The IMF and World Bank are said to be useful instrument for the maintenance of dependency and the Globalization of poverty. Show the mechanisms that are used to fulfil the above imperial pursuits

Until the early 1970s, the World Bank and the IMF worked separately and with little coordination but now their works have been coordinated through regular senior joint staff meetings and manifested through the structural adjustment programme SAPs and their derivatives. This lead into formation of four major programmes in Africa which are ant-poverty programmes, growth oriented programmes which includes infrastructure development, balance of payment stabilizing programmes and the lastly is structure adjustment programmes SAP or sometimes was called the structure recovery programmes (ERP). These theories based on bogus under cooperative advantage and garnished by the doctrine of the world division of labour.

These programmes were associated with the building of dames, roads, and provision of electricity which in facts had decreased both poverty and depth in Africa. The continents has now woken to the serious problem of conditionality and the countries have also been experiencing liquidity problems and in particular in meeting dept. Obligations are forced to turn to these institution of world bank and the international monetary fund (IMF) for short terms loan, where by these loans provision were associated with some conditionality that forced the poor and dept. African countries to follow. Failure to follow the conditionality attached to the loans provision not only deprives the countries access to further loans from the institution, but equally prevents the flow of alternative foreign capital and disrupt their normal dealings with their western trade partners. Not only the conditions delaying countries was affected but also those countries which have some relation with the delaying country. 

The conditions imposed by the organization have taken the standard SAP form with little regard to individual variation among credit seeking countries. The Bretton woods institutions (IMF and WB) under SAP are using the following mechanisms or conditionality to ensure the maintenance of dependency and the globalization of poverty:-

Currencies devaluation. By using these Britton woods institution under IMF and WB forced devaluation process in most of the countries especially the third world through SAP. This devaluation is deemed necessary because it is through that the overvalued currency which makes production costly and thus the commodities lacks competitive power over the world market especially abroad. This lead to increase consumption of the imported goods and the retardation of growth. Devaluation resulted into various effects such the increase of the price of the imported goods such as machinery, fertilizer and fuel. It put the export under low price hence increasing the demand for the export goods and demand for imported goods. In general devaluation act as the pillar of IMF policy in handling exchange rates in Africa, example the Tanzanian shillings has been devaluated to 500 per cent and the Nigerian naira by over 600 per cent, both to no avail. 

Retrenchment of workers; it is the process of reducing public expenditure as designed by the Bretton woods institution in most of the developing countries. Retrenchment is more than surgical operation aimed at cutting excess fat, it eats through the born as well. The institution wants the countries to cut their public expenditure by the rate of 20% for example in Ghana in 1983 where by it was told that 20% of its public sector work force was underemployed initially 31,700 employees were told to be redeployed, 5,500 in the civil service and 26,200 in state enterprises and 20, 00 in the cocoa marketing board (CMB).

Liberalization of the economy and resource extraction or export oriented open markets as part of their structural adjustment. It was the process of putting the government away from the trade control involvement, where by the trade control was set free to all people. This helped even other nations especially the target once that are the controller of the Bretton woods succeeded to make good conditions for them to control external trade, for example the case of Senegal was encouraged to grow groundnuts for export where by as a poor nation without many resources, it took out loans to help develop the industry, other nations saw this was going well, so they followed suit. The price of nuts started to drop and Senegal faced debt repayment problems, structural adjustment policies were put in place, cutting spending and reducing government involvement in the nut industry and elsewhere. At the same time rich countries, such as the US, were subsidizing their own nut and other industries, allowing them to gain in market share around the world rich countries have tools such as trade tariffs and the threat of sanctions at their disposal to help their industries if needed however things got worse. 

The World Bank and the IMF have forced third world countries to open their economies to western penetration and increase exports of primary goods to wealthy nations. These steps amongst others have multiplied profits for western multinational corporations while subjecting third world countries to horrendous levels of poverty, unemployment, malnutrition, illiteracy and economic decline. The region which is worst affected has been Africa, thus the IMF and the World Bank through the structural adjustment programs (SAPs), implement this globalization of poverty to least developed countries, by creating conditions for a country to access loan in the following ways;

SAPs require governments to cut public spending (including eliminating subsidies for food, medical care and education). Thus creating difficult financial conditions for their citizens who heavily depend on government’s subsidies to boost their productions as well as accessing medical care and education.

Raise interest rates thus reducing access to credit ; most of the citizens in least developed countries have low financial base to support their productions and investments. By raising interest rates for accessing loans means limiting their productions and investments, thus allowing foreign investors to dominate in developing countries implying export of wealth from developing to developed countries.

Privatization of state enterprises, for a county to receive loan from IMF and the World Bank must adopt the policy of privatizing the state enterprises for private investors, most of whom are from developed countries which have enough capital to invest. This in return subjects developing countries economy into the few foreign investors. 

Reduce barriers to trade and foreign investment such as tariffs and import duties , this condition allows free flow of goods and services from developed countries, limiting the existence of natives small scale productions due to competition in market, thus killing industrial base for natives. Trade liberalization can lead to dumping of cheap and substandard products from outside. This undermines local industries that produce or intend to produce the same products.

Through foreign investment; due to high interest rates increase the incentive to save money, but they also encourage speculative investment that brings quick profits to a few people, while adding nothing to the productive capacity. High interest rates and high credit also make capital to start new business get difficulty. Therefore, they result in stagnation of economy lead to dependence economy in these countries. Also due to the cut in government expenditure in some cases could accelerate that situation especially in developing countries example, in sectors like education, health and housing. 

Therefore, African continent can develop through proper utilization of the materials within the continent through committed leaders, with strong unification of the continent which can protest against the foreign domination which hinder the African development. That is to say Africa will liberate itself after the remove of the internal weaknesses then the economic dependence will come to an end.

REFERENCES

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