Lending Institutions, Health Care, and Human Capital
1.Explore whether or not funding from international lending institutions like the World Bank and the IMF are helping or hindering the social, economic, or political development of the country that you have selected. Support your response with examples.
2.Discuss, with examples, at least four (4) substantive ways in which a healthy population strengthens the economy of the country that you have selected.
3.Ascertain the degree to which the leadership of your chosen country has used foreign aid to improve its health care system. Support your response with concrete examples.
Lending Institutions, Health Care, and Human Capital
Funding from international lending institutions such as the World Bank and the IMF has negatively impacted the social, economic and political of most low income countries. In 2013, the World Bank set aside $52.6 billion to help promote economic growth in developing countries. A large share of these funds were committed to Africa, with South Asia taking the second position in terms of funds received. African still continues to be the largest benefactor of these funds and aid from foreign countries. However, Africa still leads in high poverty levels, mortality rates, and low life expectancy.
The World Bank and IMF have been at the forefront of lending funds to governments in developing nations. The fund is associated with stringent loan conditions that put the borrowing countries at worse conditions that they were before obtaining the loan. Both of these institutions of lending are also known for rigid orthodoxy when dealing with low income countries. The adverse impacts of borrowing funds from these institutions can be seen in the case of Zimbabwe, a developing country in Southern Africa. In the 1980s, the country experienced robust economic growth averaging 4% per annual (Kingston et al., 2011). During this period, the country had not borrowed funds from any of these international lending institutions. Health service had greatly expanded, and the education sector improved. The country also achieved the lowest infant mortality rates and highest life expectancy rates. In 1991, Zimbabwe obtained funds from the IMF to support its rapid economic growth.
The funds obtained to support the growth agenda totaled to $484 million. The IMF gave the loan but with a myriad of conditions to Zimbabwe. First, the country had to reduce its fiscal deficit to rates acceptable by the lender. Second, the country was to lower its tax rate especially in the private sector. This greatly favored the multinational corporations based in Zimbabwe. The IMF also required Zimbabwe to deregulate the country’s labor market, and to withdraw protections in the manufacturing sector. Lastly, the country was required to reduce its minimum wage. In 1992, the country experienced drought conditions. The new policies by IMF also took effect during the year. The low government spending and trade liberalization policies created conditions for an economic recession in the country. The persistent drought made the recession even worse. From 1992 to 1996, the GDP dramatically fell. Since then Zimbabwe was unable to repay the debt, and the country became disqualified from accessing international lending in 1999 (Dzirutwe, 2016).
Substantive ways in which a healthy population strengthens the economy of the country
A healthy population is critical achieving growth and development in Zimbabwe. One of the ways it strengthens the economy is by ensuring reduced government expenditure in treatment of various diseases. It is expensive for governments to provide medical care to a majority of ailing population. In the late 1990s, the spread of HIV-AIDS was at is highest in Zimbabwe. As per 2013, there were 1.4 million Zimbabweans living with HIV/AIDS. This was 15% prevalence rate, the fifth highest prevalence rate in sub-Saharan Africa (Kerina, Babill, & Muller, 2013). The HIV/AIDS scourge costs the government millions to provide treatment to those infected. In addition, orphaning resulting from HIV/AIDS related deaths has led to increased social costs for the government. The money spent on HIV/AIDS treatment alone is high and would otherwise be used for development purposes.
Second, a healthy population leads to high GDP growth due to increased productivity of the population. Healthier citizens are more likely to contribute towards nation building by engaging in productive activities. Healthier citizens are more likely to maintain focus on jobs due to mental and physical alertness. This increases efficiency in production and hence the economic growth of a country. Healthy citizens will spend less time in hospitals but in productive activities. A healthy population is able to utilize available resources for their own prosperity. A healthy population can be able to exploit natural resources for useful gains. Thirdly, health is a basic human need. The health of a population is used as an indicator of poverty and inequality levels in a country. A healthy population thus reflects low social inequalities and low poverty levels. It is an indicator that people are able to access healthcare. In Zimbabwe, the government has spruced up efforts to ensure that all citizens live within 10 miles of the nearest health facility.
Lastly, a healthy population is more likely to invest their wealth in other basic amenities such as accessing education. Education is vital to the growth and development of any country. Healthy families are able to divert their resources towards educating their children as opposed to families where there are sick members. In families ravaged by diseases such as HIV/AIDS, children are left to care to their ailing parents or siblings instead of attending school. According to Sinding (2009), education is key in improving nutrition, basic sanitation, and productivity of an individual.
How the leadership has used foreign aid to improve health care system in Zimbabwe
Zimbabwe has employed foreign aid effectively in reducing HIV/AIDS prevalence rates in the country. After being sidelined by international lending institutions such as IMF and the World Bank, Zimbabwe received much of its foreign aid from the Global Fund. The country has made great strides in reducing HIV/AIDS prevalence rates which were highest in the world in the 1990s. According to Mustaka & Donnelly (2012), Zimbabwe has managed to lower its HIV prevalence rates by more than 30 percent since the 1990s pandemic. Due to the limited funding sources, the country has not been able to achieve its strategic health milestone of ensuring that majority of people live within 10 miles of the nearest heath care facility. In addition, public health infrastructure is currently in a deplorable state due to neglect. Hospitals buildings are currently dilapidated and the staff have little motivation, with majority opting to move to other countries. Record keeping is also poor, a situation that contributes to inaccurate health statistics.
Harare Central Hospital has been greatly impacted by neglect. The hospital, just like other public hospitals is filled with long lines of patients waiting to receive health care. The wards are filled to capacity leaving many patients to suffer. Most hospitals lack enough medical staff to cater for the high number of patients who require medical care (Mutsaka & Donnelly, 2012). However, with the lifting of the lending ban, the country is expected to spruce up the health sector in the coming period.
DZIRUTWE, M. (2016, March 16). Zimbabwe expects first IMF loan in nearly two decades this year. Reuters, pp. 1-2.
Kerina, D., Babill, S.-P., & Muller, F. (2013). HIV/AIDS: The Zimbabwean Situation and Trends. American Journal of Clinical Medicine Research, 1(1): 15-22.
Kingston Christina S, I. G., Victory, D., & Gogo, K. K. (2011). The impacts of the World Bank and IMF structural adjustment programmes on Africa: The case study of Cote D’Ivore, Senegal, Uganda, and Zimbabwe. Sacha Journal of Policy and Strategic Studies, 1(2): 110-130.
Mutsaka, F., & Donnelly, J. (2012, July 18). Neglected by foreign aid, Zimbabwe still makes strides in HIV fight. Retrieved from PBS NEWSHOUR: http://www.pbs.org/newshour/updates/globalhealth-july-dec12-zimbabwe_07-17/
Sinding, S. W. (2009). Population, poverty and economic development. Philosophical Transactions of the Royal Society B: Biological Sciences, 364(1532), 3023–3030. http://doi.org/10.1098/rstb.2009.0145