[mpisgmedia] Conditionality blues

Conditionality blues Liz Stuart

September 14, 2006 05:29 PM

http://commentisfree.guardian.co.uk/liz_stuart/2006/09/post_388.html

In Mali, one of the poorest countries in the world, one person in four grows
cotton for a living. But since the World Bank insisted on reform of the
sector, the price for seed cotton fell 24% in a year, and many farmers are
now growing for zero profit. Even the Bank's own research has shown - after
the event - that the changes are likely to lead to increase poverty and slow
economic growth.

This may have been the kind of example that the UK secretary of state for
international development, Hillary Benn, had in mind when he
called<http://business.guardian.co.uk/story/0,,1871913,00.html>for the
World Bank to stop demanding that countries manage their economies
in a certain way if they want a loan.

The policy changes the Bank insists on range from the dropping of tariffs to
the introduction of private insurance. In 2001, it made privatisation of the
Dar es Salaam Water and Sewerage Authority a condition of receiving debt
relief. It also insisted on water privatisation in Nicaragua, while it read
the riot act to Senegal on greater involvement of the private sector in
health care provision. There are plenty of examples.

Most people who take a passing interest in the management of the World Bank,
and it's DC neighbour the International Monetary Fund, think that this
practice, known as "conditionality" ended with the demise of the
much-maligned structural adjustment programmes of the eighties and nineties.


But a study commissioned by Oxfam this year showed that in 15 of the 20
countries examined, the Bank had attached privatisation-related conditions
to its money.

While it is completely acceptable, and right, that donors monitor aid money
to ensure it is used for the purpose intended, and fully audited, it is not
proper that they also insist on how the country runs its economy, and even
less so if what they advocate might be suitable in Paris or Washington, but
actually increases poverty and hardship in a developing country.

The Bank has committed itself to helping countries reach the Millennium
Development Goals <http://www.un.org/millenniumgoals/>. It has not committed
itself to undermining them, and while the private sector can have a role to
play in providing services, weak states find it very hard to regulate
companies, and high costs often exclude the poorest people.

Benn has also criticised - correctly - the Bank's current obsession with
corruption, a subject which, let's face it, is not unknown to Nigeria. His
emphasis was exactly right: corruption is a bad thing and needs to stop, but
it is only one aspect of governance. It seems likely that the decision of
the president of the Bank, Paul Wolfowitz, to stress it, to the exclusion of
almost any other aspect of development, may have more to do with the policy
agenda of the US administration than the priorities of poor people.

He was also right to point out that there's no bung without someone to pay
it. He committed the UK to rooting out the companies who "provide the bribes
or the opportunities to hide stolen assets". Indeed. According to the OECD,
he and cabinet colleagues will have to do better than they are doing now. As
the head of the OECD's anti-corruption division has pointed out, in the UK
and Japan there is too little enforcement of the Paris-based organisation's
convention on bribery. Since it was written in 1999, these two countries,
along with Canada, Italy and the Netherlands, have failed to bring one
single prosecution. Some eye-plank removal may be in order.

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