Wednesday, 16 August 2023

World Bank shouldn’t pick & choose which rights to vigorously defend, and ignore: Hidden dark side of World Bank loans

 Understanding the World Bank Group: What is the IBRD?

MUST READ:

When a neo-liberal devilish Institution disguises as an angel: World Bank cuts off all funding to Uganda over Anti-homosexuality law: Our goal is to protect sexual and gender minorities from discrimination and exclusion in the projects we finance

https://watchmanafrica.blogspot.com/2023/08/when-neo-liberal-devilish-institution.html 

 May be an illustration of text

World Bank shouldn’t pick & choose which rights to vigorously defend, and ignore

https://observer.ug/viewpoint/78875-world-bank-shouldn-t-pick-choose-which-rights-to-vigorously-defend-and-ignore 

Written by DR BUSINGYE KABUMBA

On August 8, 2023, the World Bank released a statement to the effect that Uganda’s Anti-Homosexuality Act of 2023 (the AHA) “fundamentally contradict[ed]” the Bank’s values.

It went on to state that no new public financing to Uganda would be presented to the Bank’s Executive Board of Directors until Uganda effectively demonstrated that the rights of sexual and gender minorities would be protected in the implementation of World Bank-financed projects within the country.

I think the World Bank’s approach was ill-advised, for reasons I will enumerate a little later. At the same time, I have absolutely no doubt in my mind that the parliament and president were wrong to enact the AHA. I do not think it would be very good manners for me to enumerate in detail the challenges of that Act, since I happen to be one of a number of persons who are currently challenging the law before the Constitutional Court of Uganda.

I do not refrain in this regard because it is illegal to do so as is often suggested in some legal quarters – based on the idea of the sub judice rule. The Latin phrase literally means ‘under a judge’, and broadly refers to the idea that once a matter has been placed before the court, it generally should not be discussed outside the precincts of that forum.

I do not think that this common law rule is consistent with the 1995 Constitution, particularly Article 126 (1) thereof, read together with the logic of a consistent thread of Ugandan jurisprudence in such cases as Osotraco v Attorney General and Kabandize and Others v Kampala Capital City Authority on the democratic and public foundations of judicial power.

That said, suffice to very briefly note that I think the AHA 2023 offends several substantive provisions of the Constitution, including the rights to privacy, dignity, work, access to justice, expression, assembly and others. I also think it offends the fundamental provision, under Article 7 of the Constitution, which requires the maintenance of a secular state (although this particular issue is not one presented in any of the petitions challenging the law).

Secondly, as a procedural (and in some ways also substantive matter), the law was passed in an inordinately rushed, sloppy, frenzied and haphazard manner, which offended all democratic sensibilities and all reasonable norms of public participation.

Finally, from a logical and policy perspective, the law was unnecessary given that: (a) same-sex relations were already prohibited under Section 145 of the Penal Code Act, Cap 120; and (b) its main purported objective, the protection of children, was one already met by a myriad of statutory laws, including the Children Act (as amended in 2016), the Penal Code Act (as amended in 2007) and others.

It was, and remains, quite simply, a bad law, passed in the heat of passion, without sober reflection and good judgment. In the spirit of good manners, I will leave it at that.

That said, the World Bank’s position is itself problematic. Obviously, although initially established in 1944 to support economic recovery following the end of the Second World War, it has since had to contend with the nexus between its work and broader social concerns, including human rights.

Article 1 of the Bank’s Articles of Agreement (as amended) stipulates a number of primarily economic purposes, and mandates that the Bank ‘be guided in all its decisions’ by those purposes. This is reaffirmed in Article 4 (10) which prohibits the Bank and its officers from ‘interfer[ing] in the political affairs’ of its members or being ‘influenced in their decisions by the political character’ of a member.

In terms of the same provision, ‘[o]nly economic considerations shall be relevant to their decisions, and these considerations shall be weighed impartially in order to achieve the purposes stated in Article 1’. Evidently, any human rights mandate claimed by the Bank must be one carefully, strategically and incrementally claimed and asserted.

One can contrast, in this case, the difference between the East African Court of Justice (EACJ), which has been able to claim a kind of ‘human rights-related’ jurisdiction using the rule of law and good governance provisions in the Treaty for the Establishment of the East African Community (EAC Treaty), following its decision in James Katabazi and 21 Others v Secretary General of the East African Community and Another, on the one hand; with the Southern African Development Community Tribunal (SADC Tribunal)’s gamble with the decision in Mike Campbell (Pvt) Ltd and Others v Republic of Zimbabwe, on the other.

The EACJ’s more considered, and politically savvy, approach has ensured its ability to continue being able to protect critical human rights as part of the EAC integration process (even in the absence of a specific human rights mandate).

For its part, the decision in Mike Campbell effectively marked the end of the SADC Tribunal – it was disbanded by the Summit of the Heads of State in 2012 and remains non-operational to date.

There were of course, certain political dynamics at play in the respective contexts, which might explain the differing fortunes of the two judicial bodies. Nonetheless, it seems to me that the Bank would be well-advised to examine the the incremental and studied approach of the EACJ, as a case study in the assertion of a human rights mandate within economic formations and relations.

This is especially so given the Bank’s own chequered history with regard to respect for human rights issues. On the one hand, it has historically been reticent in terms of incorporating human rights concerns into its operations, including infamously supporting the apartheid government in South Africa, notwithstanding the United Nations General Assembly Resolutions prohibiting such assistance, until it eventually capitulated to international pressure and stopped this lending in
1966; on the other, almost right from its inception, the Bank’s work has had direct and positive relevance and impact in terms of the realization of a host of rights across the world, including the rights to health, education, work, social security – and indeed, ultimately, life itself.

The Bank can build upon its work in the area of socio-economic rights and group rights, and can slowly improve its record with regard to civil and political rights. For the latter to be effective and sustainable, however, it should have a level of consistency sufficient to build legitimacy, acceptance and respect.

It is precisely with regard to this aspect – consistency – that the Bank’s position fails. Ugandans can justifiably question the absence of similar statements and interventions from the World Bank when nine people were killed during the ‘walk to work’ protests in 2011; or when over 100 people were killed by security forces in Kasese in November 2016; or with regard to the hundreds of persons routinely held and tortured in so-called ‘safe houses’; or when that most basic democratic right – the right to free and fair elections – was egregiously violated in 1996, 2001, 2006, 2011, 2016 and, most recently, 2021.

The August 8 position seems to suggest that some Ugandans’ rights are more important than those of others. This is wrong, of course. It might also breed resentment against both the World Bank and the community it seeks to protect.

There is, however, another reason why the World Bank’s approach is deeply problematic. It unhelpfully feeds into, and gives some credence to, the common narrative around the ‘foreign’ nature of the rights of sexual and gender minorities – that these rights are sourced from elsewhere and that any persons who articulate and defend any such rights are funded or supported by outsiders.

Indeed, these narratives are some of the tropes, which found their way into the AHA, in terms of language around ‘promotion’ and ‘normalization’ of same-sex relations (Section 11 of the Act). In this way also, the World Bank position might ultimately harm the very community it ostensibly defends.

Certainly, the World Bank can, and should, be responsive to human rights concerns in its work around the world. However, if it is to be effective in this effort – both from a legal and strategic perspective – it is important that its work be incremental and consistent.

In order to claim a human rights competence, it should demonstrate an understanding and appreciation of basic human rights principles, including the notion of human rights as being indivisible, interdependent and interrelated (as noted in the Vienna Declaration and Programme of Action of 1993).

It should also demonstrate a real commitment to the philosophical foundations of human rights law and practice – which might coincide, with but are not always consistent with the values, assumptions and motivations which underpin other kinds of law (including international economic law and international financial law).

As Professor Philip Alston warned in his 2002 article: ‘Resisting the merger and acquisition of human rights by trade law’, the assertion of human rights competence by non-traditional actors (such as the World Bank in this case), is not always benign.

If the World Bank wants to ‘do human rights’, it should demonstrate an ability – and willingness – to do so well, and seriously. In this regard, it can begin by not appearing to pick and choose which rights to vigorously defend and which ones to ignore.

That is not the way human rights theory and practice work.

The writer is senior lecturer and acting director of the Human Rights and Peace Centre at the School of Law, Makerere University, where he teaches Constitutional Law and Legal Philosophy


Hidden dark side of World Bank loans

https://observer.ug/news/headlines/78871-hidden-dark-side-of-world-bank-loans 

Written by MARK KIDAMBA

The golden rule: He who holds the gold makes the rules was recently put into play when the World Bank, one of Uganda’s major financiers, in a statement publicized on August 8, 2023, cut all new funding to Uganda for passing the Anti-Homosexuality Act.

This action followed a directive signed by eleven members of the USA Congress in a letter dated July 25, 2023, urging the newly appointed president of the World Bank Ajay Banga to “immediately postpone and suspend all current lending to Uganda until the recent Anti-Homosexuality Act, signed by President Yoweri Museveni on May 29, 2023, is struck down”.

 

The release of this statement threw the country into a frenzy, prompting responses from President Museveni to assure his fellow countrymen that “Uganda will develop with or without loans”.

Other technocrats like the permanent secretary and secretary to the Treasury of Uganda Ramathan Ggoobi in a pique muttered that BRICS provides a good opportunity for the global South and gives developing countries like Uganda viable alternatives in pursuit of their development agenda as per the ministry of Finance’s official Twitter page.

Loud whispers of cutting down the recently passed national budget have also gotten louder in the corridors of the ministry of Finance. The World Bank’s firm stand on homosexuality doesn’t come as a surprise since one of its founding fathers, reknowned economist John Maynard Keynes was openly gay, meeting his first boyfriend Alfred Knox while both were studying at Eton.

This gives nuance to the reality that homosexuality and ‘sexual and gender minorities’ are a virtue deeply ingrained in the bank’s gene. That said, over the years the World Bank’s revered loans have come shrouded in difficulty such as: up until 2018, the bank has been charging Uganda very high interest on its loans irrespective of her political and economic situation.

As an example, with Uganda three years removed from the bush war in 1989, the World Bank charged Uganda its highest interest rate to date of 40 per cent, and then went ahead to impose structural adjusted programs [SAPs] as conditions for lending money to Uganda.

SAPs rolled out the selling of government-owned entities and led to the retrenchment of many nationals. To this day, the country hasn’t fully recovered from this egregious strategy. The international lender has justified these high interest rates the world over by quoting its credit ratings protocol as the reason for expensive loans. Uganda has poor/negative credit ratings: B for S&P Global, B2 for Moody’s, and B+ for Fitch ratings.

 

This directly translates in it borrowing expensively with interest charged in years 1986 [33.3 per cent], 1988 [35 per cent], 2012 [26.2 per cent], 2016 [23.9 per cent], and so forth. Paradoxically, Uganda is charged a higher interest rate on loans than Burundi which is considered the world’s poorest country and has no credit rating from international agencies: S&P Global, Moody’s and Fitch.

In 2012, Burundi borrowed at a rate of 11.8 per cent; in 2016, 14.2 per cent; and 2018, 14.8 per cent; all lower than the rates Uganda got World Bank loans in the same years. This defeats the principle of the international financier’s lending based on credit ratings which it continually uses to issue loans to the USA, and UK at incredibly low rates of 0.5 per cent in 2012 and 2014 [UK], and 3.5 per cent in 2020 and 3.4 per cent in 2021 for the USA.

Not known to many, World Bank loans take years to materialize. Afsaneh Beschloss, the former treasurer and chief investment officer of the World Bank, revealed: “For example, getting a loan from World Bank takes seven years on average”.

This, she mentioned on Bloomberg television in an April 2023 interview. This is more time than Uganda would need to take out a much-needed loan from a bank, or corporation. What is more disturbing is that even with the bulging debt of the international lender’s biggest customer, Africa, the World Bank is reluctant to restructure the continent’s loans, Uganda’s inclusive. Debt restructuring is when the lender agrees to renegotiate the terms of payments for the borrower.

When the 13th World Bank president David Malpass was asked in a January 2023 Bloomberg television interview about China’s request to the World Bank to “eat some losses” in debt restructurings in Zambia, he said: “There’s not a mechanism to do that...” translated as the World Bank has no renegotiation policy with debtors even when they land on hard times.

World Bank loans are famous for tactfully being directed at projects that don’t matter to the lowly but the affluent who are corrupt. In September 2020, the bank approved $300 million to boost service delivery in education, health, water and environment through local governments in Uganda.

Monies like this end up in the pockets of the affluent and corrupt who short-change these projects for their benefit. The World Bank knows this but continues to issue credit with minimal shepherding, knowing that whatever the outcome, Uganda will be liable to pay these loans, placing the country in a debt trap which they later use as leverage to arm-twist it for resources, and political capital.

As it is, the effect of the monies injected into Uganda hasn’t been felt as many in the country still study under trees; hospitals and health centres are in a deplorable state with no medicine, and millions have no access to safe water in Uganda.

According to worldbank.org in the last five years; FY 2018 to FY 2023, Uganda has received $3,291.2 million [Shs 12.1 trillion] in loans, and $1,089.6 million [over Shs 4 trillion] in grants bringing the total amount to $4,380.18 million [Shs 16.1 trillion] in funds got from the World Bank.

To the World Bank’s applause, during the said period, it has extended credit to Uganda at zero to low interest in what is called IDA credits. There’s no doubt that the cutting off of such amounts of dollars from the Ugandan economy is going to have colossal effects.

Like, the dropping in value of the Uganda shilling against the USA dollar because there will be less dollars in circulation, which ultimately raises its value against the shilling — inflation. With an insufficient USA dollar in-flow, and the absence of the buffer of a strong foreign currency reserve, the shilling is going to significantly drop against the dollar, making international trade expensive and local borrowing costly since the central bank will have to raise its lending rate(s) to control inflation.

This is going to result in the shutting down of businesses, unemployment, increased cost of living, and a ferocious tax regime as government is most likely going to raise tax rates to increase its revenue to compensate for the void left by World Bank funding.

Be that as it may, the dark [World Bank] cloud comes with a silver lining, China. The Red Dragon has emerged as a viable creditor lending over $1 trillion in the last decade to Africa, Latin America and Asia. Even when their debt contracts have been stricter than those of the other creditors, China is known not to exercise its loan rights.

This has won over the poor and middle-income countries especially because China treats them as equals. The Red Dragon is known to be flexible with debt payment because they have loans that enable borrowers to pay back in minerals, metals, and oil. This floats Africa’s boat. So, Uganda is most likely going to run into the arms of China for credit.

This threatens the superiority, and ideology of the West. When I reached out to Bernard Tabaire, the external affairs officer of the World Bank Group in Uganda, with respect to the threat posed by China as a ‘dangerous substitute’ creditor he referred me to David Theis, the press secretary and spokesperson of the World Bank Group, who met my queries with radio silence.

It’s in this regard that I reckon that the Mexican standoff between Uganda and the World Bank will not last long because Uganda has credit options: China, Russia, even the on-the-horizon BRICS, and the moral support of Africa.

This poses a threat to the West who are major players in the World Bank. Also, the international lender has dollars which are more useful and productive to them in the hands of poor countries than they are sitting in coffers in Washington.