No Credit Due: The World Bank and IMF in Africa

The Institute for Global Dialogue is an independent South African non-government organisation that provides policy analysis on the changing global environment and its impact on South Africa for the benefit of government and civil society.

This paper seeks to explain the policy-based lending progamme of the World Bank (WB), and the significance of its engagement with developing economies. It is divided into two parts. The first deals with the history and economics of international development policy vis-a-vis developing economies. It starts by explaining the WB’s origins and objectives, and then addresses the origins, objectives, and outcomes of its initial project-based lending programme. We argue that the WB’s earlier poverty alleviation project failed to achieve its stated objectives, and worsened rather than resolved problems in third world countries in which these projects were undertaken.

We also interrogate the events and conditions that led to a shift by the WB from project-based lending to policy-based lending, as well as the modalities of this shift. We argue that, through policy-based lending, the WB effectively controls the economies of borrowing countries, leaving them very little room to formulate and implement autonomous economic policies. The WB’s conditionalities, sometimes combined with that of the International Monetary Fund (IMF), have compounded the economic crises in numerous third world countries, with Africa the worst affected.

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