The Best of The Money Show: Africa's IMF debate, the future of TV and retail reinvention

SPEAKER_1 (0:02)

You're listening to The Best of The Money Show.

Stephen Grootes (0:07)

Welcome to The Best Bits of The Money Show, a digest of some of the best thoughts, comments, insights and interviews. Some of the bits of knowledge that we think might linger for longer. If you get a chance to hear them again on The Money Show, if you'd like to hear more, please go to our website, your podcast, tap search for The Money Show. And as always, if there's a bit of wisdom that you think might need to linger in a particular person's brain, then send it along, just send the podcast to them or to a particular group. You never know who might find it really helpful. Tonight, we bring you a mixture of stories from the world of money. In our Business Book Review, we spoke to Dr. Grieve Chelwa. He's an Associate Professor of Political Economy at the Africa Institute. He co-wrote the book, How the International Monetary Fund Strangles Africa. You can imagine from the title, he has a strong view about the role of the IMF, talks about debt servicing and structural adjustment and the impact of austerity policies on countries on our continent.

Grieve Chelwa (1:06)

Thank you so much, Steve, for having me. It's a real pleasure. Basically, we base our analysis on evidence, right? So we don't make presumptions or assumptions or hypothetical exercises. We actually look at the historical record.

This historical record runs all the way from the 1960s up until now, when African countries, newly independent African countries then joined International Monetary Fund. Based on our reading of that historical evidence, large, large historical evidence, it's quite clear that the IMF has not aided African countries, but it has actually stood in their way of aspirations of development.

Stephen Grootes (1:47)

Okay. So that's, I presume, about the nature of loans, about the conditions of loans, those kinds of things?

Grieve Chelwa (1:54)

You're very right, Steve. Actually, the very interesting thing is that when you look at many African countries and their relationships with the IMF, many of them have gone to the IMF so many times. We estimate in our book that an African country goes to the IMF every five years. In the case of Zambia, it's about 13 times since the 1960s. In the case of Senegal, possibly about 18 times. Ghana, around about there. So we go to the IMF so many times, and every time that we go to the IMF for assistance, we are told that this is the time that your country's fortunes will turn, but that never happens.

So precisely because of those mechanisms that you illustrate, Steve, it's around about the conditionalities that are attached to IMF assistance, the conditions that are attached to IMF assistance. Those conditions don't aid development at all. In fact, they actually prevent it from happening. I'll give an example. So one classic condition that IMF likes to impose upon African countries is the contraction of government expenditure, what we call austerity. So this drastic reduction in government expenditure.

Now what you see around the world is that countries that need to develop have to increase government expenditure, not to contract it, because they have to build roads, hospitals, power stations, because those are the preconditions for development. But the IMF actually asks us to do the reverse. So you're very right, Steve. Those are the actual mechanisms.

Stephen Grootes (3:20)

Yeah, I mean, the arguments around austerity and all the others are still going on.

Do you believe, Grieve, that this is deliberate? Is there some sort of plan somewhere by evil people to strangle Africa? Or is it a consequence of maybe path dependency or something else, or just an unequal system?

Grieve Chelwa (3:41)

I mean, we have to be very careful here. We have to go back to 1944, to the Britain Woods Conference in the US when the IMF and the World Bank were actually established. So there was this big monetary conference in 1944, just when World War II was coming to an end. And the primary architects of the IMF and World Bank were the powers at the time, and mostly it was the US., which was a rising power, and Britain, which was a declining power. So when you go back to that conference and look at the debates, look at the scheming, look at the machinations that were happening there, it's very clear that the IMF and World Bank were really created in the image of the US and to an extent Britain. They were really created to be extensions of US and British influence across the world. That's one of the reasons why that they're both, the World Bank and IMF, are headquartered in Washington, DC. This is not an accident, but it's really a result of, that thinking around the IMF and World Bank being extensions of US influence. For example, the president of the World Bank has always been an American.