A possible solution lies in the resource grabbing initiative currently being lead by several Chinese state owned mining companies. As a result of rapidly growing demand from the South and East Asian economies, considered by some developmental economists as a ‘growth miracles,’ commodity prices have been raised to levels which have previously never been seen. The Chinese solution is to mine for more raw materials abroad to keep up with demand where resources are currently being underutilized (namely Africa). The net effect of the state led ‘all is fair in oil and minerals’ which has arisen in what appears to be a “Beijing consensus ”has been the undermining of US attempts to extent its influence to resource rich countries overseas. As a result it has established relationships with regimes like that of the Sudanese who, as the Economist points out have largely “shrugged off Western threats and sanctions over the continuing atrocities in Darfur, thanks in large part to Chinas readiness to invest in the Sudanese oilfields and buy their output. ” A more pragmatic Chinese solution to the problems of development in countries which, in the interests of stability, need to cater to their citizens has come in the form of assisted development which is currently pouring billions of dollars more than Western Donors into war torn countries like Congo in return for multiples of the value of the initial investment in the form of resources, wages, and contracts.
The Congo operation involves a $9bn investment with the direct construction of infrastructure (2,400 miles of road, 2,000 miles of railway, 32 hospitals, 145 health centers and two universities). In return the Chinese would reap $42bn in untaxed revenue . Contracts are being made exclusively to Chinese firms but are exclusively uncompetitive in sharp contrast to the procurement practices held by the IFC. The trade is the first of its kind in scope however it leaves Congo in a new cycle of imperialism whereby it becomes an exporter of raw materials and an importer of Chinese goods (largely as a result of Chinese protectionist measures). The extent to which Chinas protectionist agenda has influenced its ability to unfairly compete as a producer of end user goods in developing markets is an issue for further study however not a focus for this study. The extent of technical assistance being provided by Chinese companies is admirable in its desired effect, to get infrastructure built and is perfectly in line with what is being called for by international developmental bodies as a necessary for sustainable development. However, the exclusivity and opacity of the deal is in marked contrast to the open practices being championed by organizations such as the IFC.
Over the course of its lifetime the IFC has been an undervalued asset to the WBG’s functional efficacy. However, it has been limited in its ability to deliver financing for sustainable development as it lacks the ability to respond to a need in providing adequate institutional private sector capacity. The premise of the IFC was to provide IFI funds to regions irrationally considered too risky for investment. Its sizable returns coupled with sound well documented and continuously evolving financing practices have provided its staff with an incomparable experience in developing country portfolios. In 2005 the IFC board had agree to expand operations. However, it has not grown with the speed it set out to . We are of the opinion that the IFC should undertake drastic reform towards strategic; profit seeking and capacity building initiatives in order to further diversify its portfolio and monitoring of private sector investments to meet the fast pace of international private/sovereign wealth fund flows. This can only be done with the elimination of the 20% limit on holding equity and instead giving the Corporation access to controlling stakes in struggling private enterprises. An example is in the potential returns inherent in the volatile carbon trading mechanism market. A quasi-private fund (reflected a profit centric internal promotion strategy) would be well placed to provide the levels of investment required to stay afloat, even dramatically increase its earning potential (a portion of which could be re-invested in the WBG’s other operations). In so doing, the IFC would continue to be considered a non-profit organization. Expanding its microfinance facility would also provide more opportunities for gender equality given the central role that women play in microfinance initiatives. An increase in its equity and structured and securitized products divisions would also yield a stronger bargaining position for the Banks management with respect to its ability in promoting institutional reform and capacity building through private sector initiatives.
Containment through denial of resources