include the increasing use of food crops like maize for agrofuels and the financial crisis rooted in the U.S. mortgage markets causing tightening of credit worldwide. But some of those agitating for economic relief measures in Cameroon regard the IMF as one of the ultimate causes for their plight. Reuters reports that unions have called the planned salary increases insufficient because pay levels will remain lower than they were before 1993 wage cuts imposed by the IMF and the 1994 devaluation of the CFA franc, used in much of francophone Africa, by 50%.
The multilateral institutions are clearly concerned about the impact of global food price increases, including civil unrest. When “bread riots” (sometimes called “IMF riots”) broke out in the 1980s in countries as diverse as Venezuela, Nigeria, and Jordan, the structural adjustment programs of the IMF and World Bank, with austerity measures including reduced subsidies and slashed government budgets, were widely blamed for causing social meltdowns.
This time around, both the IMF and World Bank have attempted to take proactive steps to mitigate stress associated with the price crisis. On February 25, while in Burkina Faso, IMF Managing Director Dominique Strauss-Kahn noted that “countries are potentially facing a situation where all of a sudden the price of oil and food may increase.” According to IRIN, Strauss-Kahn said the IMF could provide “short-term emergency measures” including new loans and advice on tax policy to ease the pressure on African countries.
Strauss-Kahn has been criticized for publicly supporting President Bush’s stimulus measures to address potential recession in the U.S. – the opposite of the painful austerity measures the IMF applied during the East Asian financial crisis of 1997-98. But while he has been quick to register the IMF’s concern about a potential food price crisis in Africa, it appears that in this case the IMF will not diverge so radically from past practice: new loans, seldom the best remedy for countries facing humanitarian crises, are the best he has to offer.
The World Bank, meanwhile, has also voiced its worry about food prices. On March 10, according to Reuters, Bank President Robert Zoellick linked the Bank’s plans to dramatically increase lending for agricultural production in Africa to the crisis. He said that lending would increase to about $700 million for fiscal year 2009, from a current $420 million, and could reach about $850 million per year. However, the plans for this increase were originally announced, in more general terms, at the Bank’s annual meetings in October 2007, before the food price crisis became a widespread concern.
Source: Bank Information Center
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