Multinational Monitor

SEP/OCT 2006
VOL 27 No. 5


Greasing the Deal: A Royalty Scam
by Mandy Smithberger

Not Very Sporting: Outdoor Sporting Goods Retail Subsidy Scam
by Greg LeRoy

Relocation Racket: How Relocation Consultants Pit Cities and States Against Each Other
by Greg LeRoy

South Africa Embraces Corporate Welfare: Mega Deal Subsidies Over Services for the Poor
by Patrick Bond

The Corporate Beneficiaries of the Medicare Drug Benefit
by Dean Baker

Public Funds Up in Flames: The Incineration Industry Seeks Renewable Energy Subsidies
by Monica Wilson

Green Mountain's Other Faces: The Dirty Side of Clean Energy
by Andrew Wheat


The Big Box Swindle: The True Cost of the Mega-Retailers
an interview with Stacy Mitchell


Behind the Lines

Letter to the Editor

The State of Corporate Welfare

The Front
Climate Changing Africa -- African Inequality

The Lawrence Summers Memorial Award

Book Note
The Conservative Nanny State: How the Wealthy Use the Government to Stay Rich and Get Richer

Names In the News


The Front

African Inequality

Nairobi, Kenya — With equal measures of hope and despair, 70-year-old Syombua Munyao stoops wearily to sprinkle a handful of seeds into the dry, hardened earth, almost certain they will never grow into food. “We are only trying. It is not like the old days when you would be sure of a harvest after the rains,” she sighs, shuffling back to one of a clutch of rounded huts of mud and thatched leaves where she lives in the poor Kiongwe region of eastern Kenya.

For decades, life has been a struggle in this harsh environment, but Munyao says things were never as bad as they are now. “There are no good rains anymore,” she complains. “The sun was always hot, but these days it feels like it’s moved closer. We are being baked,” she exclaims, wiping sweat from her brow under a sun still uncomfortably hot in October.

Munyao’s is a familiar story throughout Africa, which experts around the world agree is hardest hit by climate change.

The continent faces ominous environmental perils if current global warming trends continue, warned a new report released at the UN Climate Change Conference, held in the Kenyan capital of Nairobi in November 2006.

In less than a generation, 40 percent of Africa’s wildlife habitat could be lost, and cereal crops in the hungry continent of 900 million people could decline by 5 percent, the UN report said.

It warned that a third of Africa’s coastal settlements could be wiped out this century by rising sea levels, and floods threaten as many as 70 million people, together with major cities such as Lagos in Nigeria and Cape Town in South Africa.

Munyao, who lives only about 200 kilometers from Nairobi, knows nothing about the report or its dire predictions. But tens of millions of poor rural Africans like her are already suffering under the grim impact of climate change on their lives.

A decade of drought

Ten years ago, dry spells and drought forced Munyao to move from the nearby lowlands to the higher grounds of Kiongwe, where there was more water. Her family had more to eat for a while, but without rainfall the earth dried up again. She and many of the 3,000 people living in Kiongwe and nearby areas began cutting down trees on the higher ranges, clearing forested land to cultivate food and burning the wood for fuel.

Thick forests where elders once retreated for worship, or to gather vital medicinal plants to heal wounds and cure typhoid, diarrhea, coughs and other ailments, have now become dry rocky ranges.

The rainy seasons, once predictable, have become erratic and scarce. The Kiongwe River, which would flow strongly after rains in May and retain water for much of the year, is now nearly dry year round, people living there say.

“There are no rains anymore,” Munyao complains. “We no longer cultivate anything but maize and beans, because these ripen more quickly,” she says. Sometimes, the people of Kiongwe say, they manage to stay alive only because of meager food supplies from the UN’s World Food Program. Foods like cowpea, millet, sorghum and yam have become only memories from her younger days, Munyao says.

Deforestation, drought, loss of wildlife habitat and declining or disappearing crops are not future threats in the lives of most rural Africans. They are scourges of their daily lives.

The new UN climate change report noted that Africa had warmed 0.7 degrees centigrade in the previous century, and that 1995 and 1998 were the warmest years.

A changing landscape

In the Endau Hills area, about 300 kilometers east of Nairobi, Godfrey Wambua remembers the hot years of about a decade ago, noting that was when the weather became unpredictable and began to grow warmer.

“We had two seasons, the long rains from March to May and short ones running from October to November, but that is not the case anymore,” says Wambua, who is in his late thirties and is a council leader for his community of 30,000 people.

Only two decades ago, a thick forest, home to birds, monkeys, gazelle and buffalo, covered all of Endau Hills, spanning 6,700 hectares. But the foothills have turned bare, with only the hilly peaks still green with trees. Most of the animals, the residents say, have disappeared.

Like in Kiongwe to the west, people in Endau have gradually moved up the highlands, cutting down trees to expand land for cultivation and grazing. But without trees, winds sometimes blow so hard that they rip the thatched-leaf roofs from the huts.

Desertification is another scourge. Water, which was once plentiful from shallow springs, has become so scarce that women and girls sometimes walk more than 15 kilometers a day to fetch it, people in Endau say.

Scarcity throughout the region has led to tensions with herders in the next district, who have begun to bring their cattle, sheep, goats and donkeys in the hundreds of thousands to Endau for grazing and water. Sometimes fights erupt over water, and animals are killed in revenge, says Wambua, who owns cattle and sheep, and grows maize when seasons are good.

Musyoka Kaleli, who has lived in Endau Hills and makes a living from cattle and subsistence farming, remembers a time when there was more than enough food and milk to go around. “Thirty-six years ago there was rich grazing land, fertile soil and good harvests,” he recalls wistfully. “We had plenty of milk, and those who did not have could get generous rations from neighbors at no cost. But life has changed; there is hunger all year long.”

Kaleli, says his greatest worry is for the future. “When you look at us today you see poverty. This is sad, because it is getting worse, and those who come after us will have the bare earth to scratch for food.”

— Ochieng’ Ogodo/Panos Features

African Inequality

Workers in Burkina Faso are angry. Four times in 2005 and then again this May, the country’s trade unions shut down economic activity through a series of national general strikes. Thousands marched in the streets of the West African nation to protest low salaries, high prices, lost jobs and inadequate social benefits.

Very often, the strikers contrasted their living standards with those of the elites. At one march in Bobo-Dioulasso, the main commercial city, union leader Bakary Millogo decried the workers’ “rampant pauperization” as opposed to the “scandalous and ostentatious” lifestyles of high government officials.

Father Balemans, an outspoken Catholic priest, affirmed that “the gap between the rich and the poor is widening ever more.” Such a situation is all the more insupportable, he continued, in the midst of relatively high economic growth rates, which have been “mainly for the rich.” The unions, in a joint declaration in April, affirmed: “The workers have a right to their share of the national wealth, which, according to the government, grew in 2005 by 7 percent.”

Elsewhere in Africa, similar trends are also arousing growing concern. Many Africans think that inequalities are widening, with a small slice of the population getting richer as the ranks of the poor keep growing.

A series of public-opinion surveys conducted in 2002-03 in 15 African countries by African and U.S. researchers found that a large majority of people believe conditions are worsening. When asked by the researchers of the AfroBarometer project whether their governments’ economic policies were hurting most people and benefiting only a few, 61 percent of the more than 23,000 people surveyed agreed. Only in three of the 15 countries (Lesotho, Mozambique and Namibia) did less than half the respondents think so.

In the 1980s and 1990s, when the performance of African economies was stagnant or declining, economists at the main international financial institutions were able to easily blame the continent’s widespread poverty on the lack of economic growth. Renewed growth, they argued, would eventually ‘trickle down’ to improve everyone’s well-being, including the poor. But with African growth rates picking up markedly over the past decade while the proportion of Africans living on less than US$1 per day continues to rise, such arguments are facing renewed skepticism.

Meanwhile, the international community’s focus on achieving the Millennium Development Goals (MDGs) — one of which is to cut in half by 2015 the percentage of people in the world with incomes below $1 a day — is drawing greater attention to the various factors that influence poverty trends.

“Ignoring inequality in the pursuit of development is perilous,” states UN Under-Secretary-General for Economic and Social Affairs José Antonio Ocampo. “Focusing exclusively on economic growth and income generation as a development strategy is ineffective, as it leads to the accumulation of wealth by a few and deepens the poverty of the many.” Besides impeding poverty reduction and achievement of the MDGs, Ocampo adds, failure to address inequalities means that “communities, countries and regions remain vulnerable to social, political and economic upheaval.”

In recent decades, African and Latin American countries have had the highest levels of income inequality, according to a 2005 study by the UN Department of Economic and Social Affairs (DESA), The Inequality Predicament. In both regions, “the situation deteriorated even further” in the 1980s and 1990s, said the report.

Such inequality meant that when economic downturn or disaster struck, those at the bottom of the income scale, the most vulnerable, were hurt disproportionately. And when national incomes rose, those at the top benefited the most, while the poor saw few gains, if any. Partly as a result, the number of people in sub-Saharan Africa living in absolute poverty (with incomes of less than $1 per day) doubled during those two decades, according to the DESA report. Their numbers climbed from 288 million in 1981 to 516 million in 2001.

While South Asia also saw a rise in the total number of poor in that period, the region’s proportion of people living on less than $1 a day fell from 52 percent to 31 percent, marking progress towards the MDG target. But in sub-Saharan Africa, that share actually rose, from 42 percent to 47 percent.

In some countries, the gaps are very wide. In Zambia, for example, the richest 10 percent of the population earns a total income that is 42 times larger than that of the poorest 10 percent. In Cameroon, a child born into the poorest 20 percent of families is more than twice as likely to die before the age of five as one born into the top 20 percent.

In most African countries, the urban-rural gap is especially wide. In the dry rural savannah regions in the north of Ghana, poverty runs at a 70 percent rate, much higher than in the capital, Accra.

Gender also is a prevalent factor. Overall, women have access to fewer economic resources and have far less social and political power than do men, which greatly restricts their opportunities to climb out of poverty. In Guinea-Bissau, for instance, women have only about half the incomes of men and are only half as likely to be able to read or write.

Economic inequalities are only part of the picture. Across Africa, health, education, social welfare and many other aspects of human well-being are also marked by wide disparities. The wealthy receive the best schooling and medical care, while many of the poor simply do without. The poor education and health of those living in poverty in turn make it harder for them or their children to advance their economic position.

During the 1980s and 1990s, the market liberalization policies pushed by the International Monetary Fund (IMF), World Bank and other donor institutions led to drastic cuts in government-backed social programs, notes the DESA report. That in turn “exacerbated inequalities.”

By the end of the 1990s, the disastrous impact of such cuts had become so glaring that policies shifted again, towards increasing social spending. While many argue that health and education spending in Africa is still far below what it should be, others point out that allocating more money alone will not solve all the problems. In Africa, notes Yvonne Tsikata, a scholar at the Economic and Social Research Foundation in Tanzania, “social sector spending is poorly targeted and often regressive. The poor are therefore benefiting much less than the level of social expenditures would suggest.”

“Education,” notes the DESA report, “is typically seen as a means of narrowing inequalities.” However, across sub-Saharan Africa, 37 percent of children did not go to primary school in 2001, the highest rate for any world region. Among girls, the share was 41 percent. Almost all children out of school are from poor families.

— Ernest Harsch, Africa Renewal/
Third World Network Features

Ernest Harsch is the managing editor of Africa Renewal, in which the above article first appeared.


The September/October Lawrence Summers Award goes to the Motion Picture Association of America (MPAA), which has convinced the Los Angeles Boy Scouts to offer a “Respect Copyrights Patch” to scouts who go through a set of pro-copyright activities. The Motion Picture Association struck a similar deal with Hong Kong boy scouts in 2005.

Source: David Pierson, “A Merit Badge That Can’t Be Duplicated,” Los Angeles Times, October 21, 2006.

*In a 1991 internal memorandum, then-World Bank economist Lawrence Summers argued for the transfer of waste and dirty industries from industrialized to developing countries. “Just between you and me, shouldn’t the World Bank be encouraging more migration of the dirty industries to the LDCs (lesser developed countries)?” wrote Summers, who went on to serve as Treasury Secretary during the Clinton administration and is the outgoing president of Harvard University. “I think the economic logic behind dumping a load of toxic waste in the lowest wage country is impeccable and we should face up to that. ... I’ve always thought that underpopulated countries in Africa are vastly under polluted; their air quality is vastly inefficiently low [sic] compared to Los Angeles or Mexico City.” Summers later said the memo was meant to be ironic.

Mailing List


Editor's Blog

Archived Issues

Subscribe Online

Donate Online


Send Letter to the Editor

Writers' Guidelines