Poor World Bank Policies and Failure to Solve Africa’s Problems

"Infrastructure alone won't end poverty. The World Bank had to learn this lesson, too. While we believed too much in bricks and mortar in our early days, we now understand that bringing together funding, technical expertise, and tested knowledge goes much further."

 - Sri Mulyani Indrawati

The World Bank, just like the International Monetary Fund (IMF) and World Trade Organization (WTO) was set up to assist struggling economies but sadly, as Sebastiane Ebatamehi extensively highlighted in his article published on TAE (Apr 9, 2019), it appears these organizations were structured to help maintain colonial dominance over African countries.

It should not only be surprising but also a huge cause for concern how Africa has remained pretty much the same despite the supposed funding and numerous Structural Adjustment Programs (SAPs) of the World Bank.

It appears that all these funding and Structural Adjustment Programs (SAPs) have succeeded in doing is increase Africa’s debt status and further strengthened our dependence on our erstwhile colonial masters, thereby aiding neo-colonialism in no small way.

In a report on Structural Adjustment Programs which I stumbled upon recently states that SAPs are a poor prescription intended to relieve a misdiagnosed problem.

It said:

SAPs were designed to address the symptoms of economic problems and not the root causes of the economic crisis.

The need for policies to increase the economic productivity of the African countries and improving their social and technological infrastructures remained unaddressed, meanwhile, the IMF/World Bank made policies aimed at increasing government’s ability to repay loans. SAPs led to the postponement or total abandonment of development programs such as new roads, schools, and hospitals.

Existing infrastructure became cash strapped, with lack of books in schools, lack of medicine in hospitals, roads in perpetual disrepair, etc. None of the countries even those that implemented SAPs religiously have improved their economic situation to date.

After over two decades of Structural Adjustment Programs, most African countries are suffering from high inflation, lower spending on health, education, housing, sanitation, and water. Illiteracy has not declined unemployment is incredibly high and the average income for the ones lucky to be employed barely suffice for subsistence.

In 1994, the World Bank admitted that out of the 29 African countries it had provided more than $20 billion in funding to sponsor adjustment programs during the ten-year period, 1981-1991, only 6 had performed successfully: The Gambia, Burkina Faso, Ghana, Nigeria, Tanzania, and Zimbabwe. This means a failure rate of 79%. Barely a year later, however, this number shrunk to two out of 29: Burkina Faso and Ghana.

By 1995, SAPs were on the verge of collapse in Ghana.

By 2001, Ghana, the World Bank's poster child was on the list of Heavily Indebted Poor Countries (HIPC), the World Bank’s intensive care unit for the poorest countries whose debt is classified as unsustainable.

By 2002, Ghana’s real per capita income was about 10-15% below the 1983 level when the structural adjustment program was launched. In 1998, the World Bank identified four new countries, Guinea, Lesotho, Eritrea, and Uganda, as the new poster children for the success of SAPs.

Similarly, in less than two years, this list had shrunk, leaving Uganda as the Bank's only economic success story.

A lot of political capital was invested in Uganda with praises from all corners. As it turned out, the accolades were premature.

Uganda's rate of economic progress is non-sustainable. About 55 percent of its budget is aid-financed. Different African countries have different scenarios but the same story has played out over and over from one country to the next.

After structural adjustments, all countries in Africa are worse off than when they started.

Where do we go from here?

Header Image Credit: Inter Press Service