Tue, 15 May 2001 General News

World Bank admits mistakes in SAP implementation

By Public gends

In veiled words, the World Bank acknowledged at the second forum of the Structural Adjustment Participatory Review Initiative (SAPRI) held in Accra last week, that it made mistakes in its reform policies on Structural Adjustment Programmes (SAP) adopted by some African countries.

It admitted that, after almost two decades of implementation, SAP was not bringing the necessary benefits to the people and communities who have borne the brunt of the harsh prescriptions.

The World Bank Country Director in Ghana, Peter Harrold, told the 250 delegates at the forum that the global outcry against the impact of SAP is a manifestation that the World Bank failed to factor in the economic and social impact of the Bank's policies.

Harrold admitted that the World Bank and the International Monetary Fund (IMF) ignored Africa's social priorities and were only driven by economic criteria.

This is a sudden reversal of the two institutions' position. In blunt terms, they have capitulated because never have the Bank and the Fund been so humble in their dealings with the continent, particularly since becoming the driving force behind the dominant economic policies - the now famous World Bank/IMF-inspired structural adjustment programmes.

IMF and the Bank have been at the forefront of finding a solution to the problem of poverty in Africa but, by all appearances, the problem has not disappeared. And this is what Harrold admitted at the forum, acknowledging that at the time Ghana was being hailed as a success story of SAP, half of the country's population was living below the poverty line.

In the early days, the mandarins in Washington rammed their prescriptions down the throats of African countries. These prescriptions did not work because the problems were diagnosed without asking the patients how they felt.

Now the Bank and Fund have changed tack and want the patients to say what their problems are before the illness is diagnosed and prescriptions handed out.

Which is what might have motivated SAPRI. The SAPRI was launched in July 1997 as a global exercise aimed at assessing the diverse impact of SAP on the economy, society and governance in selected case study countries in Africa, Eastern Europe, South-east Asia and South America. The exercise has been conducted in seven countries globally, four of which are African, namely, Ghana, Mali, Uganda and Zimbabwe.

The SAPRI forum is the first of its kind in the realm of international development that promotes the idea of including civil society organisations in the joint evaluation of the social impact of macro-economic policies by governments and the Bank.

While the forum was aimed at reviewing SAP in the light of their social, economic and political impacts, it was also designed to be participatory with respect to management, representation and methodology.

Participants at the forum were drawn from a 25-member Civil Society Co-ordinating Council (CIVISOC) representing the TUC, religious bodies, National Union of Ghana Students, non-governmental organisations, a multi-disciplinary team of university researchers and lecturers.

The forum, which was under the lead organisation of ISODEC, a research and advocacy organisation, evaluated reports on foreign investment in the mining sector; trade liberalisation and the domestic manufacturing industry; public expenditure reforms and access to health and education.

The forum could not, however, discuss a draft report on agriculture reforms and food security because field investigators assigned to conduct research on that sector failed to execute their job.

In less grandiloquent terms, the meeting had a single purpose: how to ensure that economic growth rate translates into poverty alleviation.

Dr. Kwesi Nduom, Minister of Economic Planning and Regional Integration captured this in a speech he read for President John Kufuor at the forum.

The structural adjustment programmes of the past produced economic growth and turned the economy around after several decades of stagnation and decline. However, as noted by the President, for nearly 10 years now, Ghana has not been able to raise the rate of growth above 5 per cent, and over the last couple of years this growth rate also appears to be in decline.

"After 20 long years of implementing structural adjustment programmes, our economy has remained weak and vulnerable and not sufficiently transformed to sustain accelerated growth and development. Poverty has become rather widespread, unemployment very high, manufacturing and agriculture in decline, and our external and domestic debts much too heavy a burden to bear," said the President.

Under the general guidelines of the IMF/World Bank-inspired policies in the mid-1990s, Ghana launched the Co-ordinated Programme of Economic and Social Development Policies termed Vision 2020. Unfortunately, the first five years of the Programme was characterised by missed targets and opportunities.

Overall GDP growth averaged 4.3 percent annually, far below the Programme target of 7.8 percent. The annual inflation averaged 24.7 percent, in comparison to the target of 17.6 percent with the year 2000 ending with an inflation rate of 40.5 percent. The balance of payments averaged significant deficits as opposed to the Programme's surpluses. In fiscal affairs, the national budget showed overall annual deficits in contrasts to the Programme's surpluses.

Added to all these is the country's external debt which increased rapidly under SAP, culminating in Ghana opting to access the Highly Indebted Poor Country (HIPC) initiative.

The Chairman of the Tripartite National Steering Committee of SAPRI, Professor Akilagpa Sawyer, was blunt in pointing out that the bankruptcy of IMF/World Bank reforms have been exposed by the failures of SAP.

The second forum on SAPRI therefore concluded that, after nearly two decades of continuous stabilisation and adjustment, there is great concern about the state of the Ghanaian economy under the impact of structural adjustment.

While there was general agreement that the ERP and SAP have indeed succeeded in reversing the economic decline and generated modest economic growth over the years, its impact on domestic industry and the welfare of ordinary Ghanaians is strongly disputed, especially since empirical evidence suggests that poverty appears to be rising in the country.