29 April 2001

Africa: IMF, Bank Are Finally Listening, Say African Finance Ministers

analysis

Washinton, DC — African anger over tough and "dogmatic" conditions imposed by the World Bank and International Monetary Fund is absent from the Bretton Woods institutions' spring meetings for the first time in many years.

The Bank and Fund have changed significantly, and become more flexible, Peter J. Kuyembeh, Sierra Leone's Finance Minister told reporters on Saturday. "In olden times, the IMF approach was extremely strict. They had something which looked like penal codes: If you didn't do this, this shall happen to you."

For two decades African governments complained - without apparent effect - of onerous Bank and Fund-imposed conditions undermining political and social stability. But last month, Masood Ahmed, Deputy Director of the IMF Policy Development and Review department told reporters: "There is a lot of evidence that conditionality is less important for [growth and development] outcomes than the ownership that governments have and the commitments they have to implementing their own programs."

And in yet another sign that it was recognizing the need to change some of its practices, the World Bank declared that using "'conditionality' to coerce developing countries into reforms such as stabilizing their exchange rates or fostering an independent judicial system are largely ineffective." Announcing a study called "Aid and Reform in Africa," last month, the Bank said: "Countries that have successfully reformed have had clear political movements leading these changes. Countries that have made less progress typically have had powerful vested interests blocking change. Either way, economic policies are primarily domestically grown."

This represents a "total reversal" of the old commitment to top-down structural adjustment policies, Tanzania Finance Minister Basil P. Mramba told allAfrica.com. "They would like to see more and more African countries saying, 'This is what I want to do.'"

In the past, Mramba said, "many of our countries have not been able to fulfill the conditionalities."

Pointing to a concrete sign of change, Mramba recalled a road project in his own country that was rejected by the Bank "because the drawings were drawn by someone they did not approve... did not appoint. But the drawings were there anyway... We said, 'we can't borrow fresh money to draw the road project afresh.' And they agreed! They said, 'the most logical way is for us to look at those drawings [to see] if they comply with the required standard and we will not have to redo them just to fulfill one conditionality.'"

Mramba and Kuyembeh, along with the finance ministers of Niger and Gabon, said they support reforms that seem to be taking place in the Bank and Fund and are convinced they represent a genuine change of attitude. "We now have a new IMF and new World Bank," says Kuyembeh.

Speaking with allAfrica.com, Minister Kuyembeh explained, that while there will never be condition-free loans or assistance, "it is specialized and negotiable. You can actually argue with [Bank and IMF officials] for a long time. The very fact that they are trying to convince us that they don't want to disrupt or destabilize government, is an achievement."

But not everyone believes in the 'new and improved' Bank and Fund. "We measure change through the quality of life of people," says Marie Shaba, chairperson of the Tanzanian Association of NGOs. She was in Washington to protest Bank and Fund policies. "The Bank and the Fund are set up to look at figures, numbers, not people. You cannot 'change' bad law."

Angela Wood of the Bretton Woods Project worries that "prior actions" and "structural benchmarks" will become a kind of "back door" route to assistance and loans, replacing "up front" conditions.

Of the new emphasis on "ownership" of growth and development policies by governments, she says: "The IMF is only concerned to lend to countries that 'own' the type of reforms that it advocates. Those countries that 'own' alternative policies are likely to see their funding cut as the IMF moves to a more selective use of its resources."

Much criticism of the two institutions centers on the debt issue and many in Washington this week for protests are calling for 100 percent cancellation of debt. Even the panel of Finance Ministers was not in agreement on this issue. "We should listen to those outside," said Niger's Ali Badjo Gamatie in support of debt cancellation. "Yes, 100 percent relief, why not?" asked Gabon's Emile Doumba. "If you look at history, there are countries in the world who were able to take advantage of such a relief."

But Tanzania's Mramba, reluctant to risk bankrupting the institutions, remained unconvinced: "It would not be wise to kill the hen who lays golden eggs," he said.

The spring meetings of the Bank and Fund are considered "informal." Specific proposals will await the annual Fall meeting where large demonstrations are anticipated.

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