CHAPTER FOUR - REFORMING THE IFIS' POLICY FRAMEWORKS:
ACCENTUATING POVERTY REDUCTION AND SUSTAINABLE HUMAN DEVELOPMENT

4. TACKLING POVERTY AND SOCIAL INEQUITIES

Beyond the particular issues of structural adjustment, there is a need for IFI policies generally to target poverty reduction as explicitly as possible. One of the most disturbing criticisms of international assistance is that, despite a growing global underclass of more than one billion absolute poor, comparatively little ODA (by some estimates, less than 10%) is devoted to poverty objectives. The government has indicated that Canada will commit at least 25% of its ODA to "basic human needs". At the multilateral level of official development finance there must also be a greater concentration of concessional resources to where the problems are greatest. John Williamson told the Committee in Washington that "the tragedy of Africa is a standing rebuke to us all, but particularly to the Bank". Harvard economist Jeffrey Sachs has argued that: "Africa is the most formidable challenge facing the World Bank in the next decade, one that will be best met by phasing out traditional project-financing operations and redirecting more of the Bank's resources towards Africa's urgent needs." 32

The problem, however, is not that the MDBs are not talking a lot about poverty. Several of the regional banks have also set commendable targets in this regard. Senior officials we met with at the World Bank indicated significant increases in the proportion of lending for human resources development and the social sector. Vice-President Armeane Choski indicated that, not only did most recent SAPs include a poverty alleviation component, but that country strategy documents were now including "poverty assessments" and "public expenditure reviews" with a view to better targetting. We agree that, as he put it, "the political economy of reform has become crucial". Poverty is not just a static condition but a relationship of unequal power often accompanied by social and political marginalization. The Bank's apparent renewed interest in "sustainable poverty reduction" will be insufficient without a willingness to recognize the role of civil society in development, and to work closely with non-governmental organizations in tackling the root causes which create poverty within societies. 33

These are also phenomena which often underlie the exacerbation of ethnic tensions and that can build up into explosions of social violence. It is noteworthy that several witnesses (Jacques Bertrand, Wolfgang Reinecke, John Foster) cited past IFI policies in countries like Somalia and Rwanda - notorious examples of Africa's "failed states" - as having had unfortunate perverse effects in contributing to their downward spiral. The testimony of Manfred Bienefeld and John Loxley cast doubt on whether the IFIs are now in a much better position than before, even at the technical level of having adequate data, to come to grips in a serious way with the economic and social dimensions of reducing poverty. The distance separating IFI theories and bureaucracies from those realities explains why one priority for many reformers is to force the institutions to conduct social impact assessments, and to become more accountable at all levels, in ways that are responsive and participatory, for the effects of their lending policies and programs on local populations. 34

Accordingly, the Committee recommends that to strengthen the performance of the IFIs in tackling broader issues of reducing poverty and social inequities, the Halifax action programme clearly declare this to be a primary objective of their development lending. Specifically, Canada should call for: the MDBs as a whole to devote a rising proportion-from a minimum of 25%-of their concessional lending to explicit poverty reduction purposes, and for the World Bank in particular to direct more of its resources to assisting poor African countries; the IFIs to deepen their analysis of the roots of poverty and social instability in the countries in which they operate, working increasingly through NGOs active in this field; and the IFIs to prepare public social impact assessments, following consultations with locally-affected populations, for their development operations, including all major phases of structural adjustment programs.