Oxfam calls on rich countries to pressure the World Bank to end harmful lending practices

As the world’s richest donors are set to finalize their aid commitments to the World Bank this week, international development and aid agency Oxfam has called on them to use their influence to stop the Bank attaching harmful conditions to its loans. Donors are meeting in Berlin on December 13-14 to agree on how much they will give to the International Development Association (IDA) – the part of the World Bank Group that lends to the world’s poorest - for the next three years.

IDA is responsible for providing cheap long-term loans and grants to the world's poorest countries, 40 of which are in Africa. Oxfam has long been critical of conditions that micromanage poor countries’ decision making, or promote harmful economic policies – especially trade liberalization or privatization of essential services.

“This is the last chance for donors to use their political leverage to change the ‘business as usual’ approach of the World Bank to how it lends taxpayers’ money. Fresh money is needed, and the Bank’s coffers need to be filled, but not at any price. There is ample evidence to show that some of the privatization practices of the Bank have been very harmful to the poorest countries. Donors can’t give blank checks anymore," says Elizabeth Stuart of Oxfam International.

Oxfam points to the case of Mali where after privatizing its cotton and electricity sectors, the country faced serious socio-economic problems. In the cotton sector, the insistence by the World Bank on liberalization and a new price-setting mechanism has resulted in a 20 per cent drop in the price of cotton – a crop that sustains the livelihood of three million Malians.

Oxfam believes that conditions should only be made up of broadly agreed poverty reduction goals, linked to the Millennium Development Goals and other international standards such as human rights, as well as fiduciary controls.The international aid agency also says that it must be easier for the world poorest countries to access these funds from the World Bank in order for them to start building schools, or hiring the doctors and nurses their hospitals badly need.

“Developed countries need to show that they are serious about living up to their aid promises. Replenishing the World Bank’s fund is one way of doing this. But the buck doesn’t stop there: they also need to make sure that poor countries can actually get hold that money to fight poverty, rather than having to jump through bureaucratic hoops that help no one,” says Stuart.