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Conceptualizing RFI’s versus GFI’s - Ravi Kanbur
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4. Conditionality and Ownership
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There is, however, one generic issue in which a clear case could be made for
potentially different comparative advantages of regional versus global institutions.
Conditionality, as practiced by the Bretton Woods Institutions in particular, has come in
for a lot of criticism, for being imposed from the outside on an unwilling and resentful
population. And this is just on economic conditionality. As the development dialogue
broadens from the purely economic to include aspects of governance and democracy,
tensions between donor and recipient are bound to increase as different interpretations are
given of these concepts and their implementation.
I start with the premise that it is not conditionality per se, but its nature and its
implementation that is at issue. For example, most NGO’s (Northern and Southern)
would like to see stronger conditionality on governments to spend more on the social
sectors. It is not conditionality per se that they object to, but its content. For many in the
middle class elite in recipient countries, it is not necessarily economic conditionality that
jars so much as the perceived “imperial” mechanisms for their implementation. The wait
for the IMF/World Bank mission to pronounce on the country’s performance brings to
mind recent eras of political domination by foreign powers, direct and indirect. In this
atmosphere, no benefit of doubt is given, and even policies that would otherwise be
accepted become the subject of vehement discourse, not because of the policies
themselves but because of the mechanisms for their implementation and monitoring.
Even for governments convinced of the broad policies, and willing to take the domestic
political heat, there is irritation at the detail in the conditionalities, and at the lack of
appreciation of the time needed for implementation.
There will always be conditionality, implicit or explicit, in a donor-recipient
relationship. No donor will write a blank check, and there will always be differing views
on what constitutes an appropriate development strategy and an appropriate use of donor
resources, between donor and recipient, and among donors themselves. Our task, rather,
should be to fashion mechanisms that reduce these tensions and that do not, by
themselves, become obstacles to reaching agreement on use of resources. And it is well to
recognize upfront that in these matters, perception is as important as reality.
Perhaps the problem can be best posed in terms of a government and a polity that
needs to be delivered a “tough” message about its policies. I do not specify what these
are, but they could range from economic through social to governance issues. Of course,
the best source of such a message is the population itself, through the ballot box. But
sometimes the population itself is behind these policies. In any event, one possible
messenger for this tough message is from outside the country. This can come in a variety
of ways, one of which is through establishing and implementing conditionality in the
transfer of resources from donors. We can then ask the question—who should this
messenger be?
An examination of the recent New Partnership for African Development
(NEPAD) initiative in Africa highlights some of the issues involved. A central feature of
the NEPAD initiative, which sets it apart from all of the many previous Africa-wide
initiatives coming from the continent, is the proclamation of the importance of
governance and democracy as key building blocks of development and poverty reduction.
But equally important is the philosophy of “mutual monitoring” in ensuring that common
standards are met and followed in these (and other) areas. It is understandable why
donors have welcomed this initiative. It is long recognized that conditionality applied in
the past through the Bretton Woods Institutions has not worked, and the doubts and
suspicions sown in the past negatively impact any reforms of conditionality through
processes that emphasize “ownership”. The standard criticism of the PRSP (Poverty
Reduction Strategy Paper) process, for example, is that the content of the papers is very
little influenced by the dialogue surrounding it. Whatever the truth of this criticism, the
point is that any process emanating from the IFI’s will now be seen as tainted and for that
reason less effective than it might otherwise have been. In this context, alternative
mechanisms for developing and monitoring conditionality need to be explored.
The theory behind the NEPAD mechanism is presumably that Africans and
African governments are more likely to accept criticism from other Africans than from
people outside the region. There is certainly some truth to this, and it applies more
generally to other regions as well. But this is obviously too simple a characterization. A
counter argument is that neighbors might be less likely to criticize each other, for a host
of reasons also related to proximity. The reluctance of African leaders to criticize Mugabe in Zimbabwe is often produced as evidence for this position. Indeed, some donor
countries have made the Zimbabwe case the first “litmus test” for the workability of the
NEPAD mechanisms. This in turn has led many in Africa to criticize NEPAD as simply a
tool for donor interests. At the other extreme, however, there is a worry that localized
monitoring mechanisms may fall prey to the intense ethnic and other rivalries that exist
between neighbors, and may actually destabilize the region rather than bring it under an
overarching cooperative frame. By this argument, then, there is something to be said for
having a complete outsider deliver those tough messages.
The central problem with the World Bank and the IMF delivering these tough
messages to individual countries, and making their funding conditional on them, is that
these agencies are widely perceived to follow the interests of the G 7 countries. As long
as this perception persists, there will be resistance and resentment at the involvement of
these agencies. To the extent that the RFI’s are not plagued by this perception, because of
their governance structures or because of a perceived greater understanding of ground
level problems, the RFI’s can play an important role, perhaps even a lead role, in
developing conditionality and monitoring its implementation. Following the thread of the
argument developed above, in an ideal setting the IFI’s would only come in for situations
where a true outsider was needed, perhaps in the framework of an “appeal” process
whereby a country could go to the IFI’s as a higher, more independent, authority. But for
this to happen the IFI’s would have to be restructured to earn this standing—certainly,
reform of governance structures would be a key. Till this restructuring takes place, however, there is an argument for allowing the RFI’s to take the lead in the process of
interacting with the recipient country in developing and monitoring donor conditionality.
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