is the IMF really like a credit union?

“You can think of it sort of like a credit union for countries”

This was the answer from Eswar Prasad talking to NPR‘s Planet Money about: “What is the IMF, anyway?” If the International Monetary Fund (IMF) is like a credit union, then democracy is like a dictatorship. Needless to say I am going to disagree strongly with Mr. Prasad and his possibly quick, false analogy to help others understand how the IMF works.

Macro/ Micro

One of the easiest differences between the IMF and a Credit Union is their scope. The IMF is very macro-economic focused. They intervene on international financial issues by lending to country governments, usually with conditions for deregulating and liberalizing markets so that they will be more open to foreign trade.  Better known as Structural Adjustment Programs (SAPs), these conditions had harsh negative effects on the populations of many developing countries as they were forced to repay loans instead of invest in health and education.

Credit Unions on the other hand are much smaller than the IMF. Some Credit Unions are large institutions, but on the whole Credit Unions are community focused. They offer great returns on invested savings, an international cooperative network of ATMs, and plenty of financing options that will bring you the most benefit as opposed to forcing you to take actions that might harm you or your family’s future.

Disparity/ Equality

Both the IMF and Credit Unions are membership style organizations. The difference is with representation.

IMF member countries are given a certain number of votes based on their “quota” with the USA as the only country able to block a supermajority vote. Much of the voting power is held by the developed, Western nations. Developing countries and emerging developed countries have a significantly smaller vote total. This representation continues to fuel inequality around the world as the rich get richer and the poor get poorer. The conditionalities associated with IMF loans generally benefit the economies of Western countries while harming those of developing countries. This unequal representation also makes it more difficult to reform the IMF because of the vote imbalance.

Credit Unions are based on one person – one vote. No matter how much or how little money you have in the Credit Union you are entitled to one vote. In the same regard the members of a Credit Union are the owners. Members’ one votes determine the policies, decisions, and leadership of the Credit Union. In the IMF, the leadership is appointed by the European Union (EU) leaders. Based on the voting disparities of the IMF the leadership is never someone who will make decisions that aren’t in the interest of the USA or EU. Not the best process to promote democracy coming from those who hold high the , if you ask me.

Monetary Capital/ Social Capital

In conclusion, the IMF and Credit Unions are far from similar. One is a multinational organization that is responsible for the world’s financial recovery as long as they will benefit the most developed countries, the other is a small-scale, democratic, cooperative financial institution that allows its member/owners to build serious social capital among their community. The IMF acts as a reactionary institution when it responds to financial crises around the world and often times perpetuates them with their SAPs and other programs. However, a Credit Union is a preventative financial institution bringing a community financial knowledge and resources before crises happen. Case in point, Credit Unions did not need any bailout and have never used tax-payer money to financially stable. The Credit Union system is self-sustaining and pushes a self-help community focus.

If our largest financial institutions, banks, the IMF, and World Bank adopted more cooperative approaches to finances and development, we wouldn’t see such disparity within our countries and communities, or around the world. A system driven by democratic process and cooperative power control can only lead to greater needs being met for a greater number of people.

imperialist footprints: the development story from the inside

Day 10 | May 21, 2007
We actually woke up on time today. It was probably because it was very difficult to sleep with sunburn. I kept tossing and turning to find the right angle to get some rest. Without the sheet it was too cold because of the AC on the sunburn, with the sheet it was too hot on some sunburned areas. Having sunburned hands I think s worse than sunburned feet or shoulders. When you even wash your hands it sends s shooting tingle through your hands. At any rate we were up and enjoyed toast and eggs for breakfast. It was a very overcast day and for once my sunglasses were not needed. Rain seemed imminent. The sky was so dark as we headed to the University for lecture. We arrived for lecture and the skies grew darker yet.

During lecture the lights flicked and soon the rain came pouring down. Our professor had to speak up to be heard over the roar of the rain on the roof. As the lecture progressed the rain seemed to increase and the ceiling began leaking profusely. Lecture was on colonialism again, with emphasis on de-colonizing and colonial legacies. Another day to zone out and relax. Sixty-eight years old, not an ounce of gray hair, and chasing 20 somethings across the African continent in his khakis, collared safari-style shirts, straw, old man hat, water bottle and bug spray clipped on his belt at the ready, he may not always hear us or understand what the Ghanaians say, but Ted Tims, Teddy Bear, T-bear will always be a great travel partner and has definitely, at his young age, not lost his passion and sense of adventure. Can you imagine 68 and still traveling the world? I sure hope I can do that and without gray hair.

As I sat in lecture I listened slightly and thought about how the colonial legacy was so strong in Ghana. The leading bank is Barclays, a prominent British bank, sponsor of the Premier League of Football in England. The tourists that I encounter are mostly from the UK and when you see an Obrooni it is most often a British accent that responds. The game of football is huge, this may not be a colonial legacy, but as I wrote before, many Ghanaians stopped for the final game in the British football league. Interestingly British Airways has the only flight that comes to Ghana from the US connections or Europe. Ghana is also marked by the English language – anglophons surrounded by francophones. The BBC is a top source for news in Ghana. The education system also is very English. One of the very prominent and important colonial legacies is religion. Almost 70% of Ghanaians are Christian and that shows from the motto and phrases pasted on the backs of taxis, trotros, trucks, and storefronts: ‘Trust God’, ‘Triumph’, ‘God’s Will’, ‘All to Him’, or ‘God is Great.’ These British footprints have a colonial legacy that is amplified by the political and economic implications of colonialism for Ghana.

Politically the Ghanaians adopted the English parliamentary system of governance. They even used to have a governor general like Canada and Australia, but eventually got rid of that stain by adopting the more American system with a Presidency along with a Parliament. The development story of Ghana has largely already been told in a earlier posting on the development of Ghana, but this is what I have been taught and seen from being in Ghana. From the colonial time period Ghana was made to produce cocoa and now they are trapped in that mono-crop (cocoa) production of raw goods. In the 1970s Ghana attempted some ISI (import substitution), but it failed to have an impact because this was just not possible with Ghana’s situation of having limited abilities for industry. From 1970 – 1980 is what is called the ‘lost decade of development’ for Ghana. Ghana began to liberalize its markets with the involvement of the IMF and World Bank and their Economic Recovery Programs (ERP). Ghana still struggled and had difficulty and was soon named an HIPC (highly indebted poor country). This title limited their possibilities for development and aid. Ghana was relieved of its HIPC status later when its debts were forgiven and it began taking, “ginger steps toward standing on our [its] own (Prof. Johnson). This is what Ghana is working on now. The ginger steps of development in this globalized economy driven world. As a few points of interest on development: the government has nothing to do with land ownership – only taxes on businesses, China is Ghana’s number one foreign aider (rogue aid? – see earlier post on subject), and so far I have only seen a handful of micro-finance and lending groups.

I have noticed that the only real developed region is the Accra region, where most ofthe people and aid organizations reside. The other areas to the north and even to the immediate south are left under-developed and neglected. Cocoa is their number one export, but if the country is to develop they need an industry established to produce a finished good with that cocoa. That is impossible however because that role is already set up in the Western industrialized countries. How is Ghana to develop? More foreign aid? I have noticed that there is an interesting relationship with Iran and some development projects. Not surprisingly the US has withdrawn its aid and has nothing to do with Ghana besides USA rice.

Our second lecture was more interesting, maybe because the lecturer was more interested in passing her knowledge to us. The topic was the role of the media in the political system and political change of Ghana. The media was huge in Ghana’s political development. It was first used to combat colonialism, then was controlled by the newly independent state government, used during this time as a public voice for dissent, and finally as a promoter and grower of democracy. In 2000 Ghana experienced, for the first time, a peaceful transition of power to a new administration. The new administration was the politicians who had opposed the government since 1992. This administration had fueled the media’s public dissent and made alliances with the media. The question now is: ‘Is the current media as critical of the new administration since it had alliances?’ Ghana has a very multi-lingual media and this allows for a more participatory democratic system and society.

After lectures we headed to Makola market. Now you see whenever we tell anyone of our Ghanaian friends that we are going to Makola market they laugh, ask us if we are serious, and then tell us ‘goodluck,’ so we were a bit afraid and interested at the same time to go. After arriving it is easy to see why we got such a response – Makola market is pure insanity of commerce. Even though Makola market may seem like pure insanity there is definitely an order and control to the confusion. In the market everything has its place, there is a section for candies, clothing, luggage, seafood, crabs, fufu, pretty much anything you are looking for in Ghana is here. This is the real super (duper) market, the commercial center of the country. Most of us just went to look and experience It was actually very fun and not at all a bad experience as friends had warned. Navigating the alleyways and the crowds and seeing the extent of the market was amazing. So far this is the only place where I have experienced the real hustle and bustle and hurry. Girls with empty bowls rush back to their stands in the alley to refill and sell more, every second seems to be a lost opportunity to sell, so I often get out of their way quickly. Women call and haggle, sellers bother Obrooni and Obibini alike to make a sale. This was the first place where I heard the call “Obrooni! what are you doing here?” We responded with ‘Obibini’ and some other Twi that we had learned to the surprise of the market women. I saw quite a few Obroonis around the market that day.

I decided to not take any pictures while in the market because it had caused problems in the past – at least until we got back on the bus. Some pictures are a little blurry. Here in Makola, as in many places in Ghana and Africa, people everything on their head. At Makola I saw a new range of this skill as boxes and goods were stacked very high and carried aloft to the numerous stands. This market was nice and more fun and much more welcoming in comparison to the ‘art market’ in Osu. Probably because not many Obroonis dare to venture inside the beautiful chaos.

We arrived back at the hostel and toured the kitchen to see how we could save some money on eating costs. We decided to eat at Fresherz down the road, a very american-style restaurant with american foods. As per Ghanaian standards, after our drinks were ordered, it took nearly two hours for everyone to get their food. It was very tasty food after waiting two hours. Joseph later took us to a nice little market to get some inexpensive food. He got a taxi to take the seven of us for just 20,000 cedis ($2). First, the taxis here are very small cars, second, it is difficult to breath with someone on your lap in a small car. Five people crammed in the back, Don on my lap and two in the front. The bumps in the road were uncomfortable, but not a bad ride otherwise. Suddenly an unmarked black car drove in front of us and stopped. “Police?” we all asked, but Joseph said no. But it was the police and they began giving the driver an earful about taking seven people, Obroonis at that, in one taxi. They threatened to take his taxi sticker and asked if 20,000 cedis was worth his taxi career. In the end it was just a lecture for our driver and we were on our way again. Ghanaian police – don’t mess with them.

As we entered the small market we noticed huge flying bugs. They were very large and interesting. However they became less interesting and more bothersome as their numbers increased rapidly and they were drawn to the market lights. Large-winged, meaty flies filled the air and swarmed the lights of the market as we attempted to buy food. In our hair, faces, and brushing our legs these flies were not done kicking until their wings fell off and they all scurried away. Joseph told us that after a big rain these bugs come out and that some people catch, fry with salt, and eat them. I had heard of this before and it sounds like a treat. Maybe I can try some here.

We frequent an internet cafe down the road a ways from out hostel. We often walk in the dark to the cafe. I noticed on this night that the american tunes played in the cafe unconsciously were stuck in my head on the walk back and unknown to me I hummed them aloud. I also realized that since we were Obroonis walking on the street in the dark that we must want a taxi ride. When a taxi is empty and wants to give you a ride they honk at you. We must have been honked at over a dozen times! Can’t an Obrooni walk on the street!