Nairobi — A plan by the International Monetary Fund (IMF) to shift the relative voting power of some of its 184 member-nations will almost certainly be of no benefit to East African countries, which will remain heavily dependent on loans from the global financial institution.
But some analysts say the IMF itself is becoming increasingly irrelevant to parts of the developing world. And, they add, the fund's waning power may presage a day when it no longer exercises decisive control over the economies and budgets of poor countries such as Kenya, Tanzania and Uganda.
IMF officials agreed at the fund's recent spring meetings in Washington to seek approval, in September, of a plan to increase the voting strength of economic top-tier developing countries, including China, South Korea, Mexico and Turkey.
The move is being interpreted in many quarters as an attempt to shore up the IMF's dwindling influence in much of Asia and Latin America. The current allocation of votes on the IMF's executive board reflects the global power distribution that prevailed at the end of World War II, when the IMF and World Bank were established.
The United States thus has by far the single-largest share of votes (17 per cent), followed by Japan with 6.1 per cent, Germany with 6 per cent, and France and the United Kingdom, each controlling almost 5 per cent of the board's total votes.
China, an emerging economic titan, is allocated less than 3 per cent of total votes, while South Korea, another Asian tiger, has less than 1 per cent. Kenya, Tanzania and Uganda hold minuscule voting shares in the IMF's decision-making body. The three East African nations are part of a group of 19 sub-Saharan states with a combined vote of 3 per cent. Another 24 black African countries are given a total voting share of 1.4 per cent.
"Sub-Saharan Africa has a smaller share of the IMF vote than countries such as the UK or France," notes Romily Greenhill, a policy analyst with Action Aid International. "Unless the rich countries are prepared to give Africa a greater say in how the IMF is run, the promises they made in 2005 to help Africa will start looking increasingly hollow," adds the London-based non-governmental official.
But it is "unimaginable" that the rich countries will consent to enhance Africa's power within the fund as part of the planned shifts in voting power, says Mark Weisbrot, an economist with the Washington-based Centre for Economic and Policy Research.
The IMF's most powerful member states will not agree to give the weakest and most dependent members a greater say in how the fund engineers their economies, Weisbrot adds.
Kenya, Tanzania and Uganda will thus have to continue to meet stringent IMF conditions in order to qualify for loans not only from the fund itself and the World Bank, but also from the African Development Bank and private lending institutions, Weisbrot says.
The East African countries lack the leverage to force a shift in IMF policy-making. And part of their weakness stems from political rather than economic factors, suggests Rick Rowden, an analyst with Action Aid's Washington chapter.
Many Asian nations have already acquired the leverage needed to ignore the IMF's demands, Weisbrot points out. As part of their recovery from a region-wide financial crisis in the late 1990s, these growing economic powerhouses built up enormous currency reserves precisely so they would never again have to turn to the IMF for heavily conditioned loans.
Much poorer countries may also be starting to turn their back on the IMF. Bolivia, which is categorised by the fund as a "heavily indebted poor country," announced recently that it will allow its IMF programme to expire. Bolivia's bold move was probably motivated in part by a calculation that it will be able to borrow large sums on favourable terms from oil-rich Venezuela, Weisbrot suggests.
Led by socialist Hugo Chavez, Venezuela is acting to establish itself as an alternative source of assistance for poor countries in Latin America and beyond, Weisbrot notes. Venezuela plans, for example, to greatly increase its diplomatic presence in black Africa. It currently posts ambassadors to only three sub-Saharan states: Tanzania, Nigeria and South Africa. That number will eventually increase to 18, according to Venezuela's deputy Foreign minister for Africa, Reinaldo Bolivar. Kenya may well be among the countries that will come to share in the Venezuelan largesse. The two nations signed an agreement in February calling for closer co-operation in the fields of energy, trade and international affairs.
The actions of a leftist regime in Venezuela committed to altering global power relations is only one of the factors threatening to put an end to the IMF's dominance. "An inexorable trend of the 21st century is that citizens are increasingly demanding participation, greater representation, total transparency and effective mechanisms of accountability on the part of powerful institutions like the IMF," Rowden says. "There's a powerful movement for bottom-up decision-making rather than the top-down model that the IMF follows."
Speaking personally and not, he says, on behalf of Action Aid, Rowden likens the IMF's current plight to that of European monarchs 200 years ago.
"The way the IMF is scrambling now to hold onto its power must be like the response of those monarchs when they saw democracy coming," Rowden says.