Discuss the impacts of Foreign financial institutions in Africa

International financial institutions are established by two or more countries and subscribe to international law. The shareholders of this institutions include; governments (member states) and international institutions. Functions of these international financial institutions include;
Financial transactions, including, investments, loans and deposits to member states.
Advising, funding and assisting in implementation of projects to developing (African) states.
Reduction of global poverty and improving of people’s living standards.
Provision of technical advisory assistance on research of developmental issues.
The basic function of these institutions is to provide economic liquidity and promote a higher level of economic activity than would otherwise be possible. The various types of international financial institutions include; Commercial banks, Investment banks, Multi-lateral development banks, an example is the world bank and the international fund for agricultural development.
The institutional roles of these organizations include socio-economic development of developing states (African states) and transitional economies. These objectives are achieved through grants, loans and credits by the IFI fraternity.
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ANALYSIS AND PROBLEMATISATION.
With the fact that these international financial institutions are created basically to assist in the socio-economic development of developing states (African states), poverty and underdevelopment levels still remain at high levels in Africa. These can be attributed to the fact that these institutions are majorly controlled by super power countries that lack proper knowledge on the environment and socio-economic conditions in Africa (The United States of America has the highest voting power in the world bank). The issuance of conditional loans and investments to the continent has also been a hindrance to development.
These institutions are characterized by membership of both donor and borrowing countries (developing states).
DATA AND IMPACTS
The impacts of these financial institutions to Africa have both the positives and negatives aspects attached to it, and include the following:
Promotion of regional integration and cooperation through construction of regional infrastructure and common resources cutting across different African states, for example the Lamu port South Sudan Ethiopia road LAPPSET project that cuts across Kenya, South Sudan and Ethiopia that is being funded partly by the development bank of south Africa. These will promote regional integration and cooperation due to the fact that there will be increased movement of goods and people across the countries.
On infrastructure and energy in the continent, the international financial institutions have greatly improved the conditions of roads, dams, bridges among others. This has ensured that Africa has been on the rise infrastructural-wise hence promoting development on other areas in the continent. An example is the 150-million-dollar solar energy project by world bank in Kenya that has seen remote areas of the country become accessible through lighting of common places such as roads and market areas, thus boosting security and the economy through trade. This project was approved by the World Bank in Washington on July 26, 2017.
Agriculture being a major economic activity in the continent has also been influenced positively by these international financial institutions. The international fund for agricultural development specifically created for empowerment of people in rural areas to improve their food security, nutrition of their families and increase their incomes. Agricultural technologies such as genetic modified organisms have also been issued out by these institutions for the betterment of agricultural produce. The cost of doing agri-business has also decreased in this aspect.
Employment opportunities have been created by these the international financial institutions across the continent. This is so due to the fact that these institutions actually set up their operating bases in Africa hence seek out for the employment of professionals and technocrats to help in management of their day to day activities in the continent. Also projects carried out by world bank in Africa such as the street light project has helped in creating employment since the installation and maintenance of these lights will require man power and labor.
Education and literacy levels have also been boosted by these the international financial institutions. Projects that include construction of schools across the continent have been funded by these the international financial institutions hence contributing increase in literacy levels in the continent. For example; the secondary education quality improvement project by world bank in Kenya to improve learning in a secondary school and the transition from primary to secondary education in targeted areas. This project by the world bank on Kenya’s education system will improve the quality of education in Kenya hence we can say it will be result oriented and market based. In September 2017, the world bank gave Kenya’s education boost a 200-million-dollar boost to improve the learning of 1.2 million Kenyan students in public primary and secondary schools. Hence generally the education in Africa has been boosted by the international financial institutions, in this case by the world bank.
The international financial institutions have also brought about democracy in Africa in the following regards: in 1993, the International Monetary Fund loan was pointed out by many political commentators as having been a key factor in the shift in the Africa National Congress economic policy. This occurred in the eve of democratic elections in south Africa. Also the International Monetary Fund has also encouraged African states to embraced democracy as a means of placing checks and balances that will help get rid of corruption in the continent. These institutions also tend not to support dictatorship and undermining democracy hence they purport not to issue loans to (African) states that embrace dictatorship.
The international financial institutions also have played a major role in promotion of environmental conservation in the African continent through promotion of environmental conservationists. On June 1, 2017 the world bank launched the green African cities project in Dar es salaam. The project seeks protect and conserve the environmental assets of cities across Africa. This in turn ends up increasing the livability and productivity of these cities and also improve tourism opportunities, and enhance resilience to the impacts of climate change. The global environment facility offers developing countries (Africa) grants to promote environmental conservation and promote sustainable livelihoods.
The health care system in the continent has also been given a major boost by the international financial institutions in many regards, for example, funding the construction of dispensaries in remote parts of the continent boosting public health and also including hospitals and research laboratories across the continent. Donation of pharmaceutical drugs to the African states have been increased by the world bank. The HIV/AIDS pandemic has also been managed by these international financial institutions through awareness projects of the virus.
However, these international financial institutions also bring about public debts to African states. African states end up having budget deficits due to excess borrowing. The institutions seem not to understand Africa’s socio-economic ways hence may end up funding the wrong projects that become numb and burdensome to the public through increased taxation. IMF had been pressing Kenya to put VAT on petroleum products as part of a wider plan to increase revenue, reduce budget deficits and ultimately slow down public debt pile up.
The international financial institutions have also brought up neo-colonialism and imperialism in the African continent. Thus African states become slaves to these financial institutions which are ran by donor countries (super-power states). The international financial institutions give out loans and grants on conditions which are not favorable to the African states. They end up deterring the objectives and outlines of domestic financial institutions, such us, The African Development Bank.

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jerop5614 answered the question on January 15, 2019 at 06:08