The World Bank issued a statement on 8 August 2023 announcing that it had suspended all new public financing to Uganda over concerns with the country’s anti-homosexuality law, which “fundamentally contradicts the World Bank Group’s values.”
According to Human Rights Watch, the anti-homosexuality act violates multiple fundamental rights guaranteed under Uganda’s constitution and a number of international human rights agreements which the government of Uganda has signed. The act was first proposed in March 2023, and adopted by the Ugandan parliament in early May.
The World Bank, and the diplomatic and donor community writ large, closely follow what happens in Ugandan politics.
It took three months for the bank to react and issue the statement. That was quite fast. The World Bank is usually a slow mover because of its due diligence bureaucracy. It takes time to get members on board behind political statements. So, because it only took three months, one could argue there was an internal push from central people or member states. This says something about the bank’s ambiguous relationship with the domestic politics of its client states and how it deals with political concerns.
The World Bank has an apolitical mandate. Article IV (section 10) of the Bank’s articles of agreement says that the bank and its officers shall not interfere in the political affairs of any member; nor shall they be influenced in their decisions by the political character of the member or members concerned.
On the other hand, its mission statement “to end extreme poverty and promote prosperity in a sustainable way” is not only political but requires political action.
As a social anthropologist, I have been researching international aid in eastern Africa since 2006, and in particular the relationship between the World Bank and Uganda.
The World Bank’s engagement with Uganda has always had an impact on the country’s internal affairs. In my view, the recent suspension of funding over the anti-homosexuality law was in keeping with this tradition. The previous interventions in domestic issues have included presidential term limits, market reforms and governance reforms.
I believe the interventions should be viewed in the context of the informal and indirect means through which the World Bank seeks to control its clients. Despite its insistence on national ownership of its projects, the World Bank uses its loan portfolio to govern and control its clients.
Presidential term limits
In 2005/6, the World Bank cut its loans to Uganda by 10 per cent because of technical issues, referred to as “prior actions”, which the government had failed to implement before signing the loan agreement, causing expenditure overruns in the public administration budget. In my view, the real reason for cutting aid was political. The World Bank was frustrated when President Yoweri Museveni lifted presidential term limits to seek re-election again.
So, the recent reaction to the anti-homosexuality act shows a continuity in how the World Bank responds to domestic political issues. It also shows a change, in that the response is not rooted in politics or disguised as a form of techno-bureaucracy, but is explicitly linked to values. The tone is different. The World Bank has always sought to appear neutral on values: this suggests to me that the institution’s most prominent owners and shareholders have weighed in.
Market reforms
During the structural adjustment era, which lasted until about 2000, World Bank loans to Uganda and other recipients came with strict conditions and pre-packaged policies. The bank could make loans conditional on the recipient state privatising state-owned enterprises or liberalising the economy. These are highly political and ideological measures in the sovereign domain of the client state. Mr Museveni, for example, bought into many of the structural reform programmes, which included market reforms and reorganisation of the power sector. This is in contrast to Ethiopia, which until recently was seen as more resistant to reforms proposed by the World Bank.
A later disbursement tactic was to make concessional loans conditional on the government producing its own national poverty reduction strategy. Once that was endorsed by the bank, the bank would provide financial assistance to help the government implement its own strategy. This avoided questions about external governance and policy imposition.
Governance reforms
As the World Bank moved away from direct control, it sought to retain power through other means – while respecting national ownership. Whatever is proposed by aid recipients still needs the bank’s endorsement to become effective.
The World Bank’s power and control doesn’t just lie in its ability to decide what to fund and when to stop funding. It is also a result of the bank’s ability to frame the partnership and the conditions under which the recipient exercises the freedom it has been given.
One such freedoms concerns the formulation of national development policy. National policies need the bank’s approval to be effective; the client government essentially does what the bank wants, but voluntarily. The bank governs at a distance; the policies it funds are defined as the state’s own policies.
The World Bank, and donors in general, always emphasise the principle of national ownership, even when their policies undermine it. This gives donors the advantage of blaming their clients for failure when aid programmes do not work. And indirect governance structures imply that client governments appear both as objects to be shaped by donor policies and as subjects with whom agreements are made.
What next
How the World Bank governs and relates to its clients (not just in Uganda) has changed over time, from direct power and policy imposition to a more indirect and tacit dynamic cloaked as mutual partnership.
The fact that the Ugandan government went head and passed the anti-homosexuality bill, despite the bank’s indirect governance and technocratic micromanagement, can thus be read as a failure of the partnership arrangement and the bank’s ability to govern at a distance.
Lobbying and arm-twisting by international donors, including the US and the EU, also failed to persuade the government to drop the bill.
More actors and emerging economies are becoming active as sources of funding, such as China, the Gulf states, Russia, and private actors. These are potentially replacing traditional Western donors, marking a shift towards greater geopolitical rivalry on the African continent. But few lunches are free, and the new, emerging actors bring new conditions and expectations. The World Bank, with its [supposed] commitment to transparency and democracy, may after all be preferable.
A return to the more direct, conditionality-based governance of the structural adjustment era may be a way of dealing with values, but it could jeopardise national ownership and mutual partnership.
Jon Harald Sande Lie, Research Professor, Norwegian Institute of International Affairs
This article is republished from The Conversation under a Creative Commons license. Read the original article.
