Uganda & Global South: Shifting search for financing from World Bank & IMF to BRICS?

by Christopher Kiiza
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The Bretton Woods institutions, namely the International Monetary Fund (IMF) and the World Bank, have historically provided financial assistance to countries in the global south, including Uganda and members of the Non-Aligned Movement (NAM).

These countries from the global south have benefited from loans and aid to address economic challenges such as debt, inflation, and balance of payments issues. The IMF and World Bank are also involved in development projects to spur growth and alleviate poverty.

However, the financing provided by the IMF and the World Bank often comes with conditions such as economic reforms, exchange rate policies, privatization, financial sector reforms, governance and anti-corruption measures among others. 

The BRICS institutions on the other hand, offer a different approach, emphasizing mutual cooperation and less conditionalities compared to the Bretton Woods institutions which provides global south countries with more policy flexibility and control over their economic strategies.

The conditions attached to the financial assistance by Bretton Woods Institutions have sparked debates over sovereignty of beneficiary countries and the impact on national policies.

There is a popular argument that these conditions impede a country’s ability to make autonomous decisions, raising concerns about the long-term consequences of such engagements.

A case in point is the August 2023 decision by the World Bank to suspend any new funding of projects in Uganda, and review the ongoing projects over Uganda’s passage of the anti-homosexuality law.

The World Bank said Uganda’s anti LGBTQ Act fundamentally contradicts its “values.”

The move will negatively affect projects valued at over 6.7 trillion shillings.

Such conditions are pushing many countries in the global south to shift to BRICS (Brazil, Russia, India, China, and South Africa) as alternative source of financing.

President Yoweri Museveni who is now the chairman of the Non-Aligned Movement, says the World Bank and IMF must “confess their sins” and ask for “forgiveness” or else, Uganda and countries that form the Non-Aligned Movement will explore new sources of financing through BRICS.

“We are going to intensify our discussions with the BRICS about the affordable financing. If the Bretton Woods institutions (World Bank and IMF) can confess their sins and repent, we can forgive them, and they have a chance because we are Christians, and Christians believe in repentance and forgiveness,” said Museveni while closing the Non-Aligned Movement Summit in Kampala on January 20, 2024.

He added: “I gave some options that please repent before it is too late. Otherwise, we are going to continue exploring new ways of financing, and we can do it. A country like Uganda lacks very little.”

The issue of financing had also been raised by the United Nations Secretary General, Antonio Guterres in his address to the heads of state and government of the Non-Aligned Movement in Kampala.

“Developing countries need resources to overcome challenges, and this requires immediate debt relief….. It means reforming an outdated, unjust, and unfair global financial system that favors its founders, mostly rich countries,” Guterres told the NAM Summit in Kampala.

Relatedly, at the September 2023 United Nations SDG Summit, world leaders supported the United Nations long standing call for reform of the global financial architecture, including the Bretton Woods system to make it respond to the needs of developing countries.

International Markets

Meanwhile, at the NAM Summit in Kampala, President Museveni said that if the global south countries cooperated, they would solve their challenges themselves without having to rely on richer countries and Bretton Woods Institutions.

“We have the capacity to solve many of these problems if we cooperate among ourselves. We have been saying that wealth comes from producing goods and services and selling them. That means three things; investments to produce the goods or the services (the factories, the hotels, the transport business), and we can cooperate here. Those people with some surplus capital can invest in our countries and we produce goods and services which means that the NAM governments must create conducive atmosphere for investments to take place. This is one of the frontlines for the struggle. The atmosphere for investors to produce goods and services using the raw materials we have in our respective countries,” he said.

However, production of goods and services must be supported by the availability of market.

All countries have their internal markets, but the internal markets of most of the countries of the global south are not big enough to buy all the produce and support growth.

That is why countries need the regional and international markets.

Museveni called upon NAM countries to support each other by purchasing goods and services of NAM partner states.

“Internationally, since we are member of the same group of countries with similar interests, we should promote trade among ourselves because when I buy from you, I am supporting your prosperity, and when you buy from me, you are supporting my prosperity. Bring ideas of how we can promote and expand interstate trade among the NAM countries,” he said.

“Uganda has been supporting prosperity of others from our pockets by buying what they produce. The NAM countries should not be part of this blindness, thinking that I should only buy form you, and you buy nothing from me.”

In addition to production of goods and services and the market, Museveni reminded the NAM countries of the need to have infrastructure such as the ports and the railways, and airlines to link the NAM producers and the consumers.

“You need infrastructure. You need roads, you need the railway, you need the ports, you need the airlines to link the producer and the consumer. All these are areas of opportunities for all our NAM countries and the Group of 77 who account for 80% of the population of the world.”

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