International financial institutions (IFIs) and economic development in Africa: the case study of Zimbabwe and Ghana.

Abstract

International Financial Institutions (IFIs) are all financial institutions operating on an international level, by giving loans to governments for large-scale projects, restructuring and balance of payments in the hope of economic growth and development. Examples of these institutions are the World Bank, the International Monetary Fund (IMF), the African Development Bank (AfDB), and the World Trade Organization (WTO). There has been huge interest and high contention among many researchers and scholars on the subject of the relationship between IFIs and African economic development. There is no doubt that African economic development is lacking considering the social, political and economic troubles that African countries and its people continue to endure even over half a century since the first independent African state. This dissertation seeks to understand the correlation between these financial institutions and African economic development. This involves analyzing the different financial institutions, distinguishing whether their role has been significantly positive or not, as well as outlining the consequences of their influence in the affairs of African countries. This dissertation starts from the involvement of the Bretton Woods institutions in the development of the African continent, up to the involvement in development of the African oriented institutions, discussing their progress, together with the challenges they face. Using the Participatory Social Learning Theory, economic development will be defined as a solution to create faith and dialogue between experts, authorities and the people for the purpose of growth, individually and communally to establish rational and functional systems and bureaucracies for social and economic progress; in other words for the common growth and good of the people. Zimbabwe and Ghana will be used as case studies to fully understand the relationship between IFIs and the economic development of the continent. This will be a desktop research but qualitative in nature. It will use purposive sampling for a better understanding of the relationship between IFIs and African economic development. The dissertation concludes by giving recommendations, for the full realization of real economic development as suggested by the Participatory Social Learning Theory as well as providing the outcomes of the study which shows that some financial institutions have the potential of economically developing the continent if genuine people are put into power and implementation is carried out efficiently. Lastly this dissertation will show that some financial institutions have had a positive impact on economic development in Africa, at the same time others have had a marginal role or impact on economic development in Africa, particularly in Zimbabwe and Ghana.