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ZIMBABWE: World Bank had "negligible" impact on development
IRIN News
August 18, 2004

http://www.irinnews.org/report.asp?ReportID=42734

JOHANNESBURG - The World Bank's assistance programmes in Zimbabwe have been largely "unsatisfactory" over the past two decades, a new independent assessment has concluded.

According to a Country Assistance Evaluation (CAE) report released in May this year, the impact of the Bank's programmes on the country's overall development between 1980 and 2001 had been "negligible".

The CAE is an official assessment meachanism that appraises the relevancy, efficacy, and institutional development of the Bank's assistance programmes.

Although the Bank had contributed to liberalising trade and reforming agricultural markets over the past 20 years, the evaluation alleged that its support packages had failed to bolster macroeconomic stability or reduce overall poverty, and despite efforts to reform the civil service, no improvement in fiscal discipline had been achieved.

However, the WB's poor performance was linked to the failure by Zimbabwean authorities to commit to macroeconomic stability and poverty alleviation, the report said.

At the end of the 1980s economic growth in Zimbabwe had declined to just one percent per annum and unemployment stood at more than 20 percent. Recognising the need for more rapid growth, the government embarked on the Economic and Structural Adjustment Programme (ESAP) from 1991 to 1995, and although substantial progress in liberalising trade and deregulating agricultural marketing was achieved, macroeconomic stability remained shaky.

Deregulation of the labour market and a reduction in public expenditure led to sharp declines in employment in manufacturing and public administration, and agricultural growth was not broad based enough to reduce rural poverty. Extreme poverty increased from 26 percent to 35 percent between 1991 and 1995.

The failure to undertake a public expenditure review (PER) prior to 1995 was viewed as a key error by CAE. "Given the necessity of macroeconomic stability, especially achieving fiscal sustainability, the Bank should have undertaken the PER prior to 1995 ... and should have formed a judgement not only about the macroeconomic/fiscal targets, but also about the likelihood of their implementation," the report suggested.

Although the Bank's management accepted that a PER should have been conducted prior to 1995, it disagreed with the CAE claim that no substantive analytical work on poverty had been completed and insufficient attention had been given to social safety nets. The Bank pointed to a wide range of analytical studies conducted on poverty in 1995/96, but agreed that land reform and HIV/AIDS interventions could have started earlier.

The report pointed out that AIDS now affects one-third of the adult population and life expectancy fell from 56 years in 1990 to 40 years in 2000.

With regard to the controversial land redistribution issue, the assessment said although the Bank's strategy was "appropriate" in responding to the difficulties the country faced in the 1980s, it did not provide clear direction to land reform.

"Lending was concentrated on investment loans for infrastructure. While analytical work appropriately focused on improving economic management, all five major Bank reports made no recommendations on land reform," the evaluation said.

It was suggested that despite financial constraints, which hampered the Bank's ability to finance land acquisition, the financial institution could have taken "alternative approaches".

"The Bank should have analysed options and consequences of land reform, and should have signalled to the government earlier in the 1990s that it was willing to support a sensible land reform programme with available instruments," the report commented.

It recommended that the Bank stay engaged in the country, but observed that the current political situation meant "the Bank can do little to move forward the economic and social agenda".

Instead, there should be increased attention paid to understanding the current levels of poverty and inequality, and the impact of economic policies on these issues. The Bank should also analyse the political and economic factors which had impeded reforms in the past.

"A resumption of normal Bank lending should be conditional on credible measures to achieve macroeconomic stability, fundamental governance reforms ... parastatal reforms and the formulation of credible initial steps in the implementation of an action plan on land issues," the report recommended.

Zimbabwe has been in arrears to the Bank since May 2000.

More details: www.sarpn.org.za

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