By Roberto Savio
ROME, Jan 27 2016 (IPS)

The rich and the powerful, who meet every year at the World Economic Forum (WEF), were in a gloomy mood this time. Not only because the day they met close to eight trillion dollars has been wiped off global equity markets by a “correction”. But because no leader could be in a buoyant mood.

Roberto Savio

German Chancellor Angela Merkel is losing ground because of the way she handled the refugee crisis. French President Francois Hollande is facing decline in the polls that are favoring Marine Le Pen. Spanish president Mariano Rajoy practically lost the elections. Italian President Matteo Renzi is facing a very serious crisis in the Italian banking system, which could shatter the third economy of Europe. And the leaders from China, Brazil, India, Nigeria and other economies from the emerging countries (as they are called in economic jargon), are all going through a serious economic slowdown, which is affecting also the economies of the North. The absence of the presidents of Brazil and China was a telling sign.

However the last Davos (20-23 January) will remain in the history of the WEF, as the best example of the growing disconnection between the elites and the citizens. The theme of the Forum was “how to master the fourth revolution,” a thesis that Klaus Schwab the founder and CEO of Davos exposed in a book published few weeks before. The theory is that we are now facing a fusion of all technologies, that will completely change the system of production and work.

The First Industrial Revolution was to replace, at beginning of the 19th century, human power with machines. Then at the end of that century came the Second Industrial Revolution, which was to combine science with industry, with a total change of the system of production. Then came the era of computers, at the middle of last century, making the Third Industrial Revolution, the digital one. And now, according Schwab, we are entering the fourth revolution, where workers will be substituted by robots and mechanization.

The Swiss Bank UBS released in the conference a study in which it reports that the Fourth Revolution will “benefit those holding more.” In other words, the rich will become richer…it is important for the uninitiated to know that the money that goes to the superrich, is not printed for them. In other words, it is money that is sucked from the pockets of people.

Davos created two notable reactions: the first came with the creation of the World Social Forum (WSF), in 1991, where 40,000 social activists convened to denounce as illegitimate the gathering of the rich and powerful in Davos. They said it gave the elite a platform for decision making, without anything being mandated by citizens, and directed mainly to interests of the rich.

The WSF declared that “another world is possible,” in opposition to the Washington Consensus, formulated by the International Monetary Fund (IMF), the World Bank, and the Treasury of the United States. The consensus declared that since capitalism triumphed over Communism, the path to follow was to dismantle the state as much as possible, privatize, slash social costs which are by definition unproductive, and eliminate any barrier to the free markets. The problem was that, to avoid political contagion, the WSF established rules which reduced the Forums to internal debating and sharing among the participants, without the ability to act on the political institutions. In 2001, Davos did consider Porto Alegre a dangerous alternative; soon it went out of its radar.

At the last Davos, the WSF was not any point of reference. But it was the other actor, the international aid organization Oxfam, which has been presenting at every WEF a report on Global Wealth.

Those reports have been documenting how fast the concentration of wealth at an obscene level is creating a world of inequality not known since the First Industrial Revolution. In 2010, 388 individuals owned the same wealth as 3.6 billion people, half of humankind. In 2014, just 80 people owned as much as 3.8 billion people. And in 2015, the number came down to 62 individuals. And the concentration of wealth is accelerating. In its report of 2015, Oxfam predicted that the wealth of the top 1 per cent would overtake the rest of the population by 2016: in fact, that was reached within ten months. Twenty years ago, the superrich 1 per cent had the equivalent of 62 per cent of the world population.

It would have been logical to expect that those who run the world, looking at the unprecedented phenomena of a fast growing inequality, would have connected Oxfam report with that of UBS, and consider the new and immense challenge that the present economic and political system is facing. Also because the Fourth Revolution foresees the phasing out of workers from whatever function can be taken by machines. According to Schwab, the use of robots in production will go from the present 12 per cent to 55 per cent in 2050. This will cause obviously a dramatic unemployment, in a society where the social safety net is already in a steep decline.

Instead, the WEF largely ignored the issue of inequality, echoing the present level of lack of interest in the political institutions. We are well ahead in the American presidential campaign, and if it were not for one candidate, Bernie Sanders, the issue would have been ignored or sidestepped by the other 14 candidates. There is no reference to inequality in the European political debate either, apart from ritual declarations: refugees are now a much more pressing issue. It is a sign of the times that the financial institutions, like IMF and the World Bank, are way ahead of political institutions, releasing a number of studies on how inequality is a drag on economic development, and how its social impact has a very negative impact on the central issue of democracy and participation. The United Nations has done of inequality a central issue. Alicia Barcena, the Executive secretary of CEPAL, the Regional Center for Latin America, has also published in time for Davos a very worrying report on the stagnation in which the region is entering, and indicating the issue of inequality as an urgent problem.

But beside inequality, also the very central issue of climate change was largely ignored. All this despite the participants in the Paris Conference on Climate, recognized that the engagements taken by all countries will bring down the temperature of no more than 3.7 degrees, when a safe target would be 1.5 degrees. In spite of this very dangerous failure, the leaders in Paris gave lot of hopeful declarations, stating that the solution will come from the technological development, driven by the markets. It would have been logical to think, that in a large gathering of technological titans, with political leaders, the issue of climate change would have been a clear priority.

So, let us agree on the lesson from Davos. The rich and powerful had all the necessary data for focusing on existential issues for the planet and its inhabitants. Yet they failed to do so. This is a powerful example of the disconnection between the concern of citizens and their elite. The political and financial system is more and more self reverent: but is also fast losing legitimacy in the eyes of many people. Alternative candidates like Donald Trump or Matteo Salvini in Italy, or governments like those of Hungary and Poland, would have never been possible without a massive discontent. What is increasingly at stage is democracy itself? Are we entering in a Weimar stage of the world?

(End)

Excerpt:

By Guillermo Medina
MADRID, Mar 4 2015 (IPS)

At last, on Tuesday Feb. 24, the Eurogroup (of eurozone finance ministers) approved the Greek government’s commitment to a programme of reforms in return for extending the country’s bailout deal.

The agreement marks the end of tense and protracted negotiations. It consists of a four-month extension for the second bailout programme worth 130 billion euros (over 145 billion dollars), in force since 2012 and which was due to expire on Feb. 28. The first bailout was for 110 billion euros, equivalent to 123 billion dollars.

Guillermo Medina

During this period, the European Central Bank (ECB) will provide Greece with liquidity and the terms of a new bailout will be hammered out.

The eleventh-hour agreement was no doubt motivated partly by fears that a “Grexit” – Greek withdrawal from the eurozone monetary union – would have triggered a financial earthquake with unforeseeable consequences. The result is a very European-style compromise that averts catastrophe and gains time while avoiding facing the underlying problems.

In exchange for an extension of financial support from Greece’s partners and creditors, Prime Minister Alexis Tsipras will have to submit all his government’s measures during this period to Eurogroup inspection.

But the deal promises Greece more than just restrictions. The country will have to pay its debts to the last euro, but if, as seems probable, deadlines for primary surplus targets are extended, the country will have greater ability to pay (France has just secured this for itself).

In the final document, Greece promised to adopt a tax reform that would make the system fairer and more progressive, as well as reinforce the fight against corruption and tax evasion and reduce administrative spending.“Germany has undeniably secured its basic goal: the enshrining of austerity as the fundamental dogma of the new European economic order, although political prudence and even self-interest have softened the application of the dogma, and may continue to do so in future”

If the government pursues these goals, together with the fight against contraband, efficiently and with determination (as indeed it should, because they are part of its programme and target its domestic enemies), the income will be helpful for the application of its social and economic programmes.

In view of the successive positions that Greece has had to relinquish in the course of the negotiations, it appears that the country has achieved the little that could be achieved.

The negotiations between Greece and its European partners mark a milestone in the political tussle in the European Union since the reunification of Germany in 1990, between moving towards a Europeanised Germany or a Germanised Europe.

Germany has undeniably secured its basic goal: the enshrining of austerity as the fundamental dogma of the new European economic order, although political prudence and even self-interest have softened the application of the dogma, and may continue to do so in future.

Germany has openly tried to impose its convictions and its hegemony on Europe. Greece was only the immediate battlefield. Brussels and Berlin have been divided from the outset about how to solve the Greek crisis, but Germany prevailed.

However, the masters of Europe do not have any interest in “destroying” Greece, and so cutting off their nose to spite their face. They are satisfied with a demonstration of the asymmetry of power between the two sides, and the public contemplation of assured failure for whoever defies the status quo and supports any policy that deviates from the one true official line.

The problem with a Germanised Europe is not the preponderant role that Germany would play, but that it would impose a “Made in Germany” model of Europe that conforms to its own interests. That is how it would differ from a Europeanised Germany.

The Greek crisis has highlighted the ever-widening contrast between the values and ideals that we consider to be central to the European project, such as solidarity, mutual aid and social justice, and the new values that set aside basic aims like full employment, social welfare and equal opportunities.

It is paradoxical that Europe, which is apparently absent from or baffled by threats from the opposite shore of the Mediterranean, should take a harsh, tough attitude with a small partner overwhelmed by debt. It is also paradoxical that structural reforms are demanded of Greece, without admitting Europe’s own urgent need to redesign the eurozone and reframe the policies that have led to the poor performance of its monetary union.

The Greek crisis and the difficulties in overcoming it have a great deal to do with a design of the euro that benefits financial interests, particularly Germany’s.

The project neglected the harmonisation of tax policies and created a European Central Bank that lacked the powers that permit the U.S. Federal Reserve and the Bank of England to issue money and buy state debt.

As is well known, the ECB has made loans to European banks at very low interest rates, and they in turn have made loans to states, including Greece, at much higher interest. Government debts thus mounted up, and in order to pay they were forced to cut public spending.

Why does Europe persist in following failed policies while refusing to follow those that have lifted the United States out of recession? The only explanation is stubborn attachment to an ideological vision of economic policy that is devoid of pragmatism.

How can insistence on the path of error be explained at such a time? There may well be a quota of incompetence, but the basic reason is, as Nobel prize-winners Joseph Stiglitz and Paul Krugman affirm, that the goal of the policies imposed by the “Troika” (European Commission, ECB and International Monetary Fund) is to protect the interests of financial capital. And this is because the powers of political institutions, the media and academia, are dominated by financial capital, with German financial capital at the core.

Financial interests are essentially capable of shaping the decisions of European governance institutions. In the United States this subservience is less clear-cut, allowing hefty penalties to be imposed on certain banks, as well as the development of other economic strategies.

This is because independent mechanisms of control and oversight exist, the Federal Reserve has well-defined goals (whereas the ECB has spent years fighting the insistent threat of inflation), and there is democratic administration with the political will to resist.

In conclusion: the issue is to clarify what sort of Europe the citizens of Europe want, and what institutional changes are needed to achieve it.

And even more importantly, having seen the consecration of German hegemony over the Old World, what sort of German leadership would be compatible with a united Europe based on solidarity? Is this even possible? (END/IPS COLUMNIST SERVICE)

Translated by Valerie Dee/Edited by Phil Harris    

The views expressed in this article are those of the author and do not necessarily represent the views of, and should not be attributed to, IPS – Inter Press Service. 

Excerpt:

PPC power station in Ptolemaida. northern Greece. Credit: Nikos Pilos

By Apostolis Fotiadis
ATHENS, Jul 9 2014 (IPS)

Plans by the Greek government to sell companies that handle the key resources of energy and water face serious obstacles and its policy to offer investors exceptional privileges in an effort to boost interest in privatisation is coming under strong pressure.

Privatisation is one of the ‘prerequisites’ of the Troika – the tripartite committee led by the European Commission with the European Central Bank and the International Monetary Fund – in exchange for additional bailout money that Greece is seeking to continue to avoid insolvency.

The Greek government recently announced plans to sell a 30 percent share of its Public Power Corporation (PPC), and create a new ‘Small PPC’, which will be sold to private investors.

The new company will take with it some key production sites, lignite mines, and hydroelectric and natural gas units. In addition, about two million customers will be transferred from the original company and will be obliged to receive services from the new company for six months.Tax exemption seem to be a vehicle the Greek government favours using in its effort to attract investors to the country.

The lucrative terms and assets accompanying the new company, described in the legislation that creates it, are already attracting many local investors as well as major foreign energy companies like Germany’s RWE as well as the French EDL and the Italian ENEL.

The plan has caused strong reactions in north-western Greek cities where communities depend heavily on employment created by PPC mines and electricity production plants. PPC unions decided to take strike action to protest the privatisation plans, but these were declared illegal. The Greek opposition has called for a referendum on the issue but it appears unable to gather the 120 signatures of members of parliament necessary for it to go through parliament.

Kriton Arsenis, an independent Member of the European Parliament, has asked the European Commission whether obliging customers to receive services from the company constitutes an illegal state subsidy. In response, European Commissioner for Energy Gunther Oettinger said that the Commission “does not have adequate information to deliberate on whether this constitutes illegal state subsidy”.

At the end of March, Arsenis submitted a similar question concerning the Hellenic Republic Asset Development Fund (HRADF), which has been set up to manage Greek privatisations, and met with a similarly evasive answer.

The HRADF has announced the sale of 100 percent of Hellinikon SA – which administers 6,200 acres of land occupied by the former Athens Airport of Hellinikon – to Lamda Development.

Arsenis pointed that Article 42 of Law 3943/2011 establishing Hellinikon SA states that the company “shall be exempt from any tax, duty or fee, including income tax, in respect of any form of income derived from its business, of transfer tax for any reason, and capital accumulation tax” and again asked the Commission whether this unjustifiable tax exemption constituted state subsidy.

European Commissioner for Competition Joaquin Almunia replied that “Greece has not notified the Commission about the alleged tax exemption measure”, thus the Commission does not have sufficient information to assess whether it constitutes state aid and will ask Greece to provide clarifications on the issue.

Tax exemption seem to be a vehicle the Greek government favours using in its effort to attract investors to the country. Last week, Greek Energy Minister Ioannis Maniatis said that oil and gas explorers would pay 25 percent tax, down from the current 40 percent, to attract them to help exploit Greece’s untapped offshore hydrocarbon resources. “We have done this in order to incentivise our investors to invest in the future of Greece” he told a conference in London.

Plans to privatise water utilities stalled last month after the Supreme Court considered privatisation of the Athens Water Supply and Sewerage Company (EYDAP) unconstitutional. Following this decision, the transfer of a 34.03 percent share of the company’s stock holding to HRADF has been cancelled and the privatisation authority has publicly admitted that it is reconsidering the tender despite still holding 27.3 percent of the company.

This has effectively cast doubts on the privatisation process for EYATH, the water and sewage company of Thessaloniki, Greece’s second largest city. HRADF President Konstantinos Maniatopoulos was quoted saying in Greek media that “it will be difficult to continue the process for EYATH without taking into account the decision for EYDAP.”

The Suez/Ellaktor and Merokot/G. Apostolopoulos/Miya/Terna Energy consortia had been in the process of submitting binding offers by June 30. It appears now that HRADF will return about 50 percent of the 74 percent of its share in EYATH back to the state.

Two weeks ago, the Greek National Commission for Human Rights produced a focus report about the protection of access to water. Kwstis Papaioanou, President of the Commission told IPS: “International experience has proven that privatisation curtails the access of people to safe water. It is very encouraging though that the water has united citizens against its privatisation.”

Privatisation of water has indeed provoked strong public reactions. In an informal referendum in Thessaloniki in which over 200,000 people took part, 98 percent voted against privatisation.

“The court’s deliberation against privatisation of water companies is very clear but I would not be surprised if the government finds a way to circumvent it. There are plenty of other examples in which they have not implemented court decisions,” Arsenis, told IPS.

“Those interested in Greek public assets do not think like real investors. They take an interest only in privileged deals when profits are guaranteed and when most of investment risk is undertaken by the state in advance so that they have secured income that will cover their expenses in two or three years’ time.”

A first privatisation target of 50 billion euros in revenue by 2020 has been cut by more than half, with the country’s lenders now forecasting 22.3 billion. So far, only 3 billion has been collected.  The 2014 and 2015 targets for revenue from privatisations were set at 1.5 billion euros and 2.24 billion euros respectively but these are now very unlikely to be achieved.

By Jinty Jackson
MAPUTO, Jun 28 2013 (IPS)

Mounds of sand and rubble are what are left of sections of Maputo’s beachfront road as bulldozers, manned by Chinese construction workers, tear up the road that is being rebuilt. Southern Africa is under construction and the reminders are everywhere.

Amid the dust and earth-moving equipment, delegates from across the southern African region are gathering in the Mozambican capital Jun. 27-28 at the Southern African Development Community (SADC) Infrastructure Investment meeting to try to galvanise the funding needed for an ambitious cross-border infrastructure network that will help make the region globally competitive.

Over the next 15 years SADC wants to set in motion an extensive revamping of existing infrastructure as well as building new logistics, including hydro-dams, power transmission lines, roads and railways, while boosting internet connectivity and broadband access across the region.

An estimated 64 billion dollars are urgently needed to fund the first phase of an “Infrastructure Master Plan” SADC adopted at a 2012 summit in Maputo and wants to start putting into motion. Over the next 15 years the total cost of infrastructure projects could run to 500 billion dollars.

“This number can be frightening, but if we do not invest now we will jeopardise our trade capacity,” SADC secretary-general Tomaz Salomao admitted. “We have decided to do it now.”

Poor infrastructure is seen as the biggest hurdle to economic growth across the region. Investors complain that weak infrastructure is one of the main pitfalls to operating in the region. In 2009, the World Bank estimated that the “infrastructure gap” cut two percent off national growth figures in the region per year.

How SADC will raise money to fund what is needed is the big question. Several countries have already set aside big amounts for infrastructure; South Africa committed 400 billion dollars in 2012. Regional integration is an obvious way to cut the cost of doing business for everyone.

For development financiers like the Development Bank of Southern Africa, the assurance that governments are prepared to work together on major cross-border projects is half the battle won.

“For us as bankers that is a critical part. When we look at projects the first thing we look at is, does it have sponsor support from various governments? If you have that, you have ticked a major box,” the general manager of the Development Bank of Southern Africa’s Project Fund, Mohale Rakgate, told IPS.

The needs are enormous, and nowhere more so than in the power grid. The region lags behind West and East Africa in terms of access to electricity. Only 24 percent of its residents have access to electricity, and in rural areas the proportion is closer to five percent.

Malawi, Angola and Tanzania have yet to be connected to a common power pool, the Southern African Power Pool, set up by national electricity companies in 1995 to create a common market for power in the region. Bringing them in forms part of SADC’s short-term infrastructure development goals.

Southern Africa is better placed than ever before to be able to finance its more ambitious dreams. Countries in the region have been remarkably resilient in the face of the global economic slow-down. According to the International Monetary Fund (IMF), the region registered robust growth of 5.1 percent in 2012, which could accelerate to 5.4 percent this year.

Demand for the region’s commodities is partially driving growth, according to the IMF.

But that is only part of the story. Southern Africa is more politically stable than it has been for decades, young people are increasingly taking advantage of new economic opportunities – particularly those presented by information technology – and prudent fiscal policies by governments have helped buffer countries from the crisis and helped build up foreign reserves

“These countries now have quite a lot of capacity to raise debt. The question is how much and how sustainable is it?” Graham Smith, programme manager for Trademark Southern Africa, a United Kingdom-funded programme to help boost regional integration, told IPS.

An obvious source of infrastructure funding is the African Development Bank. Infrastructure already makes up over 30 percent of its portfolio, but governments and the bank alone are not up to the task of raising the kind of finance that is now needed.

The bank is in the process of setting up the “Africa 50” fund that it hopes will be able to leverage some 100 billion dollars to finance infrastructure on the continent. The timing for the initiative is right, according to the bank. Quantitative easing in Europe and the United States will make infrastructure investments in the developing world more attractive.

“You are looking at mid-single to double-digit returns over a long period of time such as for roads or power projects,” the African Development Bank’s regional director Ebrima Faal told IPS.

Investment will not only come from outside, but from the continent itself, Faal believes.

“We see tremendous potential for pension funds. We also see tremendous potential for central bank reserves and other sovereign funds investment,” he said.

Beyond development financing, SADC is setting a great deal of store in building what it calls “public private partnerships”.

In Mozambique, the lack of rail infrastructure is hampering a coal rush in the northeastern Tete province. Brazilian coal company Vale had little choice but to finance the revamping of an old rail track through Malawi and down to a deep-water port on Mozambique’s coast, in order to get its coal out. The company said it would spend 6.5 billion dollars on railway and port construction.

“Sometimes people think it is easy. It is not easy. For each dollar we invest in our mine we have to invest another in infrastructure to enable the project to be feasible,” Vale’s chief executive officer in Mozambique, Ricardo Saad, said.

Thanks to Vale’s line, landlocked Malawi will be able to move its goods more easily to the coast as extra capacity is reserved for passengers and goods. And the line offers possibilities of linkages to Zimbabwe and Zambia.

The region’s rail network is a mishmash of poorly maintained, insular systems that need to be painstakingly revamped and connected to each other for development corridors to become realities.

And concessionaires are seldom prepared to take all the risks involved in building infrastructure unless they are involved in high-yield activities like coal mining.

“Ports and power projects are the most likely to attract public-private partnership because you can ring-fence a long-term revenue stream,” said Smith. Much of the rest, he added, “will be public-sector financed.”

China’s deepening role in the infrastructure sector was a matter not widely discussed in Maputo. The Asian giant already has a 20 percent market share of infrastructure contracting, according to a 2012 report by business consultants Ernst & Young. Chinese loans for infrastructure are growing and in 2011 close to 15 billion dollars in Chinese commitments were secured for infrastructure projects continent-wide.

“We are considering collaborating in transport and power projects. It is a big market from a business point of view,” Jon Lee from China’s Development Bank told IPS. The bank’s presence in Maputo was the only sign of a real and burgeoning Chinese engagement on the continent.

“We are going to engage China big time,” SADC’s director of infrastructure and services, Remmy Makumbe, told IPS. “Our only concern about China is that it is mostly involved in bilateral arrangements rather than regional arrangements. We don’t have a problem as long as they engage in bilateral projects that address a regional framework.”

Egyptians queue for subsidised bread amid steadily rising commodity prices. Credit: Khaled Moussa al-Omrani/IPS

By Adam Morrow and Khaled Moussa al-Omrani
CAIRO, May 10 2013 (IPS)

Regardless of who is responsible for Egypt’s current political impasse – be it the administration of Islamist president Mohamed Morsi or an aggressive secular opposition – local experts are certain of at least one fact: Egypt’s dire economic circumstances will not improve without political stability.

“Egypt’s economic situation is intrinsically tied to the political one,” economic analyst Hamdi Abdel-Azim told IPS. “Economic stability cannot be achieved amid the turbulence and uncertainty, which for months has characterised Egypt’s political scene.”

Upon assuming the presidency last year, Morsi, Egypt’s first freely elected head of state, inherited a host of long-term economic challenges from his predecessor, ousted president Hosni Mubarak.

Chronically high rates of poverty and unemployment, deteriorating public services and infrastructure, an ever-widening state budget deficit, high foreign debt and mounting disparities between rich and poor are just a few of the issues that Mubarak’s regime failed to solve after three decades in power.

Abdel-Azim cited “mismanagement and corruption” as part of the reason for these problems. Still, the country’s economic position “has worsened considerably” in the nine months since Morsi, who hails from Egypt’s Muslim Brotherhood, took highest office, he added.

Within this period, according to Abdel-Azim, the Egyptian pound has declined in value against the dollar, while Egypt’s foreign currency reserves have fallen considerably. Domestic debt has also risen to roughly 187 billion U.S. dollars. “Numerous local companies have been forced out of business, swelling the ranks of the unemployed,” the analyst added.

Egypt’s tourism sector, meanwhile, long considered one of the country’s chief sources of foreign currency, continues to reel from the cumulative effects of long-term political instability.

Since May 2011, Egypt has been negotiating a 4.8-billion-dollar loan from the International Monetary Fund. The proposed loan, however, will be contingent upon a raft of difficult economic reforms, including major subsidy reductions and tax increases.

Egypt’s political opposition, led by the National Salvation Front (NSF), an umbrella grouping of various opposition parties and movements, has been quick to blame President Morsi for the country’s ongoing economic woes."Morsi and the Muslim Brotherhood are responsible for Egypt's deteriorating economy."
--Amr Hamzawy

“Morsi and the Muslim Brotherhood are responsible for Egypt’s deteriorating economy,” Amr Hamzawy, former MP and a leading NSF member, said in April. “The government is pushing through economic laws without consulting other political forces, while Egypt’s poor are paying the price for the Morsi administration’s failures.”

Some elements of the opposition have limited their demands to a handful of constitutional changes, a cabinet reshuffle and the dismissal of Egypt’s Morsi-appointed prosecutor-general. Others, however, have gone so far as to demand that Morsi step down in advance of snap presidential elections.

Within the last five months, the NSF-led opposition has organised numerous demonstrations and marches, many of which have ended in violence. The Muslim Brotherhood, for its part, blames Egypt’s faltering economy on the opposition’s more extremist elements, whose endless calls for strikes and protests have resulted only in further destabilisation.

“The main reason for worsening economic conditions is the insistence by the opposition – especially the NSF – on inflaming the political situation by encouraging violent demonstrations, thus further destabilising the country,” Murad Ali, spokesman for the Muslim Brotherhood’s Freedom and Justice Party, told IPS.

“In his trips abroad, President Morsi has tried to attract foreign investment to Egypt in hopes of bolstering the economy and realising longstanding demands for social justice,” Ali added. “But these efforts have largely failed to bear fruit due to perpetual domestic political instability, which has been consistently encouraged by the opposition.”

Local captains of industry, meanwhile, warn that Egypt’s economic prospects will remain dim indeed if the political situation does not settle down.

“Failure to resolve the current political impasse will eventually lead to the destruction of Egypt’s tourism industry,” Ilaham al-Zayat, head of the Union of Egyptian Chambers of Tourism, told IPS. “The steadily declining tourist numbers that Egypt has suffered since the [2011] revolution will eventually drive local tourism companies out of business.”

“Without a degree of long-term political stability,” he added, “tourist numbers will never return to pre-revolution levels.”

Gamal Eddin Bayoumi, secretary-general of the Cairo-based Union of Arab Investors, agreed with al-Zayat’s general assertion.

“Egypt’s economic deterioration cannot be stopped without an end of the current state of political uncertainty,” Bayoumi told IPS. “No investor will put his money in a country perceived to be unstable or which lacks state institutions that can guarantee the future of his investments.”

Abdel-Azim blames the ongoing political crisis on both the presidency and the secular opposition.

“The Morsi administration has taken a number of poor decisions without considering their long-term effects, while the president’s economic advisors have lacked adequate qualifications,” he said. “The opposition, meanwhile, doesn’t want to accept the results of Egypt’s first democratic presidential elections, which brought Morsi to power.”

On May 7, in an effort to placate critics, Morsi replaced nine government ministers, including those responsible for sensitive economic portfolios – finance, investment, planning and international cooperation, petroleum and agriculture. Notably, most new cabinet appointees are either Muslim Brotherhood members or sympathisers.

Opposition spokesmen blasted Tuesday’s cabinet reshuffle. “These changes don’t amount to anything,” Amr Moussa, a leading NSF member and head of the liberal Conference Party, said. “Another cabinet shake-up will be necessary before long.”

Even though the reshuffle included the heads of strategic economy-related ministries, “the changes fail to meet opposition demands for a more inclusive government,” said Abdel-Azim. “This will only make resolution of Egypt’s dire economic problems all the more difficult.”

Protestors at a Jan. 17 rally sing songs against Malawi’s president, Joyce Banda. Credit: Mabvuto Banda/IPS

By Mabvuto Banda
LILONGWE, Jan 22 2013 (IPS)

She has taken a personal pay cut, promised reforms, resumed aid flows from Western donors and put her predecessor’s private jet up for sale.

Malawi’s president Joyce Banda seems to be making all the right moves to win over the hearts and minds of this impoverished southern African nation’s roughly 14 million people.

With over 65 percent of the population living below the poverty line, 1.4 million children involved in child labour and 74 percent of the country scratching out a living on less than 1.25 dollars a day, Malawi is desperate for change, and Banda has been the face of it for nearly a year.

Riding on a groundswell of popular support, the president came into office in April 2012 after the sudden death of her mercurial predecessor, Bingu wa Mutharika; but that popularity is eroding fast as she implements painful austerity policies to fix a sputtering economy.

The aid-dependent country teetered under the late Mutharika, whose squabbles with international donors led to a freeze in major assistance packages amounting to about 500 million dollars.

The cut in aid, which has traditionally accounted for 40 percent of the country’s budget, coincided with a steady decline in tobacco sales, Malawi’s main export earner, which have gone down by more than 50 percent since 2010.

In fact, experts here say that the high-level visit early this month by IMF Chief Christine Lagarde may have done more harm than good for Banda’s waning popularity.

Already the president has capitulated to unpopular reforms demanded by the IMF and other Western donors on whom Malawi is heavily dependent, such as devaluing the currency by 49 percent, increasing petroleum prices three times in her presidency and cutting off subsidies by moving to an automatic fuel price adjustment mechanism.

These reforms have had devastating domino effects on the country’s poor, affecting people like Shadreck Kumwembe, a primary school teacher who earns less than a dollar a day.

“My real income has halved in the last few months because of the devaluation, and yet food prices have been going up — I can’t afford to pay for everything,” Kumwembe, who also disclosed that he has not received his salary from the government in the last three months, told IPS.

Commodity prices have soared and pushed inflation to 33.3 percent in December – far higher than the government’s forecast of around 18 percent for 2012.

The latest data from the Centre for Social Concern, a local research institution focusing on the cost of living in urban Malawi, showed that since Banda took over, a family of six now needs an average of 200 dollars per month to meet basic food demands – bad news in a country where the minimum monthly wage is about 20 dollars.

On Jan. 17, just a few days after Lagarde’s visit, thousands of Malawians took to the streets peacefully in all three major cities of the country for the first large-scale protests under Banda, against what they described as “the IMF’s wrong economic prescriptions”.

“I blame IMF policies for all these high prices and job losses we are experiencing. Lagarde’s insistence that Malawi continues on this path underlines how out of touch the IMF is with reality,” said James Chivunde, a civil servant who joined the protests last week.

“Late President Mutharika refused to listen to them (IMF) to devalue the kwacha (the local currency) because he knew exactly how that was going to impact us,” Lloyd Phiri, another protestor, told IPS.

According to John Kapito, head of the watchdog known as the Consumers Association of Malawi, Banda has “transferred power” to the IMF and the World Bank.

“Like many leaders of poor countries, the problem with Joyce Banda is that she doesn’t think on her own. She is listening to everything that the IMF and the World Bank are telling her. She (agreed) to devalue the kwacha, agreed to remove subsidies on fuel without considering the impact of these decisions on the poor,” said Kapito, who helped organise the latest demonstrations.

Meanwhile, the IMF is adamant that the only way out of the cycle of poverty is for Malawi to continue to abide by the Fund’s prescriptions.

“There have been huge efforts undertaken by the Malawian government and the Malawi population and it is really important to stay the course,” Lagarde said during a press conference held in the capital Lilongwe on Jan. 5.

She assured that the country is at a tipping point, that soon inflation will start dropping and prompt the Reserve Bank of Malawi (RBM) to revisit the base lending rate.

“Investors will return and we are confident that growth will resume,” she added.

Some local economic experts are inclined to agree with these sentiments.

“There will be no quick fixes, but any U-turn from the current course will be disastrous,” said Ben Kalua, professor of economics at Chancellor College, part of the University of Malawi.

“What is needed is a credible and consistent policy aimed at making economic growth more inclusive by ensuring the development and protection of social safety nets and expanding access to financial services so that everybody, including the poor, has access to credit,” he said.

Executive director of the Malawi Economic Justice Network, Dalitso Kubalasa, also backed the IMF and blamed the late Mutharika for delaying implementation of economic reforms.

“We are now paying the cost of the previous administration’s (policies) but we have to stay the course to (solve) the economic problems,” Kubalasa told IPS.

While admitting that the government underestimated the impact of austerity policies on the masses, Finance Minister Ken Lipenga stressed that donor support is enabling the government to implement a fiscal budget that provides adequate resources for the delivery of social services and to increase resources allocated for cushioning the most vulnerable.

“We have introduced food for work programmes aimed at assisting the poorest in our communities to cope with the unintended effects of the reforms,” Lipenga told IPS.

But Banda’s waning popularity may affect successful implementation of the reforms as she prepares for an election next year. Her biggest test will come when the parliament convenes in February, when she will be forced to reckon with the fact that many members of her governing party are losing faith in her leadership.

(END)

Thousands have protested against the austerity measures imposed on Greece by its creditors. Credit: George Laoutaris/CC-BY-ND-2.0

By Apostolis Fotiadis
ATHENS, Nov 9 2012 (IPS)

Ignoring the thousands of protestors gathered outside the Greek parliament on Wednesday, the government voted in public spending cuts amounting to 17 billion dollars in an economy already on its knees from a lacerated budget.

The government was promised 40 billion dollars of bailout money in exchange for the implementation of this fresh bout of austerity.

But the country’s creditors – the European Central Bank (ECB), the European Commission (EC) and the International Monetary Fund (IMF), known as the Troika – have fallen out over crucial disagreements about the terms of the financial “rescue” operation, resulting in a stalemate that has brought Greece to the knife’s edge.

It is obvious that a write-down of Greece’s 200-billion-euro debt, now owned by the European public sector, is sorely needed in order for Greece to avoid disorderly default.

In fact, a day before the election in the United States, even incumbent President Barack Obama threw his weight behind calls for a write-down.

But the EC and ECB are reluctant to accept losses, which the IMF has deemed “necessary”.

The handling of Greek debt has been a point of contention between the IMF management and European interests in and outside the Fund since Greece first asked its international creditors to rescue it from default back in May 2010.

Unable to survive its debt obligations, Greece entered into a 110-billion-euro loan deal with its eurozone partners and the IMF, conditional on the implementation of severe austerity measures.

The programme failed and the economy has all but imploded.

Peter Chowla, head of the London-based Bretton Woods Project, a non-governmental organisation that monitors IMF and World Bank activity, told IPS that it was obvious to most observers very soon after the program began that a second bailout agreement would soon follow.

He added “Even during 2010, many internal IMF reports warned that the Greek programme would not work out. Those were systematically ignored by the Fund’s leadership in order to present homogeneity of the Troika in negotiations with Greece.”

Meanwhile the main line inside the Fund gradually shifted away from European interests and closer to the positions of developing countries like India, Brazil and Russia, all of whom expressed doubts about the efficacy of the Greek plan.

Finally a compromise was struck between the IMF and the European financial institutions about the writing down of Greek debt to a level that might allow the programme to continue.

“In the spring of 2011, amid disagreements about the sustainability of Greek debt, the IMF warned, for the first time, of not offering any more money unless a debt restructure took place. European interests, inside and outside the Fund, finally had to accept this, but tried to limit their losses as much as possible,” Chowla explained.

In October 2011, the Troika offered a second 130-billion-euro bailout loan that not only demanded another austerity package, but also forced private creditors holding Greek government bonds to sign a deal accepting a 53.5 percent face value loss.

Soon after, it became clear that the second programme was wreaking havoc on a crumbling economy and would not put Greek public finances back in order.

And meanwhile, relations within the Troika kept deteriorating.

A confirmation of the depth of the fracture inside the Fund emerged this past July, when Peter Doyle, after two decades of service within the Research and Development branch of the Fund, resigned.

In his brief letter he criticised the IMF’s role in the Troika, blaming ‘European bias’ for constraining the Fund from exercising an impartial role.

Doyle charged that the IMF had compromised its independence, citing “suppression” of information that had been identified well in advance as a reason for the failure of the institution’s surveillance mechanism, which should have properly examined the impacts of the austerity plan.

Austerity shock therapy, according to Doyle, has caused the economy to disintegrate faster than expected and has brought “the second global reserve currency to the brink”.

Further evidence of the Fund’s responsibility in what is now a full-blown Greek crisis surfaced during the launch of the IMF’s autumn 2012 World Economic Outlook in Tokyo, where the IMF’s chief economist, Olivier Blanchard, acknowledged that the Fund’s surveillance models, used to dictate the terms of bailouts, were flawed.

Panagiotis Roumeliotis, Greece’s one-time representative to the IMF, confirmed to IPS that Doyle’s criticism is serious and valid.

He also provoked a high-profile investigation about the handling of the crisis by stating in an interview with the New York Times this August that the bailout plan was “condemned” from the start.

Domenico Lombardi, Italy’s former representative on the IMF’s executive board, says the impasse within the Troika is now reaching a total deadlock.

This August, the Fund refused to provide money to pay off a 3.2- billion-euro Greek bond held by the ECB, Lombardi told IPS. This was made up by an emergency bond sale by the Greek state.

A 5.5-billion-euro bond due to expire on Nov. 16 should be covered by anticipated bailout loans, but the IMF seems unwilling to participate in financing that either.

“Basically the IMF is not going to contribute in any meaningful way till the debt restructuring issue is agreed, formally or informally, explicitly or implicitly,” Lombardi told IPS.

He added that the entire joint programme would have to be restructured if the IMF pulled out at this late stage.

Given that the Greek economy will face an emergency liquidity problem next week, it hastily organised a short-term bond sale Friday to close the gap.

This debt is owned by the ECB, which has thus far refused to write down the debt or lower interest rates.

The situation has now become very dangerous, according to Lombardi.

The creditors may be able to buy some time “by lowering the interest rate on bailout money they have loaned to Greece,” he said.

But the most pressing issue is that none of the leading players seems to have any idea what is to be done in the long term.

(END)

By Jinty Jackson
Sep 20 2012 (IPS)

Carolina Poalo strikes the dry earth over and over with her hoe, her frail body bent almost double. She is determined to begin planting. During the long, dry season in Mozambique, she and her two young grandchildren have eaten little but cassava leaves.

In a country where the average life expectancy is 50, the 65-year-old is considered very old, but her golden years are far from restful.

Instead, life is a constant battle for the many elderly living in the semi-rural outskirts of the capital, Maputo.

Violence and abuse against the elderly – ranging from rape to psychological abuse and neglect – are on the rise, say authorities. Often this is linked to witchcraft accusations, although no official statistics exist about the phenomenon. Perpetrators are often family members.

Carolina Paolo’s sister, Amelia Paolo, fled her home when her sons accused her of witchcraft. “They threw me out, calling me a witch,” she tells IPS. “I only survived thanks to my plot of land.”

It was a bit unclear how she got access to land where she lives now, but she has a plot of land next door to her sister’s in Bilalwane, on the outskirts of Maputo.

“I don’t get any help from my children. Sometimes they dump their kids here when they get pregnant,” Carolina Paolo tells IPS of her two daughters.

The women survive by earning extra cash when they can, working in nearby fields. The five dollars a month state elderly grant, the lowest in Southern Africa, is enough to buy them a one-kilogramme bag of salt. With no access to running water, the money also comes in handy when filling up at a nearby tap – one barrel of water costs them three cents.

Mozambique’s social welfare office is notoriously corrupt and inefficient. Only one in three people interviewed by IPS said they received the grant despite all three having applied for it.

Her body shrunken and her eyes grown over with cataracts, Maria Chambale (70) admits she is frightened of what might happen when she can no longer work, “I must go on fighting,” she says and shrugs. “What else can I do?”

She, like the other elderly in Mozambique, works on her own small plot of land to grow vegetables to feed herself. She also accepts “piece jobs” or day jobs in nearby fields owned by richer neighbours who have land but do not have the time to farm it.

Despite the heady pace of Mozambique’s economic growth – the World Bank expects the economy to expand by 7.5 percent in 2012 – little benefit is trickling down to the poor, many of whom are elderly people.

“Sixty-eight percent of the elderly live below the poverty line in Mozambique,” says Janet Duffield, the director of the aid agency HelpAge International in this country.

For the elderly in the city who cannot grow food to feed themselves, conditions are even worse.

Sixty-year-old Armando Mattheus is amongst the many elderly people who now find themselves begging on the streets of the capital, unable to cope with the high cost of living. “Before I could buy something with the little I have but today I can’t buy anything,” says Mattheus, who spends his days outside a popular Maputo restaurant, begging tourists for handouts.

It is a situation experts say Mozambique’s government needs to address urgently. Eighty percent of people work well into old age in Mozambique – one of the highest rates in the world.

“The population in Mozambique works until they die because there aren’t alternatives,” says the director of Mozambique’s Institute of Social and Economic Studies, António Francisco.

With half its population of 23 million under 18 years old, Mozambique is often referred to as a country of young people. Those who can remember the devastating civil war that ended two decades ago are now in the minority.

Newly discovered natural gas and coal deposits promise untold riches for a lucky few and will soon fuel what is already one of the world’s fastest growing economies.

The aged make up a tiny fraction of the population – just five percent.  However, by the time a child born today reaches 60, that number will be nearly three times as high, according to Francisco’s research. This represents, he says, “an unprecedented demographic transformation in the history of Mozambique.”

Nearby countries – South Africa, Swaziland, Botswana, Namibia and Lesotho – all spend between 0.3 and two percent of GDP on grants for the elderly. Like Mozambique, they have a young population structure but such an approach can pay dividends.

Japan, which in 2010 registered 38 percent of its population over the age of 65 – the world’s largest proportion – spends over 10 percent of GDP on pensions, according to the International Monetary Fund. And the United Kingdom spends five percent of GDP on pensions, according to the Organisation for Economic Cooperation and Development.

Studies show that providing state pensions can reduce hunger and poverty because elderly people share resources with the family.

A 2003 study by HelpAge International found that “social pensions increase the income of the poorest five percent of the population by 100 percent in Brazil and 50 percent in South Africa.” And a 2005 study by the University of Manchester in the U.K. found that people living in households receiving a pension were 18 percent less likely to be poor in Brazil and 12.5 percent less likely in South Africa.

One fifth of all families in Mozambique include an elderly person. This is one reason why aid agencies are pushing the government to fall into step with other countries in the region. Another is that 43 percent of orphans are cared for by grandparents in Mozambique. The country has an HIV prevalence rate of 16.2 percent, one of the highest rates in the world.

“Of the 10 African countries with the highest HIV prevalence, eight have introduced some form of social pension or cash transfer directed at older people,” says Duffield.

The government would need to provide citizens over 60 with a minimum of 26 dollars a month to have an impact, estimates Francisco. The figure represents three percent of the country’s 12.8-billion-dollar GDP.

But universal social pensions would be too costly, argues Felix Matusse, who heads the government’s Department for the Elderly. “We still depend on external aid,” he explains, pointing out that foreign donors contribute over 30 percent of the entire state budget.

But the government cannot go on pleading poverty for long. By some estimates, Mozambique stands to collect over five billion dollars a year in the long term from its natural gas alone.

Bolivia, South America’s poorest country, financed its universal pension scheme or “Dignity Pension” in 2007 through a direct hydrocarbon tax. Could Mozambique do the same?

“Improved revenue collection from new-found mineral resources could free up fiscal space more than adequate to provide a cash transfer for all older people,” suggests Duffield.

Others argue that caring for the elderly should not have to depend on hydrocarbon windfalls. “What kind of state do we have that cannot look after five percent of its population?” asks Francisco, adding that nearby Lesotho finances a pension scheme but has no natural resources to speak of.

Few expect a major shift in government policy on pensions before the next national elections in 2014. But in the run-up, the government is showing greater willingness to tackle its elderly problem.

A draft bill, due to go to parliament before the end of the year, aims to protect the aged from abuse, meting out specific tough penalties for violence related to witchcraft accusations. However, there is no mention of universal old age pensions.

Matusse points out that Mozambique will not begin to reap the benefits of hydrocarbons for at least another five years. “Then we will see what is going to happen in terms of social security,” he says.

After 18 months of talks, on Wednesday Egypt’s government formally requested a 4.8-billion-dollar loan from the Washington-based International Monetary Fund (IMF), hoping to stabilise an economy that has continued to badly stutter in the aftermath of the popular uprising that led to the downfall of former President Hosni Mubarak.

The request, relayed to IMF chief Christine Lagarde by Egyptian President Mohamed Morsi in a meeting in Cairo on Wednesday, has been met with scepticism from sectors of Egyptian civil society as well as some nationalist politicians.

Many are now expressing anxiety over the negotiations’ lack of transparency and the possibility that the Egyptian government could agree to onerous conditions that may force it to cut back on spending on social welfare and safety nets.

“Many fear that a new era of dependency will start, even after the revolution,” Amr Adly, economic and social justice director with the Egyptian Initiative for Personal Rights, a Cairo-based watchdog, told IPS.

“The IMF loan won’t be approved without giving concessions that completely contradict the promises of a new development model, and thus undermine the potential for social justice measures after the revolution.” (The IMF did not respond to a request for comment for this story.)

Currently, Egypt has some 35 billion dollars in international debt, and talk of a major IMF loan also runs up against ongoing campaigns urging the international community to look into reducing such debt.

“The best way for the international community to support a fresh start for the Egyptian people would be to support an independent commission to determine if much of the debt accrued during the Mubarak era is illegitimate and thus should be cancelled, before any new debt is undertaken,” Deborah James, with the Centre for Economic Policy Research, a think tank here in Washington, told IPS.

This is not to say that the Egyptian economy doesn’t need some significant assistance. Since the beginning of the popular uprising in January 2011, as foreign tourism and investment have plummeted, the country has reeled from a massive crunch on foreign reserves and liquidity as well as a fast-widening budget deficit.

While the IMF has been in talks with the Egyptian government throughout much of that time and billions of dollars in so-called standby credit have been on offer, Fund officials have been wary of going forward until Cairo has been able to show broad political support for taking a loan. With President Morsi’s recent show of power over some of the military’s top brass, many observers feel that the talks could now come to fruition.

Several countries, including Saudi Arabia, Qatar and the United States, have decided or are contemplating offering significant bilateral help to Egypt, as well. Qatar alone has pledged two billion dollars.

Outsourcing expertise

The need for economic help notwithstanding, Egyptians are now trying to weigh their country’s financial troubles against the rumours of what the IMF may require of the government.

Adly, for instance, suggests that the IMF is likely to push for the privatisation of public utilities, regressive taxation and less social expenditure. But he also expresses frustration that, to date, much of this is simply speculation.

“There is no transparency in this process – we have no idea about what the IMF and the government are negotiating about,” he says. “The government has said that the IMF is not imposing any conditionalities, but then why are they negotiating at all?”

Part of the issue is that the newly elected president, his Muslim Brotherhood party and its ruling coalition have decades of experience in social and religious issues but lack expertise in monetary and fiscal issues.

As such, many are worried that IMF officials will be able to dictate the terms of the loan to a greater extent than it would if it were dealing with a government with a clear economic vision.

Morsi’s government is clearly aware of its lack of economic expertise, and thus has chosen to keep around some important members of Mubarak’s government, including the governor of the central bank, Farouk Al-Okdah, and others.

“These are the very members of the neoliberal team once in charge under Mubarak,” Adly says. “These bureaucrats and technocrats are quite conservative, and there is the idea that they have been kept in office in order to negotiate with the IMF and the World Bank.”

Plantation mode

On Wednesday, Lagarde said that the IMF is “responding quickly” and sending a technical team in early September. That same day, Prime Minister Hisham Qandi said he would hope for an agreement by the end of the year.

If an agreement happens, Egypt would be the 20th African country to be indebted to the IMF, according to 2011 statistics. If the final agreed amount is anywhere near the request, the Egyptian loan would be by far the largest on the continent.

In lieu of information about current negotiations between Cairo and the Fund, lessons learned from experiences elsewhere are inevitably forming some of today’s analysis.

Rick Rowden, an economics doctoral student at Jawaharlal Nehru University in Delhi and a development consultant, says that many multilateral funders, including the IMF, have for years placed significant emphasis on human development indicators.

In so doing, he tells IPS, they have “wholly neglected the actual need for economic development – shifting from an economy that is overly reliant on agriculture and extractive industries into one that is based more on manufacturing and services”.

Time and again, Rowden says, the IMF and other funders have pushed policies that seem to run counter to the industrial policies that most countries need to create real development: those that build domestic manufacturing. Doing so, he says, make it difficult for countries such as Egypt to “get out of plantation mode”.

Rowden suggests that this can be further exacerbated by a tendency on the part of the IMF not to differentiate between domestic and international private sectors, an “essential first step” in creating effective domestic industrial policies.

“The people of Egypt need to participate and make sure their government takes steps to develop national development strategies, including the adoption of long-term industrial policies to build a domestically owned manufacturing base with a clear plan to diversify the economy, build up the tax base and increase public investment,” he says.

“And none of this will be likely under [IMF] loans and policy advice.”

By Mantoe Phakathi
MBABANE, Jul 31 2012 (IPS)

Swazis should not see the ongoing nationwide one-month teachers’ strike as a movement capable of overthrowing the political regime here, despite the fact that civil servants and nurses have joined the action, according to political analyst Dr. Sikelela Dlamini.

Since Jun. 21, teachers in this southern African monarchy have engaged in an indefinite strike demanding a 4.5 percent cost of living increase, which has left thousands of pupils in about 30 to 50 percent of the country’s 179 secondary schools and 153 primary schools without teachers.

The country’s National Association of Public Servants and Allied Workers Union has also since joined the strike, although over 70 percent of its members are at work, and the Swaziland Democratic Nurses Union is engaged in a go-slow after the government won an interdict in the country’s Industrial Court against full-blown strike action on Jul. 19.

While strikers have mainly protested against the government’s move to freeze all public servant salaries, on numerous occasions the Swaziland National Association of Teachers (SNAT) president Sibongile Mazibuko warned that if the government refused to give workers the 4.5 percent cost of living adjustment, which is below the inflation rate, “the government might end up losing the country.”

The inflation rate currently stands at 9.43 percent, which has made it difficult for the 63 percent of Swazis living below the poverty line of two dollars a day to put food on the table.

But Dlamini and other analysts feel that the struggle for democracy in Swaziland lacks clear political alliances between labour and political organisations.

Dlamini told IPS that Swazis should not read too much into the teachers’ strike because workers have not yet declared their regime-change agenda at the negotiating table. In addition, only just over half of SNAT’s 9,000 members are on strike.

“No amount of all-out protest and defiance on the part of labour alone is sufficient to topple the status quo without a clear political direction,” Dlamini told IPS.

While workers are in a strategic position to challenge King Mswati III’s regime because they can withhold the labour that fuels the economy, Dlamini said that the country needs political organisations to negotiate and contest power.

Political parties have been banned in Swaziland for almost four decades and King Mswati III’s government continues to use security forces to quash any political dissent spearheaded by trade unions.

Following the fiscal crisis that has hit the country since 2009, after a 60 percent decrease from Southern African Customs Union income, workers began to call for political change, better working conditions, and below-inflation salary increases.

A United Nations Impact of the Fiscal Crisis in Swaziland survey released on Mar. 16 said that 21.9 percent of surveyed households have experienced reduced income since the crisis hit in 2009. And about seven percent of households surveyed admitted to having a member who lost a job as many families here survive on a meal a day.

The government has said that there is no money to pay public workers, whose salaries constitute a significant 52 percent of the national budget. Last year, the cash-strapped country took out a 320-million-dollar loan with neighbour South Africa. And at the time, the International Monetary Fund advised the Swazi government to reduce public servants’ salaries by 4.5 percent and politicians’ salaries by 10 percent, to save the government 24 million dollars a year.

However, the government has refused to adhere to calls demanding the cancellation of the controversial Circular No. 1, a government gazette that awards politicians, including the prime minister, cabinet ministers and members of parliament, lucrative perks. The government also continues to spend, and has plans to purchase 800 new cars over five years.

In addition, Mswati, Africa’s last absolute monarch, who has 13 wives, has also been criticised for his lavish lifestyle. The South African Mail & Guardian newspaper reported on Jul. 25 that three of the monarch’s wives are to soon go on holiday to Las Vegas, in the United States, with a 66-member retinue.

“We want a competitive government that will care about ordinary people instead of only those in power,” Mazibuko told IPS.

The government has responded to the strike by cutting the striking teachers’ July salaries by a third. It said that this was done because the strike is illegal as the Industrial Court recently ruled against it. However, teachers remain on strike.

But South African-based socio-economic analyst Thembinkosi Dlamini told IPS that civil society organisations in Swaziland, particularly labour unions, are weak and not very well coordinated to challenge the regime.

“The state has also made frantic efforts to dismantle any form of collective effort that could bring pressure to bear on the system,” said Dlamini.

For instance, in March the government registered the Trade Union Congress of Swaziland (TUCOSWA), only to deregister it in April after stating that there is no legislation governing the merger of trade union federations here.

Trade unions felt that the government was trying to weaken the labour movement by deregistering TUCOSWA so that there could be no unity among workers, which could lead to them protesting against the government.

Meanwhile parents and public school pupils, who are supposed to be sitting for their mid-year examinations, are the ones most affected by the labour action, said human rights activist Doo Aphane. Some children do not even attend class currently, which exposes them to all sorts of risks, including sexual abuse and drug use, Aphane told IPS.

“Our government lacks a human rights-based approach because it is clear that the government has not taken into consideration the plight of the many ordinary people who are suffering because of this strike,” said Aphane.

Prime Minister Sibusiso Barnabas Dlamini has threatened to fire striking teachers and close down schools if the strike continues. He has maintained that public servants will not receive a salary increase for the next three years.

“This does not guarantee lessons for the children who have been idling for weeks now,” the director of Save the Children Swaziland, Dumisani Mnisi, told IPS. “I wish that the government and teachers could sit down and sort out their differences so that children do not suffer the consequences of the action.”

A director of one of the country’s civil society organisations, who asked for anonymity, said that the prime minister was not handling the matter well and was “very arrogant because he is the King’s appointee and he has nothing to lose even when the public complains about his conduct.”

“Since the strike started we’ve been trying to get an appointment to engage the prime minister, but he’s been refusing to see us,” he said. “He seems to be only interested in fixing up the teachers and not ensuring that the children receive an education.”

He said that the government’s decision to buy cars to the value of 2.4 million dollars when it claimed that there was no money for workers showed how insensitive those in power were.

“That’s why people are now calling for a system that will ensure that those serving in the government take the citizens seriously,” he said.

Analysts insist though that it will take more than a group of aggrieved workers and empty threats to bring about political change in Africa’s last remaining absolute monarchy.

For yet another occasion, it was not the good news Caribbean leaders wanted to hear.

Already stung by mixed economic growth ranging from a downturn in countries like Trinidad and Tobago, Antigua and Barbuda and St. Vincent and the Grenadines to marginal growth in Barbados, St. Lucia and the British Virgin Islands, the Caribbean was told that its premier financial development bank has had its credit rating downgraded by the U.S.-based Moody’s Investment Services.

The president of the Caribbean Development Bank (CDB), Dr. Warren Smith, trying to put on a brave face in light of the downgrade from AAA to AA1, said it was not unexpected.

He told the annual CDB board of governors meeting that ended here on Thursday that the new ratings were being accepted “in today’s heightened environment of uncertainty” and that “our risk management practices need to be strengthened”.

“To that end we are undertaking an in depth examination of our risk management framework and we will implement appropriate recommendations as we build resilience to the more dangerous world which we now occupy,” Smith said.

But Grenada’s Finance Minister Nazim Burke, who described the new rating as “unfortunate and untimely”, said it also brought new problems for the Caribbean at a time when many borrowing member countries (BMCs) were “fighting to nurture a very fragile economic recovery”.

“The possibility of higher borrowing costs is a major concern. Indeed, for countries like Grenada, whose borrowing is constrained to very concessionary financing, this is a very worrying development,” Burke told the meeting.

St. Lucia’s Prime Minister Dr. Kenny Anthony, who has taken over the chairmanship of the bank, said in the opinion of Moody’s, the shortcomings were inconsistent with the standards associated with “Triple A” rated banks and reflect deficiencies in the management of the bank’s assets and liabilities and in its financial planning.

“Nevertheless, the bank must move quickly to create a dedicated risk management function, adopt comprehensive asset-liability management policies and carry out other necessary reforms to ensure that all its fundamentals get back on track and are sustained,” he added.

But Moody’s was not the only international body bearing bad news for the Caribbean.

The Wall Street-based international credit agency Standard & Poor’s warned that Caribbean debt is increasing in light of the global economic crisis.

In its latest report, “Caribbean Debt Is on the Rise”, it said economic growth and foreign direct investment in the region have slowed, while the fiscal and debt profile of many countries have deteriorated.

“Compounding the economic decline and sluggish recovery are structural weaknesses, including lower national savings rates than those of other emerging market countries, persistent current account deficits, and a high reliance on external financing,” said Kelli Bissett, Standard & Poor’s credit analyst.

She said these factors increase the Caribbean nations’ vulnerability to external financial and economic shocks.

At the launch of the Caribbean Growth Forum (CGF) on Thursday, official figures showed that in contrast to Latin America, which grew by six percent in 2011, Caribbean countries only grew by an average 2.3 percent. The CDB is projecting that economic growth in the region will be between 1.5 and two percent this year.

The figures show Caribbean economies also face serious debt challenges. For some regional countries, public debt-to-GDP ratios have reached 100 percent.

“Despite the great diversity and differences in economic performance, there are a number of common challenges the Caribbean countries face (including) the high cost of doing business, the challenging business environment and the business climate which leads to some inefficiencies in the delivery of public services, the high debt and the mis-match that currently exists between skills and jobs,” Hasan Tuluy, the World Bank Regional Vice President for Latin America and the Caribbean, said at the signing ceremony.

The one-year CGF is a partnership between the World Bank, the Inter- American Development Bank, and the CDB with support from the United Kingdom Department for International Development (DFID) and the Canadian International Development Agency (CIDA).

IDB representative for Barbados and the Eastern Caribbean Joel Bransk told the signing ceremony that economic growth is a requirement for the region.

“We see growth as one of the most evolving conditions that lead to improving the quality of life …alleviating poverty and maintaining macroeconomic stability,” he said.

Antigua and Barbuda says it hopes to re-start by Jun. 1 this year the 110.4-million-dollar Stand By Agreement (SBA) with the International Monetary Fund (IMF) in 2011.

Reviews of the agreement had been halted after the Baldwin Spencer government last July gave “full and tangible” support to a move by the intervention of “an important financial institution by the Eastern Caribbean Central Bank”.

“The impact of this development, however, has resulted in a hiatus in the completion of reviews by the Fund and in disbursements anticipated under the Stand-by Arrangement that were programmed into our government’s budget for 2011,” said Whitfield Harris Jr., the temporary CDB governor for Antigua and Barbuda.

St. Kitts-Nevis Prime Minister Dr. Denzil Douglas on Thursday took his country’s financial problems to the Paris Club, telling the informal group of financial officials from 19 of some of the world’s biggest economies, which provides financial services such as debt restructuring, debt relief, and debt cancellation, that “I believe that it is no exaggeration to say that we are in the process of transforming our economic and social outlook.”

“To complete this transformation we need your support,” he said.

But Smith believes there is hope for the Caribbean if governments embark immediately on a raft of reform policies that would enhance the environment for the production of internationally competitive goods and services.

“This is no easy task, but it lies at the core of developing a more resilient Caribbean economy,” he said, noting for instance that the region would have to adopt new energy policies.

“The smaller countries will have no choice but to interconnect to existing and newly emerging low-cost energy production sites in neighbouring countries. Close collaboration between the producing and consuming countries is a prerequisite for making this a reality,” he said, adding also the need to prioritise the wide-scale introduction of broadband internet to drive down the cost of communication, especially for business and education.

The CDB president said the region also needed to pay close attention to the imminent commissioning of the expanded Panama Canal in 2014 that would facilitate the transit of mega ships from the expanding economies in the Eastern countries into the Caribbean.

“It will create opportunities for ports in our region to develop large transhipment facilities for vessels serving smaller ports in North and South America. It also holds the promise of these islands becoming logistic centres and industrial assembly nodes for Far Eastern businesses accessing South American ports and the nearby eastern seaboard of the United States. The job creation possibilities for our countries are enormous,” he added.

(END)

As Malawi’s poor struggle to afford food and other staple items since the 48 percent devaluation of the local currency against the dollar, economic commentators are optimistic that the move will provide an opportunity to boost the country’s export market.

A group of farmers queuing to buy fertiliser outside a shop in Bvumbwe, southern Malawi after the local currency was devalued. / Credit:Claire Ngozo A group of farmers queuing to buy fertiliser outside a shop in Bvumbwe, southern Malawi after the local currency was devalued. Credit: Claire Ngozo

On May 7, Malawi’s President Joyce Banda made a decision to devalue the Kwacha from K168 to K250 to the dollar.

The lowering of the currency against the dollar has hit locals hard. Malawi is one of the poorest countries in the world: 74 percent of the population of this southern African nation lives on less than 1.25 dollars a day, and nearly one in 10 children die before their fifth birthday.

The devaluation of the Kwacha created panic among consumers who rushed to stock up on basic food items such as maize flour, cooking oil and rice as the price of products increased by an average of 50 percent.

Consumers suffered a further blow on May 11 as the prices of fuel and electricity also rose by 30 and 63 percent respectively.

“The devaluation has made us poorer than before. Our salaries remain the same, so how can we afford to pay twice as much on basic necessities such as maize flour?” asked Mada Mayuni, a civil servant who works as a copy typist in the capital, Lilongwe.

Consumers suffered a further blow on May 11 as the prices of fuel and electricity also rose by 30 and 63 percent respectively.

“The devaluation has made us poorer than before. Our salaries remain the same, so how can we afford to pay twice as much on basic necessities such as maize flour?” asked Mada Mayuni, a civil servant who works as a copy typist in the capital, Lilongwe.

Mayuni is a widow and looks after seven children aged between four and 16.

“I don’t know how we will survive because my salary is only enough for transportation to and from work. Maybe I should move to the village and try subsistence farming,” she told IPS.

Matthews Chikankheni, the president of the Malawi Confederation of Chambers of Commerce and Industry, a partnership of enterprises and associations representing all sectors of Malawi’s economy, told IPS that although the average person was suffering, the devaluation of the Kwacha was a necessary adjustment that should be welcomed as it would boost the country’s export trade.

“This is a chance for export traders to improve their earnings. The devaluation means that exports will be cheaper and imports more expensive, and as a country we need to take advantage of this situation and export more,” said Chikankheni.

By devaluing the Kwacha, Banda was responding to requests that the International Monetary Fund (IMF) and local economists had made to the country’s late President Bingu wa Mutharika. However Mutharika had repeatedly refused to take the step that economists believed would have saved the country’s failing economy.

Malawi’s donor relations suffered greatly following accusations that Mutharika’s government failed to respect the human rights of lesbian, gay, bisexual and transgender people and the right to freedom of the press.

Donors refused to release up to 400 million dollars and the United States suspended a 350-million- dollar grant. At the time, almost 40 percent of Malawi’s national budget was donor-dependent. Many donors have since pledged to help Banda restore the country’s economy.

The devaluation of the Kwacha and the liberalisation of the foreign exchange market are expected to contribute to the government’s attempts to reach an early agreement with the IMF in order to unlock donor funds.

Chikankheni said that the devaluation would boost demand for domestically-produced goods and discourage the current dependency on imported consumer goods, which have now automatically risen in price.

He added that the increase in exports would mean that foreign exchange would be easily available in the country and would result in an eventual improvement in the economy, which would trickle down to the people.

Currently Malawi’s annual imports, which are estimated to be two billion dollars worth of goods such as electronic items, groceries and furniture, exceed its exports. The country exports 1.2 billion dollars of agricultural products like tobacco, tea, sugar and groundnuts, according to the National Statistical Office.

Chikankheni is optimistic that the devaluation will aid the growth of the tobacco industry.

Tobacco is the country’s main revenue earner, accounting for up to 60 percent – or 950 million dollars – of foreign exchange. According to the Ministry of Agriculture and Food Security, Malawi’s tobacco accounts for five percent of the world’s total exports.

Dalitso Kubalasa, the executive director of the Malawi Economic Justice Network, a coalition of more than 100 civil society organisations that promotes economic governance, told IPS that the devaluation would make Malawi’s export products more competitive on the international market.

“On the export front, the devaluation will lead to increased demand for Malawi’s exports in the short run. In the long run, this is expected to stimulate production and thus lead to increased production of exportable goods … thereby generating foreign currency,” said Kubalasa.

He added that because the prices of imports had automatically risen and become unaffordable for some, the situation would motivate locals to substitute these goods with commodities that can be produced locally. It would provide an incentive to local industry, he said.

But he admitted that the devaluation would affect the country’s middle class and poor.

“We all have been through desperate times…perhaps we might have to even brace ourselves for more,” said Kubalasa. “But on the brighter side, we still need to understand that something needed to be done fast to put a stop to the downward trend of the economy before it got to a point of no return.”

He said he was hopeful that the devaluation was not the only solution to Malawi’s economic woes.

“For the devaluation to be effective, it needs to be done alongside strategic and well-focused supporting intervention measures,” said Kubalasa. (END)

The Brazilian government is stepping up South-South aid, to strengthen the South American giant’s status as a donor country and its international clout. It now provides assistance to 65 countries, and its financial aid has grown threefold in the last seven years.

Itamaraty Palace (Brazil’s foreign ministry), homebase for the country’s South-South development aid strategy.

A project to extend financing for food purchases to five countries in Africa has helped confirm that Brazil, traditionally a recipient of aid, has taken its place among the group of foreign donor countries.

The United Nations announced in late February that Brazil would provide 2.37 million dollars for a local food purchasing programme, to benefit small farmers and vulnerable populations in Ethiopia, Malawi, Mozambique, Niger and Senegal.

The project, carried out by the Food and Agriculture Organisation (FAO) and the World Food Programme (WFP), will thus draw on the expertise accumulated by Brazil in its own food purchasing programme, known by its Portuguese acronym, PAA.

The PAA buys agricultural products from small farmers and distributes them to vulnerable groups, including children and adolescents through school feeding programmes. Besides fighting hunger, it is aimed at strengthening local food production.

The PAA is a cornerstone of the country’s Zero Hunger strategy, launched by the government of Luiz Inácio Lula da Silva (2003-2011) and continued by his successor, President Dilma Rousseff, both of whom are moderate leftists who belong to the Workers’ Party.

The programme, in conjunction with other anti-poverty policies, has helped reduce malnutrition by 25 percent and pulled 24 million people out of extreme poverty, according to Lula administration statistics.

“This is a way to help other governments develop policies of support for family farmers, who in this country are responsible for the production of 60 percent of the food consumed,” Marco Farani, director of the Brazilian Cooperation Agency (ABC), told IPS.

The PAA “works very well, and keeps farmers in the countryside, caring for their small plots of land and making them their source of subsistence and livelihood,” said Farani, whose agency operates under the foreign ministry.

The project is based on cooperation between FAO and the WFP in the production and supply of seeds and fertiliser, and the organisation of the purchase and distribution of food, among other aspects.

Since January, FAO has been headed by José Graziano da Silva, from Brazil.

In an interview with IPS in December, Graziano said he would bring to the U.N. organisation his experience as one of the architects of the Zero Hunger programme, in areas like the strengthening of local markets to produce higher quality food, reduce food waste, and lower costs.

Now, in association with organisations like the United Nations or in bilateral aid, Brazil wants to extend throughout the developing South its own successful initiatives like the PAA.

This new cooperation and development aid strategy has been taking shape since 2005, when Brazil, now the world’s sixth largest economy, earmarked 158 million dollars for foreign aid. That amount rose to nearly 363 million dollars in 2009 and to an estimated 400 million dollars in 2010, according to preliminary figures from the ABC.

Meanwhile, Brazil plans to dedicate 125 million dollars to technical cooperation over the next three years, more than double what this country will itself receive in international aid in that period.

“Today we are active in more than 65 countries, while three or four years ago we were only active in the Portuguese-language countries of Africa. We currently have cooperation projects in 38 African nations, and in Latin America,” Farani said.

The countries of Latin America receive 45 percent of Brazil’s foreign aid. The rest is distributed among other areas of the developing South, mainly through bilateral channels, but also through the U.N., as in the case of the new local food purchasing fund for the five African countries.

Brazil is now one of the WFP’s 10 largest donor countries.

The difference, Farani said, is that “in our South-South cooperation, we do not impose closed models or solutions. We recognise the experience of the other countries, while sharing our own expertise.”

Brazil has thus established a kind of manual of principles to guide international aid.

“In first place, we are a developing country, which is why our attitude towards the challenge of development is one of humility, because development is still a challenge for Brazil,” Farani said.

“Besides, we have similar realities and challenges” as developing countries, and “we approach things from the idea that it is possible to overcome those challenges, while the attitude of a country from the industrialised North is ‘we are going to help to keep things from getting even worse’,” he said.

Mauricio Santoro, an analyst at the independent Getulio Vargas Foundation in Rio de Janeiro, mentioned political reasons as well for Brazil’s strategy of becoming a donor country.

Brazil hopes to win a permanent seat on the U.N. Security Council and wants greater decision-making power in multilateral bodies like the International Monetary Fund and the World Trade Organisation.

“The political objective is to increase Brazil’s influence in other developing countries, particularly in Latin America and Africa. It’s part of the consolidation of Brazil’s international leadership vis-à-vis nations of the so-called global South,” he said.

But Santoro said there is a difference with respect to traditional donors that use aid as an instrument to establish a presence in new markets.

Brazilian companies, like the state-run oil company Petrobras and private construction and mining firms, are increasingly operating throughout Latin America and in other regions as well.

“The focus is more on politics than on the economy,” he told IPS. “Cooperation is not necessarily stronger with large commercial partners.”

“But it works as a kind of buffer for tension in countries like Bolivia, Paraguay or Mozambique, where there is a heavy presence of Brazilian companies,” he said.

Another difference, Santoro said, is that Brazil’s foreign aid does not come with strings attached, and generally promotes projects that put a priority on developing human resources, by means of training of public employees, for example.

It is the age-old concept of “teaching people to fish rather than giving them fish,” he summed up. (END)

By Mekonnen Teshome and Miriam Gathigah
ADDIS ABABA , Feb 21 2012 (IPS)

Ethiopia says that the double-digit economic growth the country has experienced over the last seven years has started benefitting its majority by boosting their income and productivity in agriculture and small-scale businesses.

While the International Monetary Fund and the World Bank state that the country has registered 8.7 percent GDP growth, the government claims the economy has grown by 11.4 percent.

However, the country was declared the second-fastest growing economy in Africa for 2011, after Ghana, in the annual economic report by the United Nations Economic Commission for Africa (ECA).

In the past, Ethiopia has made headlines for recording some of the worst famine situations in Africa, and for its poor health indicators – it has posted one of the highest maternal mortality rates in the world. In 2005, 871 women died per 100,000 live births.

But this is slowly changing as the government has made progress in the provision of social services such as health, education and infrastructure.

“In 2010, Ethiopia continued to register the fast growth, as it has for the last five years. GDP growth in 2010 remained strong at 8.8 percent. Growth is driven by the service sector (14.5 percent), followed by the industrial (10.2 percent) and agricultural (six percent) sectors,” the ECA report indicated.

In an exclusive interview with IPS, State Minister of the Office of Government Communication Affairs, Alemayehu Ejigu, said Ethiopia has registered remarkable growth by increasing major crop production from 11.9 percent in 2005 to 18.08 percent by the end of 2010. People’s lives are changing for the better in rural and urban areas because of health facilities and infrastructure development, he said.

Ejigu attributed the success to the effective implementation of the national five-year Growth and Transformation Plan (GTP). He said that the country’s GTP for 2011 to 2016 would help Ethiopia join the grouping of middle-income countries.

Ejigu also told IPS that the government planned job creation opportunities through the construction of 73,000 kilometres of rural roads. “This would create an opportunity for farmers to easily transport agricultural products to market,” Ejigu said.

Abeba Bezu, an economic affairs consultant in Addis Ababa, said that under the country’s ambitious Plan for Accelerated and Sustained Development to End Poverty government had reduced poverty from 38.7 percent in 2005 to 31 percent five years later.

“Although struggling with a large population estimated to be 82 million people, making it the second-most populous country in Sub-Saharan Africa, there has been significant progress towards improving livelihoods. There is notable development.”

However, assistant Professor Teshome Adugna at the Economics Department of the Ethiopian Civil Service University cautioned that as GDP considers the market value of goods and services, it cannot be a perfect instrument to show the country’s actual growth, given Ethiopia’s poor record handling and management systems.

“Since the GDP reporting does not provide information on who produces how much, it is difficult to know how individual citizens benefit from the reported growth,” he said.

Adugna described Ethiopia’s growth as “broad-based”, which he attributed to the growth of the agricultural, industrial and service sectors.

“Of course, we should not expect urban unemployment to end very shortly,

“I can say that many people are benefiting from the economic growth in Ethiopia, but I would not say that the life of the majority has improved. We need time to bring about social development that can change the lives of the majority.”

Ten years ago, only two thirds of Ethiopians had access to healthcare services, leaving another 68 million people across the expansive rural areas in dire need.

“Since 2004, the Ministry of Health has expanded access to healthcare through the Health Extension Programme (HEP), which targets the rural population,” said Amanuel Ayalew, a volunteer health worker in northern Ethiopia.

As a result, Ethiopia’s country report by the Department for International Development (DFID), the United Kingdom’s government department responsible for promoting development and poverty reduction, revealed that the impact of the health programme is notable since HEP reaches nine million households. DFID will spend an average of 524 million dollars per year in Ethiopia until 2015.

With more than 35 million insecticide-treated bed nets for malaria, there has been a 73 percent reduction in malaria cases. This, coupled with a massive and consistent vaccination programme for children under five against killer diseases, has seen deaths in that age group reduced by a significant 62 percent in villages with access to HEP.

There are now about 1.4 million more women on contraceptives than there were in 2005, and the gross primary school enrolment rate has risen from 91.3 to 96 percent between 2005 and 2010.

However, challenges remain.

“In spite of a constituent economic growth of double digits in the last five years with economic analysts projecting a similarly impressive growth, sustainable growth and poverty reduction remains a challenge,” Bezu said.

A majority of rural poor are still grappling with severe climate change and are still highly susceptible to drought.

It is a situation that government partially acknowledges. “When we say the country is growing it does not mean that every citizen has no problem…even in the United States there are people who are provided with food aid,” Ejigu said. He, however, added that no one would die of starvation as there would be no food shortages in the country.

It is a view that the leader of the opposition Ethiopian Democratic Party, Mushe Semu, does not agree with.

“Ethiopia is a country where many citizens are starved. It is not a question of having food two or three times a day,” Semu told IPS.

He said it was impossible for Ethiopia to become a middle-income country. “When we think of the majority of the Ethiopian population we are talking about our farmers and rural communities that are 85 percent of the people. Here, the land management and fertility should be considered,” he said.

He said that without effectively distributing all arable land to people, and with the prevailing land degradation, it was not possible to bring about development.

The country is not conducive for private sector growth, analysts say.

The newly completed African Union building in downtown Addis Ababa. Credit: Mekonnen Teshome/IPS

“Although the government envisions a private sector led development, the environment is not conducive for the growth of the private sector. In fact, private investment as a percentage of GDP has remained on the decline since 2004,” Bezu said.

In a World Bank global survey dubbed Ease of Doing Business, in 2010 and 2011 Ethiopia ranked 103 and 104 respectively out of 183 countries.

But meanwhile, civil servant Abiy Getahun said that the double-digit economic growth repeatedly propagated by the government media has not yet brought the desired social development to his life. He cited the low wages paid in Ethiopia, which, according to him, are low compared to the rest of Africa. In the 2011 U.N. Development Programme’s Human Development Report Ethiopia ranks 174 out of 187 countries worldwide.

He said that most people, especially urban dwellers, could not withstand the skyrocketing price of good and services.

“The total salary increment I got over the last 10 years is only 400 Ethiopian Birr (less than 25 dollars) while the price of goods and services has risen in an unbelievable manner.”

* Additional reporting by Miriam Gathigah in Nairobi.

(END/2012)

Excerpt:

Hillary Clinton at Busan Credit: Miriam Gathigah/IPS

By Miriam Gathigah
BUSAN, South Korea, Nov 30 2011 (IPS)

Women toil in the fields for most of their lives producing food and strengthening the largely agricultural economy of African countries, but when their fathers, husbands or older sons die, they are no longer welcome on land they may have tended for years.

This observation was made by Hillary Rodham Clinton, United States secretary of state, at a special session on the status of women at the ongoing Fourth High Level Forum on Aid Effectiveness (HLF4) in thi sSouth Korean port city.

Some 2,500 delegates, including members of ministerial teams from 160 countries, civil society leaders, experts from multilateral organisations and academics are attending the HLF4 to discuss international principles and rules to improve development co-operation.

Many agreed with Clinton’s observation that created a strong image of the status of women in Africa and Asia who earn their livelihoods from natural resources.

“Many years ago I travelled to Africa and everywhere I went there were women working in the fields, gathering firewood and in market stalls, and so I asked an economic analyst, how do you account for these contributions by women? And, he said that they didn’t. Because it wasn’t in the formal sector.

“If these women could stop working, even for a day, that would have a huge impact on the economy.”

The situation has not changed significantly for many women in Africa and Asia.

“Women still account for at least 70 percent of the 1.3 billion people living in abject poverty. Women work two-thirds of world working hours, produce at least half of the food. Yet, they only earn a paltry 10 percent of world income and own a negligible one percent of world property,” said Michelle Bachelet, executive director of U.N. Women, an entity concerned with gender equality and women’s empowerment.

Despite statistics showing that countries that engage women and recognise their contribution achieve greater growth, many African countries are only too willing to offer lip service to the course of gender equality to improve their image at global conferences such as in Busan.

Said Bachelet: “We are saying that this is the time to move from speech line to budget line.”

“I can sense the same frustration in Bachelet’s voice as she made a case for gender equality. The same frustration that I feel. I ask myself, how much longer do we have to make this case?” Clinton said.

Clinton said this is in spite of the fact that credible sources such as the World Bank and the International Monetary Fund have shown that the gross domestic product and per capita income could be higher if women were recognised and integrated into development.

From Clinton’s passionate plea for more commitment to gender equality in relation to better implementation of aid, she made it clear that discriminating against women hurts the economy.

“In Asia, statistics show that the economy loses about 89 billion dollars every year because of discriminating against women within the labour force. Sadly, this is a region with countries working hard to emerge as leading economies,” Bachelet said.

Leading champions of gender equality said women are empowered when they are given an opportunity to go to school, their children are better fed and they too stand a better chance of accessing a good education.

A majority of women remain poor with few opportunities to access work that is remunerated, little or no money and little chance to give their children a decent meal. During the recent drought in the Horn of Africa, U.N. statistics showed that of the four million people on the brink of death, two million were children.

But this could change. The Busan forum, that ends Thursday, can take this chance to redeem itself with a new and practical solution towards improving the lives of millions of women.

What is measured gets noticed, Clinton said. “We are now working on developing data on whose basis gender status can be improved. Today, I am pleased to announce a new initiative, the Evidence and Data for Gender Equality (EDGE).

“EDGE is a new initiative to improve the availability and use of statistics that capture gender gaps in economic activity. It capitalises on the United States’ call to action at the May 2011 OECD ministerial session on gender and development and builds on recommendations of the U.N. International Agency and Expert Group on Gender and Statistics.”

Often, Clinton said, loans are given to small business enterprises without assessing how many of these are owned or run by women. “Consequently, she said, “women continue to face difficulties in accessing credit.

“In many countries, a man and a woman can go to the same lender for credit and even have similar collateral, but a woman will be treated differently. We can reform credit policies that discriminate and disadvantage women.”

Clinton lauded the Busan forum saying that it created an opportunity for new initiatives and partnerships critical to advancing the struggle for gender equality and the empowerment of women.