(Photo: Al Jazeera)
By Obinna Chukwu – Contributor
On the 15th of February 2021, Ngozi Okonjo-Iweala was elected Director General of the World Trade Organisation (WTO). Okonjo-Iweala is the first African, and the first female head of the organisation. She spent 25 years at the World Bank, rising to Managing Director. At the World Bank, she managed the development portfolio for South Asia, Africa, and Europe. Before that she had trained at Harvard and MIT as a development economist. In 2003, Okonjo-Iweala was appointed Minister of Finance by the Obasanjo administration in Nigeria, during this period she played a tremendous role in securing a $30 billion debt relief agreement, which greatly allowed the country to shift more resources to capital expenditure. In 2011, she was re-appointed as Minister by the Jonathan Administration, she once again led initiatives to streamline revenue management, and galvanised civil service reforms. Okonjo-Iweala comes in at a very crucial period. The last couple of months have played host to the Covid-19 pandemic, which has upended supply chains and disrupted decades of sustained trade processes. Her appointment could also signal a change in the general direction of established global powers, chiefly the victors of the Second World War.
Since the last decades of the 20th century the polices described by the catch all term ‘Washington Consensus’ have come to dominate international trade practices. This term was coined by John Williamson in an influential 1989 essay What Washington Means by Policy Reform. In this he analysed the consensus regarding certain economic advice and models holstered on Latin American nations. Williamson’s aim was to codify that part of the neoliberal analysis that have become commonly accepted within development theory and particularly in the circles of big developmental institutions. Following the structural adjustment policies (SAP’s) of the 1980’s and 1990’s it offered a new path to economic development and was labelled as a worthy structure for economic advancement. These policies generally required countries to devalue their currencies against the dollar, lift import and export restrictions, balance their budgets, and remove price controls and state subsidies. The Covid-19 pandemic has arrived on the scene and challenged all the notions previously upheld by policy makers described above. What can one see as the major effects brought about by the crisis? One can contend that there are three primary changes that will occur during and after the current situation. The first is the erosion of the Washington Consensus, the second is the retreat of international organisations, and the third is the emergence of nationalist advances within economic management.
The current world order has been fitted upon the axis of international trade and offshoring. The Covid-19 pandemic shows us that nations will begin to situate more of their productive capacity at home. The challenges to supply cycles experienced earlier this year have unleashed broken down synergies particularly within multinationals. Hence, large corporations will seek to have such inbuilt capacity closer to their customer base. The second is the retreat of major inter-governmental organisations. Many nations watched as these institutions offered rhetoric upon rhetoric with few concrete actions to bring nations together. It is now clear to many corporate stakeholders that going forward one cannot rely on the prescriptions of international bodies in times of major crises, hence they will institute certain buffers to mitigate against any further seismic shifts. It was to the prescriptions and pronouncements of national bodies that citizens adjusted and reoriented themselves, and it will be to the prescriptions of major corporations that individuals will further adjust to new trading patterns. Finally, nations have signalled their intentions to provide bountiful relief packages and stimulus checks to their populace and for this reason they must boost their trade balances by encouraging income inflows. Thus, one can contend that more nations will now take an active role in shaping company policies to protect their own corporations and vigorously support them on the world stage.