Date: Tue, 21 Feb 1995
Sender: Pan-Africa Discussion List (AFRICA-L@VTVM1.CC.VT.EDU)
From: The Washington Office on Africa (woa@igc2.IGC.APC.ORG)
Africa Policy Information Center, African NGOs on World Bank IDA Financing
A position paper of the Africa Policy Information Center, distributed by the InterAfrica Group NGO
12 February 1995
The World Bank and African NGOs:
Policy Dialogue on IDA 11
From: InterAfrica Group NGO NETWORKING SERVICE
Contact: Vanessa Sayers, NNS Co-ordinator
Feb. 12, 1995
What is IDA?
The International Development Association (IDA) is a branch of
the International Bank for Reconstruction and Development (IBRD),
better known as the World Bank. IDA was established in 1960 to lend
funds to developing countries which cannot afford IBRD lending terms.
While IBRD "loans" must be repaid with interest at market rates over 15
to 20 years, IDA "credits" (extended to governments only) have a 10 year
grace period, and are for repayment over 35-40 years at virtually 0%
interest. All of the countries of the Horn of Africa - Djibouti,
Eritrea, Ethiopia, Somalia and Sudan are eligible to receive only IDA
funds, because of their low GNP (although only Ethiopia borrowed funds
Why is it being discussed now?
IDA funds are raised
from 35 donor governments, of which the United States, closely followed
by Japan, is the largest contributor. IDA is replenished every three to
four years and has been replenished ten times to date. There is
currently much discussion around IDA in donor countries, among NGOs and
developing country governments. This is because the decision making for
the 11th replenishment of IDA which will run from mid 1996 to the 1999,
takes place from January to September this year and was preceded by the
50th anniversary of the World Bank and International Monetary Fund
(IMF). NGOs used this anniversary as an opportunity to discuss and
lobby for reform of these institutions - including reforming IDA.
What does it have to do with NGO's work?
According to literature produced by the World Bank, poverty
reduction has been IDA's "raison d'etre", particularly since the 1970's.
However, the same literature states that only a maximum of 40% of IDA
lending fulfils IDA's own criteria for having the potential to reduce
poverty as set out under the'Programme of Targetted Interventions'.
While there has been a shift towards investment in rural and human
resource development since the early years when all investment focused
on infrastructure, there is still concern about the level to which funds
are positively (or otherwise) affecting the poorest sectors of society.
Around one quarter of total IDA lending (48% in Sub-Saharan Africa) is
presently given to national macro-economic reform programmes - often
called 'structural adjustment'- in the form of balance of payments
support and in some cases to help pay off old debts.
What are NGOs saying about IDA?
There is concern among NGOs and others that the effects of
'adjustment' on the poor have been harsh and given IDA's mandate of
poverty reduction that there is a contradiction between funding
adjustment programmes and reducing poverty. Some have gone as far as to
argue that IDA and its lending should be entirely separate from the
IBRD and its policies. The African NGO position attached deals with the
likely reality that adjustment lending will continue and that, given
this, there should be a decrease in the proportion of lending for
adjustment and an expansion of human development lending, while the
benefits from all lending - including adjustment - should flow
"disproportionately to the poor and disadvantaged sectors of society".
At present the economic and political climate in the developed
countries, particularly the United States, is raising concerns that
budget cuts will lead to a substantial drop in contributions to IDA 11
this year. As IDA is the only source of large-scale development finance
for nations which are not considered 'creditworthy' by the international
markets, African NGOs want it to be retained at its present level, but
to fulfil its mandate more effectively.
The African NGO consultation on IDA 11 took place in Addis Ababa
on January 9-13, 1995. It is one of three consultations set up by the
NGO Working Group on the World Bank. The others will be in Asia on
March 20-24 and in Latin America on April 23 -27.
For other resources on IDA and NGO papers and reports on the
World Bank and IDA, contact the NNS office at the email address above.
Recommendations of the Africa NGA Consultation on IDA11
Having considered the performance of IDA and
the conditions in African countries where IDA programmes operate, we,
African NGO's have concluded that it is essential for the IDA programme
We view the potential of future country programmes and their
chances of success positively, given the right criteria and correct
implementation. We draw important lessons from the past which informs
the critique contained in this memorandum.
As regards IDA11, African NGO's believe that real funding levels
should, as a minimum, be maintained at present levels and preferably be
We express concern that the poorest were not deriving
recognisable or adequate benefit from different country programmes which
causes NGO's to argue that the focus of benefit to the poorest should be
sharpened in regard to IDA11.
IDA should therefore focus on
redressing inequities created by the market. The benefits should flow
disproportionately to the poor and disadvantaged sectors of society in
all forms of IDA lending, including adjustment.
Poverty reduction depends on providing poor people with access
to resources to do things for themselves. IDA needs to tackle the
reasons that make poor people poor.
Given the multicausal origins of poverty and its many
manifestations in rural and urban areas, as well as across countries,
poverty reduction will not be achieved through unitary economic
strategies nor imposed models of human development. Targetted poverty
reduction interventions mean not only effective ways of delivering
resources to those most in need but a more precise understanding of the
economic, social and political dynamics at work in impoverishing
specific communities. Therefore, poverty reduction programes should
emphasize the local understanding of the nature of poverty, enable
locally-based initiatives to address this and expand opportunities for
the poor to foster new mechanisms of social integration and support.
We are concerned at the number of IDA-eligible countries that in
practice are not receiving IDA lending. About 40% of the population of
IDA eligible countries lived in countries excluded from funding in 1994.
Ways should be found in IDA11 to include poverty-focussed programmes in
The World Bank has made some progress as regards the importance
of participation in its programmes. For IDA11 the principle and
practice of participation needs to be deepened. This will provide the
basic building blocks for effective targeting of IDA lending towards
poverty alleviation. There should be full participation by governments,
relevant civil society organisations (social proximity), including the
beneficaries in sectoral fora to provide a relevant institutional
framework. This participation refers to all the processes such as
poverty assessment, public expenditure review, policy framework paper
negotiations, country assistance strategy, project design,
implementation and monitoring.
In seeking solutions it is critical to start with the solutions
that the poor themselves offer.
We are concerned about the Head-quarter-centered, Washington
consultant-centered and often government-centered decision making
processes that currently inform IDA. Under IDA11 there is need to use
local experience knowledge and experts.
The overhang of "debt" and the increasing levels of
multilateral debt, particularly through the accumulation of arrears, is
now pre-empting a large part of the available resources. Countries
attempting to keep up with their debt service are seriously constraining
their opportunities for growth. Countries not doing so accumulate
further arrears and risk default.
The use of IDA funds (particularly the "fifth dimension" funds)
for debt management and debt reduction strategies of specific countries
may be understandable but this should not be interpreted as providing a
long-term and comprehensive solution to the problem of multilateral
debt. A strategy, separate from IDA, but involving the World Bank,
needs to be evolved to address this problem. In summary, there should
be no recourse to IDA funds as a soft option to address the problem of
the growing overhang of multilateral debt.
IDA lending should be skewed in favour of creating the
essential components of an enabling and accountable state. The capacity
of the state to implement effective poverty reduction
strategies/programmes can only be enhanced, in this way.
In advocating for unqualified liberaisation of markets, the Bank
has not given due recognition to the positive role the state can play in
African conditions in view of the fragile nature of the private sector.
In particular the implementation of IMF stabilisation and World Bank
adjustment programme risks curtailing the role and capacity of the
state. Much needs to be done to strengthen the positive aspects of the
The present approach of relying on a modified version of
"trickle down" and addressing the persistence of poverty as a short-term
phenomenon corrected by instituting "safety nets" is very short-sighted
Poverty should form the focus of project/programme design and
should be specifically targeted rather than as a short-term corrective
necessity until "trickle down" growth filters through. Only in this way
can a sustainable reduction in poverty be achieved.
World Bank figures* show that 48% of IDA lending in sub-saharan
Africa is classed as "adjustment lending". As NGO's we express grave
doubts about SAP and how it affects the situation of the poor.
In IDA11 there should be a reduction of adjustment lending
because of the negative consequences experienced currently in some
cases. Therefore the uses or allocations of IDA11 should be
restructured. Infra-structure and adjustment lending should not be more
than 40%. Human development lending should constitute at least 60%. The
latter includes: education, health, water and sanitation, agricultural
research, extension services, nutrition as well as credits to make poor
people agents of economic change and tackling what makes people poor,
such as land reform, law reform etc.
In view of the aforegoing considerations, we call upon all African
NGO's, voluntary development organisations and community-based
to substantially undertake the task of monitoring the impact of IDA
on the poor;
to participate actively in the collecting of data bases that make
such monitoring possible;
to conduct, to whatever extent possible, detailed micro-level
studies on the impact IDA is having; and
to publicise and to specifically inform the World Bank, Governments
and donors of the impact of IDA as perceived through the NGO experience.
11 January 1995
Oct.1994 Review of FY94 IDA Programme
Note added by Africa Policy Information Center: Participants at
the meeting, in addition to representatives from the World Bank,
included representatives from CEVO, IAG, IARA, OXFAM USA and RADEV (all
based in Ethiopia), FAVDO (Senegal & U.S.A.), Kagiso Trust and
Foundation for Contemporary Research (South Africa), Swiss Coalition for
Development, DENIVA (Uganda), Christian AID and TWN (UK), NGO
Coordinating Committee (Zambia), and MWENGO (Zimbabwe).
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