Tag: Economy & Trade

Rich Continent, Poor People — Global Issues

  • Opinion by Jomo Kwame Sundaram (kuala lumpur, malaysia)
  • Inter Press Service

KUALA LUMPUR, Malaysia, May 03 (IPS) – Capital flight from the global South is immense, with widespread adverse effects. A new book proposes measures to curb, even reverse capital flight from Africa. It also offers pragmatic lessons for many developing countries.

Out of Africa

On the trail of capital flight from Africa extends pioneering work begun much earlier. The editors – Leonce Ndikumana and James Boyce – estimate Sub-Saharan Africa (SSA) has lost more than US$2 trillion to capital flight in the last half century!

Leonce Ndikumana

SSA currently loses US$65 billion annually – more than yearly official development assistance (ODA) inflows. The book’s studies carefully investigate natural resource exploitation – of South African minerals, Ivorian cocoa, and Angolan oil and diamonds.

Such forensic country analyses are crucial to more effectively check capital flight. Outflows since the 1980s from the three countries have been massive: US$103 billion from Angola, US$55 billion from Cote d’Ivoire, and US$329 billion from South Africa in 2018 dollars.

Capital flight has been much more than cumulative external debt. Annual outflows were between 3.3% and 5.3% of national income. Nigeria, South Africa and Angola account for the most capital outflows from SSA, with Cote d’Ivoire seventh.

Resource booms

As governments get more revenue from natural resources, the fiscal ‘social contract’ is eroded. When people pay taxes, they expect state spending to benefit the public. But with more revenue from resources – via state monopolies, royalties and taxes – governments become less accountable to their own citizens.

Gaining and maintaining access to foreign credit has similar effects. Developing country governments then focus on ingratiating themselves with friendly foreign donor governments to get ODA, and on enhancing their credit ratings.

Hence, such regimes have less political need to provide ‘public goods’, including services, let alone accelerate social progress. Thus, erosion of the fiscal ‘social contract’ undermines not only public wellbeing, but also state legitimacy.

James K. Boyce

To secure power, ruling cliques often rely on ‘clientelism’ – patronage or patron-client relations – typically on regional, ethnic, tribal, religious or sectarian lines. Their regimes inevitably provoke dissent – including oppositional ethno-populism and civil unrest, even armed insurgencies.

Unsurprisingly, such regimes believe their choices are limited. Another option is repression – which typically rises as the status quo is threatened. The resulting sense of insecurity spreads from the public to the elite, worsening capital flight.

Exploiting valuable natural resources not only generates export earnings, but also attracts foreign investments. One result is ‘Dutch disease’ as the national currency rises in value – reducing other exports and jobs, inevitably hurting development prospects.

Thus, vast private fortunes have been made and illicitly transferred abroad. Ruling elites and their allies rarely only rely on either state or market to become richer. The book shows how both state and market strengthen private and personal power and influence.

Plundering Africa

The book’s case studies show how resource extraction has been central to capital flight. In all three countries, the efficacy of fiscal policy tools – especially to foster investments for development – has been undermined.

Outflows have increased with economic liberalization, as unrecorded financial outflows – via the current account – grow with freer trade. Thus, trade-related financial transactions enable corruption and capital flight.

In Côte d’Ivoire – the world’s top cocoa producer – rents initially came from supply chains connecting farmers to consumers. Corrupt partnerships – connecting domestic elites to foreign businesses – have been crucial to such arrangements.

Thus, natural resource primary commodity exports have enabled illicit capital flows. Ivorian cocoa exports have been consistently under-reported – with trade statistics of major importers showing massive under-invoicing by exporters.

Post-colonial political settlements have given a few privileged access to resource rents. With capital flight thus enabled, successive Ivorian regimes have been less obliged to spend more on development or public wellbeing.

Due to the cocoa boom, the post-colonial ‘Ivorian miracle’ ended when prices fell. The bust triggered a political crisis, culminating in civil war. But the crunch also meant the country could no longer service its foreign debt.

In Angola too, natural resources worsened its protracted civil wars. After these ruinous conflicts, oil rents enriched the triumphant nepotistic regime. This enabled the control to gain control of more, even as most Angolans continued to live in destitution.

Angola’s massive oil exports mainly benefited the small elite of cronies around the president. They failed to develop the economy or improve most lives. All this has been enabled by ‘helpful’ professionals who have enriched themselves doing so.

While benefiting its elite and foreign transnationals, Angola’s ‘oil curse’ has blocked balanced and sustainable development of its economy. Despite rapidly depleting its oil reserves, Angola and most Angolans have benefited little.

South Africa – SSA’s second largest economy after Nigeria – seems less reliant on natural resources. Post-apartheid economic liberalization has enabled capital flight as private corporate interests – especially the influential minerals-energy complex – quickly took advantage of the new dispensation.

By under-invoicing their exports, mineral interests have been engaged in massive capital flight and tax evasion. Meanwhile, business cronies have enriched themselves in new ways, e.g., in the state’s electric power sector. Such abuses were exposed by the Gupta family scandal, leading to then President Jacob Zuma’s downfall.

Stemming capital flight

‘State capture’ by politically influential nationals have undermined government regulatory capacities with help from transnational enablers. Ostensible ‘good governance’ reforms have enabled capital flight and tax evasion – by undermining ‘developmental governance’, including prudential regulation.

Institutional environments, mechanisms and enablers facilitate capital flight, tax evasion and wealth accumulation offshore. With often complex, varied and changing facilitation, capital flight has shifted massive wealth abroad for elites.

Transnational financial networks have eased capital outflows – at the expense of productive investments, good jobs and social wellbeing. Capital flight has worsened financing, including budgetary gaps – aggravating related social deprivations.

Wealth creation enhances the economic pie, but distribution depends on who appropriates it. Improved understanding of such varied and ever-changing relations of appropriation is crucial to effectively curb this haemorrhage.

Greater awareness should inspire and inform better measures to check capital flight from the global South. Instead of the Washington Consensus ‘good governance’ mantra, a developmental governance agenda is needed.

Hence, curbing capital flight is crucial for financing sustainable development. Checking capital flight and related abuses – such as trade mis-invoicing, money laundering, tax evasion and public asset acquisition by elites – requires well-coordinated efforts at both national and international levels.

All researchers, policymakers and regulators will gain from the book’s forensic analyses of financial, fiscal and other such abuses. International financial institutions now have little excuse for continuing to enable the capital flight and tax evasion still bleeding the global South.

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© Inter Press Service (2022) — All Rights ReservedOriginal source: Inter Press Service



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Bringing Seeds of Hope to Farmers — Global Issues

  • Opinion by Paul Teng, Genevieve Donnellon-May (singapore)
  • Inter Press Service

SINGAPORE, May 02 (IPS) – Amidst a backdrop of rising food insecurity worldwide and a global food supply chain crisis, many countries are attempting to increase the level of food self-production. One improved input for farming which is receiving renewed attention is improved seed. The two most populous countries in the world, China and India, have recently made ground-breaking moves to improve their competitive position by developing new seeds which will improve their food production and increase resilience to climate change. So far, in 2022, new regulations on using biotechnology (genetic modification and gene editing) have been put in place by both countries to ultimately allow smallholder farmers to benefit from these new seeds.

Paul Teng

The COVID pandemic and, more recently, the Ukraine-Russia war have significantly disrupted food production and supply chains for food and farm inputs. Fears are growing about reduced crop planting by farmers in developing countries and reduced yields due to the lesser use of high-priced fertilizers. Apart from fertilizers, supply chain disruptions affect all inputs needed for farming, including seeds. The seed is the first link in the food chain.

The availability and access to seeds are essential to farmers, particularly in developing countries or areas affected by droughts and other disasters, giving rise to the concept of “seed security, which the UN FAO defines as the “ready access by rural households, particularly farmers and farming communities, to adequate quantities of quality seed and planting materials of crop varieties, adapted to their agro-ecological conditions and socioeconomic needs, at planting time, under normal and abnormal weather conditions.” In many developing countries, quality seed is commonly produced by companies operating under public scrutiny.

The importance of having reliable supplies of improved seeds for farmers has been particularly highlighted in the world’s most populous country, China, where seeds are high on the policy agenda.

In early April 2022, Chinese President Xi Jinping called for working toward food self-sufficiency and developing the country’s seed industry during a visit to a seed laboratory in Hainan Province, southern China. He noted that China’s food security could only be safeguarded when seed resources are firmly held in its own hands. President Xi’s comments come at a time when many countries aim to increase their self-production of food in anticipation of disruptions in supply chains such as those caused by the Ukraine-Russia crisis and the COVID pandemic.

Genevieve Donnellon-May

President Xi’s comments fit in the broader context of seed and food, issues that will only continue to grow in importance. They come at a time when there is rising food insecurity worldwide and a looming global food crisis brought on by the Ukraine-Russia War, a worsening geopolitical environment and growing vulnerability of the global food supply chains due to accelerated climate change impacts and Covid-19-related disruptions.

All the above background factors have led China and India to make important moves to tap a proven tool for developing new crop varieties, namely biotechnology.

In April 2022, China’s agriculture ministry announced plans for the first time after many years of deliberations to approve two new genetically modified corn varieties developed by the Syngenta Group. Earlier, In January 2022, China published new guidelines for the approval of gene-edited plants, paving the way for faster improvements to important food security crops. And this came amid a raft of measures to overhaul China’s seed industry, seen as a weak link in efforts to ensure it can feed the world’s biggest population. China’s Minister of Agriculture and Rural Affairs, Tang Renjian, had likened seeds to the “computer chips” of agriculture.

In an unrelated parallel development, India approved a key change in rules at the end of March 2022 to allow genome-edited plants or organisms without any “foreign” genes to be subjected to a different regulatory process than the one applied to genetically engineered products. As in China, this is anticipated to lead to faster development of new crop varieties that can meet the challenges of climate change and higher yields.

However, not all interested parties support the use of biotechnology to develop new seeds or patenting new crop varieties. Although the evidence is strong that multinational and domestic seed companies have played a major role in lifting crop production through their improved seeds, this has also led to concerns about the control that the private sector may have over this important input for food production. And related to this issue of control of seeds is the patenting of new seeds.

There has been a rise in ‘seed activism‘ and interest in seed sovereignty as part of the pushback against the modern agricultural system that is supported by patented seeds such as hybrids. This pushback has been helmed by groups which exploit the fear (often speculative) that by having control over seeds, a handful of multinational companies, rather than farmers or countries, have control over the global food supply. This omits the reality that farmers have the right to choose whatever seeds to plant and even keep their own seeds if desired. These groups have also failed to recognize that investments to innovate and produce new seeds would not have been possible without adequate protection of seeds as intellectual property. Countries like China and India realise the importance of promoting innovations in the seed industry.

China, in particular, has announced that it aims to revitalize the seed sector, encourage germplasm collection, and strengthen intellectual property protection in the sector. In China, views on the importance of seeds in food security are reflected in various domestic policies such as in 2022’s “No 1 Central Policy Document”, the country’s agricultural blueprint. A top policy priority is the development of the seed industry in China.

The issues of seed sovereignty based on farmer-saved seed, when balanced against the track record of improved seeds from companies which give high yields, are complex. But in the final analysis, farmers will choose the seeds that give them the most assured yields under risky conditions, even if they have to pay for such seeds. This has been the case with almost all the developed and developing countries with food surpluses for export, such as the U.S.A., Canada, Brazil and Argentina. And consumers, as well as food importers are those who benefit by there being more food at affordable prices.

The first “Green Revolution” in Asia which took off in the 1970s was based on improved seeds of wheat and rice, bred using technologies which were novel at that time. However, towards the latter part of the last millennium, the need for more novel technologies to improve crops became obvious as yield gains were stagnating in many crops. The challenges facing all smallholder farmers arising from changes in climate, pests and natural resource depletion are becoming more intense and frequent. And unless new seeds are developed and made available to farmers in shorter timeframes, it is the consuming public that will suffer the consequences of reduced, unreliable food supply and higher prices.

The conundrum is how to balance local ownership of seed sources which are commonly unimproved and low-yielding with improved high-yielding seeds developed by seed companies (either domestic or multinational) using modern science. Ultimately, smallholder farmers worldwide deserve new “seeds of hope”.

Paul Teng is Adjunct Senior Fellow, Centre for Non-Traditional Security Studies at Nanyang Technological University Singapore. He has worked in the Asia Pacific region on agri-food issues for over thirty years, with international organizations, academia and the private sector.

Genevieve Donnellon-May is a master’s student in Water Science, Policy and Management at the University of Oxford. Genevieve’s research interests include China, Africa, transboundary governance, and the food-energy-water nexus.

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Indigenous Women in Mexico Take United Stance Against Inequality — Global Issues

Every other Tuesday, a working group of Mayan women meets to review the organization and progress of their food saving and production project in Uayma, in the state of Yucatán in southeastern Mexico. CREDIT: Courtesy of the Ko’ox Tani Foundation
  • by Emilio Godoy (uayma, mexico)
  • Inter Press Service

UAYMA, Mexico, Apr 26 (IPS) – Every other Tuesday at 5:00 p.m. sharp, a group of 26 Mexican women meet for an hour to discuss the progress of their work and immediate tasks. Anyone who arrives late must pay a fine of about 25 cents on the dollar.

The collective has organized in the municipality of Uayma (which means “Not here” in the Mayan language) to learn agroecological practices, as well as how to save money and produce food for family consumption and the sale of surpluses.

“We have to be responsible. With savings we can do a little more,” María Petul, a married Mayan indigenous mother of two and a member of the group “Lool beh” (“Flower of the road” in Mayan), told IPS in this municipality of just over 4,000 inhabitants, 1,470 kilometers southeast of Mexico City in the state of Yucatán, on the Yucatán peninsula.

The home garden “gives me enough to eat and sell, it helps me out,” said Petul as she walked through her small garden where she grows habanero peppers (Capsicum chinense, traditional in the area), radishes and tomatoes, surrounded by a few trees, including a banana tree whose fruit will ripen in a few weeks and some chickens that roam around the earthen courtyard.

The face of Norma Tzuc, who is also married with two daughters, lights up with enthusiasm when she talks about the project. “I am very happy. We now have an income. It’s exciting to be able to help my family. Other groups already have experience and tell us about what they’ve been doing,” Tzuc told IPS.

The two women and the rest of their companions, whose mother tongue is Mayan, participate in the project “Women saving to address climate change”, run by the non-governmental Ko’ox Tani Foundation (“Let’s Go Ahead”, in Mayan), dedicated to community development and social inclusion, based in Merida, the state capital.

This phase of the project is endowed with some 100,000 dollars from the Commission for Environmental Cooperation (CEC), the non-binding environmental arm of the North American Free Trade Agreement (NAFTA), formed in 1994 by Canada, the United States and Mexico and replaced in 2020 by another trilateral agreement.

The initiative got off the ground in February and will last two years, with the aim of training some 250 people living in extreme poverty, mostly women, in six locations in the state of Yucatán.

The maximum savings for each woman in the group is about 12 dollars every two weeks and the minimum is 2.50 dollars, and they can withdraw the accumulated savings to invest in inputs or animals, or for emergencies, with the agreement of the group. Through the project, the women will receive seeds, agricultural inputs and poultry, so that they can install vegetable gardens and chicken coops on their land.

The women write down the quotas in a white notebook and deposit the savings in a gray box, kept in the house of the group’s president.

José Torre, project director of the Ko’ox Tani Foundation, explained that the main areas of entrepreneurship are: community development, food security, livelihoods and human development.

“What we have seen over time is that the savings meetings become a space for human development, in which they find support and solidarity from their peers, make friends and build trust,” he told IPS during a tour of the homes of some of the savings group participants in Uayma.

The basis for the new initiative in this locality is a similar program implemented between 2018 and 2021 in other Yucatecan municipalities, in which the organization worked with 1400 families.

María Petul, a Mayan indigenous woman, plants chili peppers, tomatoes, radishes and medicinal herbs in the vegetable garden in the courtyard of her home in Uayma, in the southeastern Mexican state of Yucatán. CREDIT: Emilio Godoy/IPS

Unequal oasis

Yucatan, a region home to 2.28 million people, suffers from a high degree of social backwardness, with 34 percent of the population living in moderate poverty, 33 percent suffering unmet needs, 5.5 percent experiencing income vulnerability and almost seven percent living in extreme poverty.

The COVID-19 pandemic that hit this Latin American country in February 2020 exacerbated these conditions in a state that depends on agriculture, tourism and services, similar to the other two states that make up the Yucatán Peninsula: Campeche and Quintana Roo.

Inequality is also a huge problem in the state, although the Gini Index dropped from 0.51 in 2014 to 0.45, according to a 2018 government report, based on data from 2016 (the latest year available). The Gini coefficient, where 1 indicates the maximum inequality and 0 the greatest equality, is used to calculate income inequality.

The situation of indigenous women is worse, as they face marginalization, discrimination, violence, land dispossession and lack of access to public services.

More than one million indigenous people live in the state.

Women participating in a project funded by the North American Commission for Environmental Cooperation record their savings in a white notebook and deposit them in a gray box. Mayan indigenous woman Norma Tzuc belongs to a group taking part in the initiative in Uayma, in the southeastern Mexican state of Yucatán. CREDIT: Emilio Godoy/IPS

Climate crisis, yet another vulnerability

Itza Castañeda, director of equity at the non-governmental World Resources Institute (WRI), highlights the persistence of structural inequalities in the peninsula that exacerbate the effects of the climate crisis.

“In the three states there is greater inequality between men and women. This stands in the way of women’s participation and decision-making. Furthermore, the existing evidence shows that there are groups in conditions of greater vulnerability to climate impacts,” she told IPS from the city of Tepoztlán, near Mexico City.

She added that “climate change accentuates existing inequalities, but a differentiated impact assessment is lacking.”

Official data indicate that there are almost 17 million indigenous people in Mexico, representing 13 percent of the total population, of which six million are women.

Of indigenous households, almost a quarter are headed by women, while 65 percent of indigenous girls and women aged 12 and over perform unpaid work compared to 35 percent of indigenous men – a sign of the inequality in the system of domestic and care work.

To add to their hardships, the Yucatan region is highly vulnerable to the effects of the climate crisis, such as droughts, devastating storms and rising sea levels. In June 2021, tropical storm Cristobal caused the flooding of Uayma, where three women’s groups are operating under the savings system.

For that reason, the project includes a risk management and hurricane early warning system.

The Mexican government is building a National Care System, but the involvement of indigenous women and the benefits for them are still unclear.

Petul looks excitedly at the crops planted on her land and dreams of a larger garden, with more plants and more chickens roaming around, and perhaps a pig to be fattened. She also thinks about the possibility of emulating women from previous groups who have set up small stores with their savings.

“They will lay eggs and we can eat them or sell them. With the savings we can also buy roosters, in the market chicks are expensive,” said Petul, brimming with hope, who in addition to taking care of her home and family sells vegetables.

Her neighbor Tzuc, who until now has been a homemaker, said that the women in her group have to take into account the effects of climate change. “It has been very hot, hotter than before, and there is drought. Fortunately, we have water, but we have to take care of it,” she said.

For his part, Torre underscored the results of the savings groups. The women “left extreme poverty behind. The pandemic hit hard, because there were families who had businesses and stopped selling. The organization gave them resilience,” he said.

In addition, a major achievement is that the households that have already completed the project continue to save, regularly attend meetings and have kept producing food.

© Inter Press Service (2022) — All Rights ReservedOriginal source: Inter Press Service

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