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Greece-Africa

Greece's economic woes are painful reminder of Africa's agony, analysts

Greek Prime Minister Alexis Tsipras is seen on a television monitor while addressing the nation in Athens, Greece July 1, 2015.
Greek Prime Minister Alexis Tsipras is seen on a television monitor while addressing the nation in Athens, Greece July 1, 2015. REUTERS/ERT/Pool

Greece inched closer to dropping out of the eurozone on Wednesday, after defaulting on its 1.5 billion euro payment to the International Monetary Fund. The IMF rejected Athen's last-minute request for an extension, leading to scenes of chaos outside Greek banks. For African observers, the situation in Athens is a stark reminder of the continent's debt crises of the 1980s and 1990s. In both cases, the role of the IMF is called into question.

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Five months of negotiations between Greece's radical left government and its creditors ended on Wednesday with Athens defaulting on its loan, sending markets over the edge, and anguished Greek pensioners with them.

Scenes of panic of Greeks beseiging banks, have struck a chord with many Africans. "What is happening to Greece, happened to Africa for over three decades," François Ndengwe from the African Advisory Board told RFI.

"The conditions imposed by the IMF are not conducive to economic development," Ndengwe said. "240 billion euros have been injected into Greece these past 5-6 years, and the programme has not achieved the desired results. If economic development was the goal, then the IMF has failed miserably."

For Dr Samuel Nyambi, Executive director of CAPDEV, a company working to improve development in the continent, the Greek case is not an an isolated incident.

"For myself and many other Africans, we feel a lot of sympathy with the Greeks and the reforms they're having to swallow, because we went through the same thing with the IMF's structural adjustment programs."

During the continent's debt crises in the 80s and 90s, the IMF and World Bank imposed structural adjustment programs on developing countries who needed to repay their debts. But these reforms, which included privatizing companies and cuts to government spending, have been slammed by economists for hindering growth.

"Africa has lost three decades of growth," Ndengwe told RFI. "Africa's economy was developing, people had salaries, when the debt crisis began in the mid 70s and 80s, forcing the IMF to step in, that all changed."

The International Monetary Fund was not immediately available for comment on its role in Africa's debt crisis, but with regards to Greece, IMF chief Christine Lagarde said in a statement that it was seeking "a balanced approach with Greek authorities to help restore economic stability and growth in Greece, with appropriate structural and fiscal reforms."

The IMF added that allowing Greece to delay repayment, as requested by Alexis Tsipras, was "ineffective" in helping a country overcome crisis.

The Greek Prime Minister vowed to go ahead with a controversial bailout referendum to decide on Greece's future in the eurozone. A precedent that African observers hope will be extended to African nations to judge the terms of their bailout programs with the IMF.

On Tuesday, Ghana, widely recognized for its strong economic track record, gave signs that it may also consider renegotiating its bailout terms with the IMF, viewed by some economists as unrealistic.

For many observers, the Greek situation is yet another reminder that the world is still yet to learn the lessons of the financial meltdown of 2008. Dr Samuel Nyambi, Executive director of CAPDEV, hopes that Athens' economic woes wil provide fresh impetus for an overhaul of the entire financial system.

"We need to have a joint conversation which includes the IMF, so this world system of governance can be adjusted, not just tinkered with on the edges," he concluded.

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