World Bank’s neoliberal Africa strategy signals worsening uneven development

By Patrick Bond

May 30, 2011 – Links International Journal of Socialist Renewal – A renewed wave of development babble began flowing soon after the February launch of the World Bank’s 10-year strategy document, Africa's Future and the World Bank‘s Support to it. Within three months, a mini-tsunami of Afro-optimism swept in: the International Monetary Fund’s Regional Economic Outlook for SubSaharan Africa, the Economic Commission on Africa’s upbeat study, the African World Economic Forum’s Competitiveness Report and the African Development Bank’s discovery of a vast new “middle class” (creatively defined to include the 20% of Africans whose expenditures are US$2-4 a day).

Drunk on their own neoliberal rhetoric, the multilateral establishment swoons over the continent’s allegedly excellent growth and export prospects, in the process downplaying underlying structural oppressions in which they are complicit: corrupt power relations, economic vulnerability, worsening resource curses, land grabs and threats of environmental chaos and disease.

These are merely mentioned in passing in the World Bank’s Africa strategy – the most comprehensive of these neoliberal-revival tracts – but a frank, honest accounting of the author’s role is inconceivable, even after an internal Independent Evaluation Group report scathing of mistakes the last time around. That effort, the 2005 Africa Action Plan (AAP), was associated with the G8’s big-promise little-delivery summit in Gleneagles.

The World Bank admits the AAP was a “top-down exercise, prepared in a short time with little consultations with clients and stakeholders” and that the “performance of the Bank’s portfolio in the Region” was lacking. Tellingly, the World Bank confesses, “People who had to implement the plan did not have much engagement with, and in some cases were not even aware of, the AAP.”

Tyrants and democrats

Though in 2021 the same will probably be said of this strategy, the World Bank claims its antidote is “face-to-face discussions with over 1,000 people in 36 countries”. However, as quotes from attendees prove, the bank could regurgitate only the most banal pablum.

Nor does the strategy propose grand new alliances (e.g. with the Gates Foundation). There is just a quick nod to two civilised-society partners, the Africa Capacity Building Foundation (Harare) and African Economic Research Consortium (Nairobi), which together have educated 3000 local neoliberals, the World Bank proudly remarks.

Embarrassingly, the World Bank hurriedly stoops to endorse three continental institutions: the African Union (AU), the New Partnership for Africa’s Development (NEPAD, founded by former South African president Thabo Mbeki in 2001) and African Peer Review Mechanism (2003). The latter two are usually described as outright failures.

As for the former, there were once high hopes that the AU would respond to Africa’s socio-political and economic aspirations, but not only did Muammar Gaddafi exercise a strong grip as AU president and source of no small patronage.

Horace Campbell pointed out other leadership contradictions in Pambazuka News in March:

That the current leaders of Africa could support the elevation of Teodoro Obiang Nguema to be the chairperson of this organisation pointed to the fact that most of these leaders such as Denis Sassou-Nguesso of Republic of Congo, Robert Mugabe of Zimbabwe, Omar al-Bashir of Sudan , Paul Biya of Cameroon, Blaise Compaore of Burkina Faso, Meles Zenawi of Ethiopia, Ali Bongo of Gabon, King Mswati III of Swaziland, Yoweri Museveni of Uganda, Ismail Omar Guelleh of Djibouti, and Yahya Jammeh of Gambia are not serious about translating the letters of the Constitutive Act into reality.

These sorts of rulers are the logical implementers of the World Bank strategy. No amount of bogus consultations with civilised society can disguise the piling up of odious debts on African societies courtesy of the World Bank, IMF and their allied strongmen borrowers.

Yet these men are nowhere near as strong as the World Bank assumes, when reproducing a consultancy’s map of countries considered to have “low” levels of “state fragility”, notably including Tunisia and Libya – just as the former tyranny fell and the latter experienced revolt.

In contrast, the Africa strategy makes no mention whatsoever of those pesky, uncivil-society democrats who are opposed to World Bank partner-dictators. Remarks Pambazuka editor Firoze Manji:

Their anger is being manifested in the new awakenings that we have witnessed in Tunisia, Egypt, Libya, Yemen, Côte d’Ivoire, Algeria, Senegal, Benin, Burkina Faso, Gabon, Djibouti, Botswana, Uganda, Swaziland, and South Africa. These awakenings are just one phase in the long struggle of the people of Africa to reassert control over our own destinies, to reassert dignity, and to struggle for self-determination and emancipation.

Unsound African architecture

The World Bank will continue standing in their way by funding oppressors, leaving the Africa strategy with a structurally unsound, corny architectural metaphor: “The strategy has two pillars – competitiveness and employment, and vulnerability and resilience – and a foundation – governance and public-sector capacity.”

Setting aside hypocritical governance rhetoric, the first pillar typically collapses because greater competitiveness often requires importing machines to replace workers (hence South Africa’s unemployment rate doubled through post-apartheid economic restructuring). And World Bank advice to all African countries to do the same thing – export! – exacerbates mineral or cash crop gluts, such as were experienced from 1973 until the commodity boom of 2002-08.

The World Bank strategy also faces “three main risks: the possibility that the global economy will experience greater volatility; conflict and political violence; and resources available to implement the strategy may be inadequate”.

These are not just risks but certainties, given that world economic managers left unresolved all the problems causing the 2008-09 meltdown; that resource-based conflicts will increase as shortages emerge (oil especially as the Gulf of Guinea shows); and that donors will be chopping aid budgets for years to come. Still, while the World Bank retains “some confidence that these risks can be mitigated”, in each case its strategy actually amplifies them.

It is self-interested – but not strategic for Africa – for the World Bank to promote further exports from African countries already suffering extreme primary commodity dependency. Economically, the Africa strategy is untenable, what with European countries cracking up and defaulting, Japan stagnant, the US probably entering a double-dip recession and China and India madly competing with Western mining houses and bio-engineering firms for African resources and land grabs. Nowhere can be found any genuine intent of assisting Africa to industrialise in a balanced way.

The World Bank’s bland counterclaim: “While Africa, being a relatively small part of the world economy, can do little to avoid such a contingency, the present strategy is designed to help African economies weather these circumstances better than before.” But these are not “circumstances” and “contingencies”: they are core features of global North-South political economy from which Africa should be seeking protection.

Neoliberalism, poverty and ecological destruction

A poignant example is the World Bank’s warm endorsement of Kenyan cut-flower trade in spite of worsening water stress, commodity price volatility and inclement carbon-tax constraints. Nevertheless, “Between 1995 and 2002, Kenya’s cut flower exports grew by 300 percent” – while nearby peasant agriculture suffered crippling water shortages, a problem not worth mentioning in World Bank propaganda.

Where will water storage and power come from? World Bank promotion of megadams (such as Bujagali in Uganda or Inga in the Democratic Republic of Congo) ignores the inability of poor people to pay for hydropower, not to mention worsening climate-related evaporation, siltation or tropical methane emissions.

Other silences are revealing, such as in this World Bank confession of prior multilateral silo-mentality: “Focusing on health led to a neglect of other factors such as water and sanitation that determine child survival.” The reason water was underfunded following Jeffrey Sachs’ famous 2001 World Health Organization macroeconomic report was partly that his analysts didn’t accurately assess why US$130 billion in borehole and piping investments failed during the 1980s-90s: insufficient subsidies to cover operating and maintenance deficits.

Lack of subsidies for basic infrastructure is an ongoing problem, in part because “the G-8 promise of doubling aid to Africa has fallen about $20 billion short”. So as a result, “the present strategy emphasizes partnerships – with African governments, the private sector and other development partners,“ even though public-privpate artnerships rarely work. Most African privatised water systems have fallen apart.

South Africa

South Africa has had many such failed experiments, in every sector. The latest World Bank loan to Pretoria, for $3.75 billion (its largest-ever project loan) is itself a screaming rebuttal to the Africa strategy’s claim that “the Bank‘s program in Africa will emphasize sustainable infrastructure. The approach goes beyond simply complying with environmental safeguards. It seeks to help countries develop clean energy strategies that choose the appropriate product mix, technologies and location to promote both infrastructure and the environment.”

That loan also caused extreme electricity pricing inequity and legitimation of corrupt African National Congress construction tenders. This generated condemnation of the government by its own investigators and of the World Bank by even Johannesburg’s Business Day newspaper, normally a reliable ally.

South African workers would also take issue with a World Bank assumption: “The regulation of labor (in South Africa, for instance) often constrains businesses… In some countries, such as South Africa (where the unemployment rate is 25 percent), more flexibility in the labor market will increase employment.”

This view, expressed occasionally by the World Bank’s aggressively neoliberal Africa chief economist, Shanta Devarajan, is refuted not only by 1.3 million lost jobs in 2009-10 but by the September 2010 International Monetary Fund Article IV consultation analysis, which puts South Africa near the top of world labour flexibility rankings, trailing only the US, Britain and Canada.

Microfinance

There are other neoliberal dogmas, e.g., “Microfinance, while growing, has huge, untapped potential in Africa.” The World Bank apparently missed the world microfinance crisis symbolised by the firing of Muhammad Yunus as Grameen executive (just as the strategy was released), the many controversies over usurious interest rates, or the 200,000 small farmer suicides in Andra Pradesh, India, in recent years due to unbearable microdebt loads.

The World Bank also endorses cell phones, allegedly “becoming the most valuable asset of the poor. The widespread adoption of this technology – largely due to the sound regulatory environment and entrepreneurship – opens the possibility that it could serve as a vehicle for transforming the lives of the poor.” The bank forgets vast problems experienced in domestic cellphone markets, including foreign corporate ownership and control.

And as for what is indeed “the biggest threat to Africa because of its potential impact, climate change could also be an opportunity. Adaptation will have to address sustainable water management, including immediate and future needs for storage, while improving irrigation practices as well as developing better seeds.” Dangers to the peasantry and to urban managers of the likely 7 degree rise and worsened flooding/droughts are underplayed, and opportunities for wider vision for a post-carbon Africa are ignored, such as the importance of the North (including the World Bank itself) paying its vast climate debt to Africa.

'An African consensus'?

Compared to World Bank funding for insane megaprojects such as the $3.75 billion lent to South Africa to build the world’s fourth-largest coal-fired power plant last April, not much is at stake in the strategy’s portfolio: $2.5 billion/year over the decade-long plan.

Nevertheless, the Africa strategy hubris is dangerous not only for diverging from reality so obviously, but for seeking a route from World Bank strategy to “an African consensus”. The bank commits to “work closely with the AU, G20 and other fora to support the formulation of Africa‘s policy response to global issues, such as international financial regulations and climate change, because speaking with one voice is more likely to have impact”.

Does Africa need a sole neoliberal voice claiming “consensus”, speaking from shaky pillars atop crumbling foundations based on false premises and corrupted processes, piloting untenable projects, allied with incurable tyrants, impervious to demands for democracy and social justice? If so, the World Bank has a strategy already unfolding.

And if all goes well with the status quo, the strategy’s predictions for 2021 include a decline in the poverty rate by 12 per cent and at least five countries entering the ranks of middle-income economies (candidates are Ghana, Mauritania, Comoros, Nigeria, Kenya and Zambia).

More likely, though, is worsening uneven development and growing World Bank irrelevance as Africans continue courageously protesting neoliberalism and dictatorship, in search of both free politics and socio-economic liberation.

[Patrick Bond directs the University of KwaZulu-Natal’s Centre for Civil Society in Durban.]