World Bank’s Loan Policy Impedes Progress On Ebola Crisis
By J. Yanqui Zaza
Why is the Ebola disease killing thousands of people in the three West African countries? Is it due to the aggressiveness of the disease, lack of infrastructure and lack of physicians, cultural practices or all of the above? An article called “Fighting Ebola, and the Mud” in the NY Times described how the lack of infrastructure impacts development or crisis such as Ebola. Mr. Karin Huster, a nurse with the Non-profit organization last Mile Health, said Liberia’s dysfunctional transportation system is standing in the way. Patients have died on grueling journeys to treatment units. Blood sample have sat waiting for days, eventually becoming invalid. The Liberian roads, especially during the rainy season, are deadly traps of red mud, riddled with craters sometimes as deep as a car.” Here is a bridge. (https://mail.aol.com/38815-616/aol-6/en-us/Suite.aspx)
Poor road infrastructures are some of the major challenges that hamper the US troop’s effort in reaching the all 15 counties of Liberia, said Deborah Malac, the
Ambassador of the United States of America to Liberia. These challenges are making things very difficult for people who are seeking healthcare to get to treatment units in the remote parts of the country, she said.
I guess, anticipating that countries will have to borrow money to finance infrastructures, the World Bank, which makes billions of profits from lending money, did identify infrastructure and lack of skilled manpower as the culprit. In fact, it has advised that this fatal disease might affect 1.4 million people by January 2015, if the number of Ebola camps is not increased, and sufficient physicians are not employed to treat those citizens affected. On its web site, the World Bank stated that the international community must admit that weak public infrastructure is not only hampering the fight against Ebola disease, but it is also impeding economic activities with trading partners as well as big business.
But wait a minute, when did the World Bank realize that the lack of infrastructure is an impediment to development? Aren’t the World Bank and its allies responsible for the design and implementation of economic policies in Africa for decades? Isn’t it the World Bank’s involvement in writing flawed concessionary agreements of natural resources that has made it difficult for poor countries to earn adequate funds to finance infrastructures? Robert Sirleaf, son of President Ellen Johnson Sirleaf, stated that the World Bank, not only advised, but wrote Liberia’s oil concessionary agreement, which has been described as flawed by Global Witness. (http://www.youtube.com/watch?v=ZmGJQo419YI&feature=youtu.be).
With minuscule revenue from rich resources, Liberia, Sierra Leone or Guinea relies on users’ taxes such as International Trade, Excise tax, Sales tax, Business registration fees, Fines, etc. to finance about 50% of its budget. For example, in 2009, Liberia received about 10% ($35 m/$347m) of its budget from 71 investors managing Liberia minerals, while the rest came from users’ tax. Unlike Liberia, Botswana’s royalty income funded 50% of its $2,6 billion dollar budget in 2009. The government of Botswana, a shareholder of the country’s diamond industry, receives part of the profits of the diamond, which is used to finance public programs such as infrastructures. (An article called Power v Poverty by Duncan Green carried by Newsstatemen, 12/16/08).
The World Bank and its allies continue to assert that poor countries’ ownership in their rich resources will not be productive. To calm public criticism, Liberia has begun to bargain for government ownership in few industries, but the impact is minimal because the percentage is so minuscule. It is true that many bureaucrats are corrupt and ineffective. Nonetheless, there are success stories of reasonable dividends derived from government’s ownership in rich resources. Government ‘s involvement in management was limited, as in the case of Botswana.
Let us review the World Bank’s opposition to government’s ownership, especially so as a lending institution. Common sense suggests that an institution that relies on making billions in profits from lending money might be opposed to any programs that reduce its profits. Well, reasonable dividends from government’s ownership from rich resources would reduce loans borrowed from the Bank. In essence, the World Bank’s policy ensures directly or indirectly that poor countries use the World Bank’s loan-program to finance all long-range projects (infrastructure) or no funding for infrastructure.
The loan program allows the World Bank to dictates the policy of these poor countries. More so, lending institutions, including the World Bank generate higher margin of profits from money lent to poor (insolvent) countries than solvent institutions. For example, a regulatory filling, by one of America’s lenders, Citi Group’s OneMain financial unit, shows that making loans to insolvent institutions can be highly profitable. Last year, OneMain’s profit increased by 31%. Further, the record shows that 66% of the 1.3 million customers were problem-customers. (Michael Corkery, NY Times, 10/22/2014).
In fact, the World Bank’s yearly profits speak volume. (http://go.worldbank.org/D74CFKTQ80) It shows billion in profits, year after year, with the exception of the few years when its shareholders and allies concluded to readjust loans of certain poor countries. So, why is the World Bank, an institution created since 1943 to assist poor countries, earning billions in profits, but its clients getting poorer? The World Bank does not just want profit, but huge profits. Remember, if the World Bank’s source of lucrative business becomes solvent, then its profits might vanish. Consequently, when poor countries can’t generate adequate revenue from consumption tax, and are deprived from receiving dividends/profits from lucrative natural resources as shareholders, they can’t construct infrastructures, etc., unless they borrow money from the World Bank.