THE WORLD BANK: IS ANYONE TENDING THE STORE?

PCDForum Column #73, Release Date April 20, 1994

by Robert J. Berg

While I respect the fundamental criticisms of the World Bank by those who call into question its very existence, I am among those who continue to work for its reform in the hope that it will yet fulfill its promise on the world scene. This said, I have come to the reluctant conclusion that reform is hampered by weak management oversight and lack of personal accountability on the part of the Bank's Board and top executives. I offer four examples:

1. Misinformation. In its loyalty to dogma, the World Bank has intentionally misled the public on the record of structural adjustment, its key policy of the last dozen years. Some of us have long held that the Bank's structural adjustment programs were failing in Africa (e.g., the Khartoum Declaration of 1986, which I co-drafted, and my closed door address to a 1991 meeting of the Governors of Africa's central banks). But the Bank said that we were wrong and that 30 to 33 African states were successfully reforming. Indeed, it has spent millions of dollars in an effort to prove its case.

This year the Bank reported that structural adjustment reforms were going well in only six African countries. Even the list of six "successes" includes dubious cases like Nigeria, which recently opted out of structural adjustment. When I asked a key Bank official to explain the difference between 30 to 33 successes reported last year and the 6 claimed this year he cavalierly replied: "Propaganda. We wanted to create a bandwagon effect." This bandwagon, by the way, was aimed at selling failed structural adjustment policies to Russia and her neighbors with profound consequences.

It is the most fundamental responsibility of the top officials of any multilateral institution to assure that their agency tells the truth. Yet there seems to be no penalty for Bank staff who have actively hid the truth on a policy that has adversely affected millions and millions of people. In the future how will we know which 80% of the Bank's claimed successes may not be true?

2. Poor Portfolio Management. The Bank has said that the education of girls is the very best investment it makes. (Basic education of boys can't be far behind.) If so, why isn't the Bank restructuring its development portfolio to assure that this is the last generation of unschooled children, instead of continuing to make low yielding investments like structural adjustment?

3. Wasteful Research Financing Practices. Some units of the Bank claim it is against Bank policy to self-finance in-house research. In these units thousands of hours of expensive professional time are wasted in a chaotic competition with the Bank's borrowers, universities and NGOs for bilateral and foundation research funding. Other units self-finance overly expensive Bank research programs out of Bank profits. Logic and fairness suggest that Bank staff should negotiate an annual research budget with their Board and stop making claims on the limited research funding available from external sources.

4. Erratic Policy Shifts. Two years ago the Bank was spending heavily on technical assistance. Last year the Bank announced that expatriate technical assistance was a waste of money and would be funded only on a case to case basis in places such as Africa. At first this abrupt policy shift was off, and then on, the record. Is anyone tending the store?

Given the substantial evidence of management weakness at senior levels in the Bank, I find it irritating when those who ignore these and other evident deficiencies devote themselves to defaming the Bank's critics. I heard one Bank Executive Director claim in recent meetings in the Bundestag and Mexico City that the entire group of Washington based NGOs is destroying the Bank with useless Washington blather. These are groups, along with a number of key Southern NGOs, that have been pressing the Bank hard on the question of sustainability. Like myself, these NGOS believe the Bank should be reformed rather than closed and they are raising fundamental issues that the Bank must address if it is to play a far more constructive role. Yet evident weaknesses in management competence, integrity, and accountability at the very highest levels of the Bank raise serious questions as to its ability and desire to achieve such reform.

Robert J. Berg is president of the International Development Conference, 1401 New York Ave., NW, Suite 1100, Washington, DC 20005 and a contributing editor of the PCDForum. This column was prepared and distributed by the PCDForum based on his article written for the IDC Policy Bulletin.

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