This semi-annual report, which analyses macro and poverty developments in developing countries, is released for the Spring and Annual Meetings of the World Bank and the IMF. Interactive Data Tool This interactive tool provides a birds-eye view of major forecast variables and cross-country comparisons. Africa Inequality and Shared Prosperity Poverty. Albert G.
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Outlook Data Congo, Rep. Privatization, like financial liberalization, is seen by the IMF and World Bank as an instrument to promote private sector development, which has been elevated to the status of "engine of growth".
Cooperation: New Players in Africa
The privatization of State-owned enterprises SOEs , including water and power utilities, has been one of the core conditionalities imposed by the two institutions, even in the context of "poverty reduction". Most of the foreign direct investments registered by African countries in the s came as a response to privatization of SOEs. No sector was spared, even those considered as "strategic" in the s, such as telecommunications, energy, water and the extractive industries. After complaining about the slow pace of privatization throughout the region, it issued a warning to African governments to accelerate the dismantling of their public sector, accused of being "at the heart of Africa's economic crisis".
The process of privatization peaked in the late s and ever since has leveled off, despite more deregulation, liberalization and all kinds of incentives offered to would be investors. To date, it is estimated that more than 40, SOEs have been sold off in Africa. In fact, many privatization schemes have failed and contributed to worsening economic and social conditions. Almost everywhere, privatization has been associated with massive job losses and higher prices of goods and services that put them out of reach of most citizens.
It tends to convey the idea that SAPs have failed, in large part, because African States are "corrupt", "wasteful" and "rent-seeking" and because of the "poor implementation" of policies. In other words, SAPs were basically "sound", it is the combination of "rampant corruption" and lack of qualified personnel that led to the failure of these policies. Thus, "good governance" means nothing else than the need to build a neoliberal State, subservient to the IFIs, able to effectively implement, "sound policies" and to protect the interests of foreign investors.
Indeed, one of the main goals of the IMF and World Bank has been to discredit State-led development strategies in favor of market-led strategies. This is why one of the main targets of these institutions has been the role of the African State in economic and social development. To discredit that role, a two-track strategy was adopted.
The first track was to attack the credibility of the African State as an agent of development. To achieve that goal, an abundant literature has been published by the two institutions, highlighting the "corrupt", "predatory", "wasteful" and "rent-seeking" nature of the African State. To justify these epithets, the IFIs pointed to the "mismanagement" of the public sector, accused of being an obstacle to economic growth and development. These attacks helped make the case for the sweeping restructure of the public sector, which, in many cases, led to its dismantling in favor of the private sector.
The second track in weakening the role of the State in development was to deprive it of financial resources. Trade and financial liberalization achieved in part that goal. As already indicated, trade liberalization not only led to a greater loss of fiscal revenues, following lower tariff barriers, but it also led to huge trade losses.
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This was compounded by financial liberalization which entailed further fiscal losses resulting from tax holidays and low income tax rates. To make up for these losses, the African State had to resort to more and more multilateral and bilateral loans and credits, which further alienated its sovereignty. As a result, many African States have been stripped of all but a handful of their economic and social functions. Cuts in spending mostly fell on social sectors. State retrenchment primarily aimed at eliminating subsidies for the poor, removing social protection, and abandoning its role in fighting for social justice through income redistribution and other social transfers to the most disadvantaged segments of society.
This explains, among other things, the degradation of many basic social services and the explosion of poverty in Africa, since , as the World Bank itself has acknowledged. While dismantling or weakening the economic and social roles of the State, the IMF and World Bank have sought to build or strengthen the functions most useful to the implementation of neoliberal policies and the promotion of private sector development. This explains the insistence on "capacity building" or on "institution building", heard over the last few years.
However, the institutions that the IMF and World Bank talk about are not for development, but for markets. In other words, they propose building institutions supportive of neoliberal policies and in the service of the private sector, especially foreign investors. Thus, the "institution building" agenda promoted by the IMF and the World Bank has nothing to do with promoting democracy and protecting human rights. In fact, the neoliberal conception of governance undermines both since it deprives representative institutions of their role in formulating public policies following open and democratic debates.
After producing poverty and deprivation on a massive scale in Africa and elsewhere, the IFIs' focus on "poverty reduction" since could not be more suspect. There is no doubt that the shift in the rhetoric of the IFIs amounts to an admission of failure of past policies, which put too much emphasis on correcting macroeconomic imbalances and "market distortions" at the expense of economic growth and social progress.
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The disastrous record of SAPs and the continued deterioration in the economic and social situation of countries subjected to IMF and World Bank programs put into question the credibility and even the legitimacy of these institutions. Their crisis of legitimacy was exacerbated by stepped up attacks by the Global Justice Movement and growing criticism from mainstream economists, especially from Joseph E.
Stiglitz, former World Bank Chief Economist.
The PRSPs are supposed to provide more freedom to developing countries in formulating their policies. This is what the Bank and the Fund call "national ownership. That framework is non negotiable and includes fiscal austerity, trade and financial liberalization, privatization, deregulation and State retrenchment, etc. In essence, despite the disastrous outcome of their past policies, the IMF and the World Bank still believe that those policies are in the "interests of the poor". In particular, they think that trade liberalization and openness are the best - if not the only - road to growth, which they see as a "prerequisite" for poverty reduction.
Hence the export-led growth strategy advocated by the two institutions, but which has been a big failure in African and other developing countries. Policies which are at odds with both the wishes and the interests of the poor, observes the document. It is this straight jacket that ties up developing countries' hands and prevents them from achieving any substantial gain in poverty "reduction".
Most of the time, countries have failed to implement these conditions, leading to the suspension of their programs. In fact, the IFIs' conception of poverty views it as an isolated aspect of overall economic and social development that should be dealt with by short-term measures. Hence, the emphasis in the PRSPs on more spending for primary education and health, among others. Thus, PRSPs contain some short-term measures aimed at mitigating the negative impact of macroeconomic policies and structural reforms on the most vulnerable groups, notably the poor.
However, the tools the World Bank and the IMF have proposed to achieve this goal are the same as those already tested in the past and that have aggravated poverty and deprivation in much of Africa. As already indicated, a new "generation" of conditionalities have been added to old conditionalities, with the concept of "good governance", analyzed above. One can imagine the enormous human and financial resources needed to deal with such a number of conditionalities.
For this reason, the degree of compliance with IMF and World Bank-sponsored programs has significantly declined since the mids. First, mislead world public opinion, especially in Northern countries, in making believe that they are really serious about "reducing poverty". And the World Bank alone counts on a huge and sophisticated propaganda machine to achieve this.
Africa rising? The economic history of sub-Saharan Africa
With the more than staff of its External Relations Department - Propaganda Department, one should say - the Bank has all the means it needs to "explain" effectively its policies. The second objective of the PRSPs is to enlist a broad support within each country to help rehabilitate discredited and failed policies. This is what "national ownership" and "participation" of civil society organizations are supposed to achieve. While insisting on the "participation" of civil society organizations, their most vocal critics, the IMF and World Bank tend to sideline representative institutions, like National Assemblies.
This is another illustration of these institutions' contempt for the democratic process in Africa. In fact, they are instruments of domination and control in the hands of powerful states whose long-standing objective is to perpetuate the plunder of the resources of the Global South, especially Africa. In other words, the fundamental role of the Bank and Fund in Africa and in the rest of the developing world is to promote and protect the interests of global capitalism.
This is why they have never been interesting in "reducing" poverty, much less in fostering "development". As institutions, their ultimate objective is to make themselves "indispensable" in order to strengthen and expand their power and influence. They will never relinquish easily that power and influence. This explains why they have perfected the art of duplicity, deception and manipulation. In the face of accumulated failures and erosion of their credibility and legitimacy, they have often changed their rhetoric, but never their fundamental goals and policies.
This is why they cannot be trusted to bring about "development" in Africa. If the experience of the last quarter of a century has taught Africa one fundamental lesson it is that the road to genuine recovery and development begins with a total break with the failed and discredited policies imposed by the IMF and the World Bank. In fairness to both institutions, we must recognize, however, the complicity of African leaders in the disastrous outcome of neoliberal policies. Many governments and senior civil servants have bought into the agenda promoted by the IMF and World Bank.
Therefore, they bear a great responsibility in the current state of the continent. Thus, to put an end to the influence of these institutions, African social movements and progressive forces must explore strategies aimed at promoting a new kind of leadership able and willing to challenge these institutions in favor of genuine alternative development policies. Skip to main content. Demba Moussa Dembele.