Poverty and Funding by International Agencies

The following letter to the Editor of the New York Times following the street protests in Washington, D.C., against the World Bank on April 18 and 19, 2000.

Last week's street protests in front of the World Bank and the International Monetary Fund headquarters in Washington, D.C., brought to focus the lack of sufficient progress in dealing with poverty in most developing countries. It is true that even after half a century of assistance by these and other international institutions in areas of agricultural output, job creation, education, health, and infrastructure development, amongst others, more people are in poverty now than at any time before. Admittedly, the protestors are generally correct in their assertions about the condition of poor nations, but the questions that need to be asked are, who is to be blamed for this failure, and what fundamental changes are needed.

It is no secret that billions of dollars have been wasted by many governments on projects that have yielded little or no benefit to the intended segment of the society, the poor. Even in countries that have experienced rapid industrial development in the past decade, the living conditions in rural areas have improved very little. In India alone, the rural population now exceeds 600 million people, or nearly two-third the total population, and their social and economic status has hardly changed from all the recent reforms instituted by the government. The situation is not much different in practically every other developing country.

Under the present arrangement where funds allocated by international institutions are mostly channeled through national government agencies, it is not possible to assure the desired outcomes. Corrupt governments and inefficient bureaucracies are the real reasons for the failure to surmount poverty. International institutions are in no position to bring about the much needed internal reforms and fundamental changes in governance in any developing country.

So, how should international development and lending agencies reform themselves? Perhaps, the protestors ought to be telling the World Bank not to fund projects through corrupt governments and inefficient bureaucracies. Alternately, new ways need to be found to directly involve the private sector and non-governmental organizations (NGOs), without the crippling governmental intervention. Also, as it would be expected in the private sector, projects that fail to meet their milestones should not receive continued funding. The time has come to demand accountability and performance on the part of recipients of funds in developing countries.


Abraham M. George is the president of The George Foundation, a non-profit organization engaged in several projects in India on education and health in rural areas.

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