Judith Edstrom
I WOULD like to address some of the perceptions and misconceptions about the World Bank in South Africa that have surfaced recently, at times with a degree of emotional fervour.
First, what is the World Bank and what are we doing in South Africa?
The World Bank is a co-operative bank owned by its member governments. South Africa is both an owner and a client of the bank. It can call on the bank for whatever services it wants – advice, loans, training or guarantees.
To date, the World Bank’s role has consisted mainly of providing advisory services requested by agencies primarily within the government.
True to its main objective of helping to reduce poverty in its client countries, the bank has worked with the Reconstruction and Development Programme office to produce a report on key indicators of poverty in South Africa, and co-financed a household living standards survey.
We have also helped to finance a participatory poverty assessment undertaken by several non-governmental organisations (NGOs), as well as a poverty and inequality analysis under the auspices of the deputy president’s office.
The bank has been one of several contributors to policy formulation in a number of areas, including macro-economics, health financing, urban basic services, land reform, small and medium enterprise development and education.
We have also provided a few small grants for early childhood development, increasing Aids awareness among teens and developing procurement reforms to assist small entrepreneurs.
The government is currently discussing with bank staff the possibility of seeking World Bank financing for some programmes already envisaged or under way in the Department of Trade and Industry (DTI) to enhance industrial competitiveness and job creation.
Second, has the World Bank pressured the government into accepting our advice?
No. The policymakers with whom we have dealt seek advice from any number of sources, and draw their own conclusions as to the course South Africa should take in addressing its own development issues. Alec Erwin, the DTI minister, was recently quoted in the Mail & Guardian as confirming this. The bank provides information on what has and has not worked in other countries, rather than a single policy prescription.
Third, is there a World Bank ideology?
Once again no. The World Bank is not a monolithic organisation – our staff come from a wide variety of fields: economics to anthropology, engineering to rural development. Complex issues of development do not lend themselves to a single simple answer.
The World Bank does, however, have policy views based on the international experience that we have had the opportunity to observe and analyse.
This experience reveals that sustainable development can best be achieved when the government takes the lead in setting the rules for job-creating investment by the private sector, relying on the latter to provide the financial resources and the entrepreneurial capacity to make the most productive use of physical and human resources.
Governments across the globe have come to realise that private sector investment is required to generate the growth, the jobs and the infrastructure to improve the living standards of their populations.
Nobody denies that economic growth is a prerequisite to improved living standards – no country in the world has managed to reduce poverty and income inequality if its economy is not growing.
We have also learnt that growth is not enough to ensure improved living standards of the poor. Countries must adopt policies and programmes that aim to ensure that benefits of growth are shared among their people. While this involves providing opportunities for people to improve their own welfare, it also requires efficient, equitable and sustainable provision of services. Basic among these are health and education.
In fact, provision of education opportunities has been shown to be one of the most important, if not the most important, variable in translating growth into improved welfare. It is for this reason that the World Bank is the largest financier of social sector programmes – for health, nutrition and education – in the world, with an annual expenditure of over US$3-billion globally to these sectors.
More and better quality education is key to South Africa’s transformation into a society where all of its citizens benefit from any gains on the growth front.
Fourth, does the World Bank care more about policies or people?
Government policy has a major impact on people, and so the World Bank is rightly concerned about policy issues. At the same time, much of the bank’s financing goes directly into investments such as schools and clinics that provide tangible benefits to people.
Development is about people – their access to opportunity, to a voice in the matters of state and community that affect them, and to sustainable livelihoods that allow them the dignity and responsibility of ensuring their own welfare.
The most important question concerning the bank’s role in South Africa is whether it contributes to actions that improve the well-being of South Africans, particularly those who have not benefited from the country’s economic progress in the past.
Finally, is the cause of development better served by dialogue or by disassociation?
I am baffled by the sentiments of some groups that contact with the bank constitutes contamination and should therefore be curtailed. The bank has learnt a lot from groups with differing views.
Exchanges with NGOs and civil society groups have had a direct and positive impact on its understanding of and sensitivity to social and environmental aspects of development programmes. We seek more dialogue, not less.
It’s easy to seek scapegoats for why policies or programmes do not succeed. It’s much harder to find solutions to achieving sustainable development for people. We have a responsibility to put our heads together and focus on the latter.
Judith Edstrom is the World Bank’s representative to South Africa
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