Posted on May, 30 2003

The Poverty Reduction Strategy approach that the World Bank and the IMF established in the late 1990s, while potentially good for African countries, has in fact been undermined by the lending operations of the IMF and the World Bank. If this trend continues, national confidence in this process will be eroded significantly.

“The PRSP related policy lending of the IMF and the World Bank tend to favour traditional economic growth that favours the privileged not the rural poor,” according to David Reed, Director of WWF’s Macroeconomics Programme based in Washington D.C., which seeks to influence development policies that affect the environment.

70% of poor people live in rural areas and depend upon natural resources for their livelihood and development. Deprived of this resource they see their living standards decline or migrate to urban areas. In an analysis that WWF has conducted of completed Poverty Reduction Strategy Papers in 5 African countries (Kenya, Tanzania, Madagascar, Cameroon, and Uganda; as part of a global analysis), promising opportunities to reduce poverty through macroeconomic and structural reform are being missed due to a “single-minded” quest for market efficiency and export promotion.

“Negotiations with the IMF focus mainly on infrastructure development and social activities which are important, but there can be no sustainability if the environment is not taken into consideration, as 80% of people in Africa depend directly on natural resources for survival,” says Sam Kanyamibwa, head of WWF’s East African Regional Programme based in Nairobi.

These strategies are designed to be nationally owned and they form the basis for lending by the IMF and the World Bank, as well as a blueprint for all development assistance. Half of all the countries that are eligible for concessional lending and debt relief are in Africa, where natural resources are the easiest target for export oriented economic expansion. Unless there is a drastic change in policy, paying attention to the sustainable use of natural resources in relation to poverty reduction, there is a danger that these resources will be depleted leading to grave long term consequences.

Another WWF analysis concludes that lending programmes of the IMF and the World Bank respond only to selected PRSP priorities — giving little attention to the rights of the poor or to improving environmental management.

“There is considerable pressure on the government of Zambia, for example, to take policy measures that adversely affect the poor such as introduction of a personal income tax at a flat rate of 30% including for those living under poverty”, according to Guy Scott, a Lusaka-based consultant working with WWF. He concludes that the “predatory behaviour of public institutions operating under the Washington Consensus notion of ’sustainability’ suggest that responsiveness of the IMF and the World Bank to the twin problems of environmental degradation and poverty has been more apparent than real."

WWF’s analysis suggests an alternative approach that may produce better results. It builds upon a strong analysis of the various factors that cause poverty, and works to empower local communities to access and manage their environments. An analysis of factors in 2 African countries (Zambia and South Africa) suggests that the poor have less to lose from economic changes than they do from the institutional arrangements of their governments often under pressure from the IMF and the World Bank.

“We hope that more African governments will put national interests first and not feel that they are victims of the policies of the World Bank and the IMF” said Reed.

Results show that rural communities, especially the poorest ones, are being locked out of the natural resources that they rely on, through a variety of public policies that focus on generating export revenue. The poor have been effectively shut out of the process, which has largely been serving the needs of people with investment capital. Unless countries have the capacity to link structural reform with protecting the environment, and involve a number of stakeholders in that process — including civil society — the situation will not improve, according to WWF.

For more information:

Brent Nordstrom
Communications Officer, WWF Macroeconomics Programme Office
Tel: +1 202 486 8972
E-mail: brent.nordstrom@wwfus.org

Shubh Kumar-Range
Senior Programme Manager, WWF Macroeconomics Programme Office
Tel: 1 202 778 9729
E-mail: shubh@wwfus.org