Hazardous to Health: The World Bank and IMF in Africa
Action Position Paper
SUMMARY CONTENTS: This posting contains the first part of an Africa Action position paper released on April 18 at a joint press briefing in Washington with the World Bank Bonds Boycott. On the eve of the press conference, Africa Action executive director Salih Booker stated, "The policies of the World Bank and IMF have eroded Africa's health care systems and intensified the poverty of Africa's people. These institutions must be made accountable for their role in causing the worst health crisis in human history, which Africa now faces." Africa Action supports the World Bank Bonds Boycott Campaign as a tool to exert pressure on the World Bank to cancel Africa's debt and end the imposition of economic policies harmful to health. Endnotes for part 1 1. Paul Kieti Kimalu, Debt Relief and Health Care in Kenya (Nairobi: Kenya Institute for Public Policy Research and Analysis, July 2001). http://www.wider.unu.edu/conference/conference-2001-2/poster%20pa pers/kimalu.pdf 2. The World Bank, World Development Indicators (Washington, 2001). See table 8 at: http://www.worldbank.org/poverty/data/trends/mort.htm 3. Reported from the fourth general assembly of the African Population Commission, Addis Ababa, Ethiopia, February 2002. See http://www.globalpolicy.org/socecon/develop/aids/africa/LifeXpec0 212.htm 4. Kevin Watkins et al, The Oxfam Poverty Report (Oxford, 1995), p. 74. 5. The U.S. holds 16.45% of the votes at the World Bank, and over 17% of the votes at the International Monetary Fund. 6. Rick Rowden, "Globalization and Protest Against the Policies and Outcomes of a Corporate-Led Process", a paper presented at the "Poverty and Globalization Conference," St. John's University, Jamaica, NY, April 2001. (Available upon request from the author at rowden@action.org) 7. The World Bank, Annual Report 2001 (Washington, 2001), volume 1, p. 154. http://www.worldbank.org/annualreport/2001/Bank_splash12.html 8. Meredeth Turshen, Privatizing Health Services in Africa (New Brunswick, NJ, Rutgers University Press, 1999), p. 38. 9. John Yudkin, "Tanzania: still optimistic after all these years?", in The Lancet (1999; 353: 1519-21). 10. UNICEF, "Balance sheet of human progress in Africa," posted beginning in September 2000 at http://www.unicef.org/miscellaneous/balance.htm 11. Turshen, Privatizing Health Services in Africa, p. 17. 12. UNICEF, The State of the World's Children (New York, 1998), section on "The Silent Emergency". http://www.unicef.org/sowc98/silent.htm 13. UNICEF, "Balance sheet of human progress in Africa." 14. Joint UNAIDS/WHO Press Release, "HIV Causing Tuberculosis Cases to Double in Africa", April 23, 2001. See http://www.unaids.org/whatsnew/press/eng/pressarc01/ TB_240401.html 15. "Roll Back Malaria" a partnership of the World Health Organization (WHO), UNICEF, UNDP and the World Bank. See http://www.rbm.who.int Hazardous to Health: The World Bank and IMF in Africa Africa Action Position Paper By: Ann-Louise Colgan, Research Associate, Africa Action April, 2002 (continued from part 1) More than 17 million Africans have died of HIV/AIDS. It is currently estimated that more than 28 million of the 40 million people living with the disease worldwide are in sub-Saharan Africa [16]. There are more than 12 million African orphans who have lost their mothers or both parents to AIDS [17]. The social and economic effects of the AIDS crisis are reversing post-independence progress and exacerbating conditions of underdevelopment. The policies imposed by the World Bank and IMF have fueled the spread of the disease and continue to hinder the response to this health emergency. Declining Health Care Systems As poverty has increased Africa's health problems, World Bank and IMF intervention has also led to a breakdown of health care delivery systems. The role of the state in the provision of health care services has been reduced substantially. Cutbacks in the health sector have severely undermined existing services. And Africa's debt repayment obligations to foreign creditors have diverted money directly from spending on health. Cutbacks in government spending represent a major component of World Bank and IMF adjustment programs. In the 1980s, real disbursements per person dropped in government expenditure in many African countries. In Madagascar, between 1977 and 1985, government expenditures declined by 24% [18]. Cutbacks in government budgets led to major cuts in the health sector. In the 42 poorest countries in Africa, spending on health care fell by 50% during the 1980s [19]. In Nigeria, per capita expenditure on health fell by 75% between 1980 and 1987 [20]. The dramatic drop in health expenditure in the 1980s and 1990s resulted in the closure of hundreds of clinics, hospitals and medical facilities across the continent. Those that remained open were generally left under-staffed and lacking in essential medical supplies. Many were unable to afford even basic vaccines. In 14 sub-Saharan African countries between 1990-1992, the level of polio vaccination dropped by more than 10% as a result of cutbacks in health care services [21]. Thousands of health care professionals throughout the continent lost their jobs as a result of public sector cuts. In Ghana, between 1982 and 1992, the number of doctors in the government health care system dropped from 1700 to 665. In Senegal, between 1980 and 1993, the number of people per nurse increased six-fold [22]. Even as government spending on health was cut back, the amounts being paid by African governments to foreign creditors continued to increase. By the 1990s, most African countries were spending more repaying foreign debts than on health or education for their people. Health care services in African countries disintegrated, while desperately needed resources were siphoned off by foreign creditors. It was estimated in 1997 that sub-Saharan African governments were transferring to Northern creditors four times what they were spending on the health of their people [23]. IN 1998, Senegal spent five times as much repaying foreign debts as on health [24]. Across Africa, debt repayments compete directly with spending on Africa's health care services. The erosion of Africa's health care infrastructure has left many countries unable to cope with the impact of HIV/AIDS and other diseases. Efforts to address the health crisis have been undermined by the lack of available resources and the breakdown in health care delivery systems. The privatization of basic health care has further impeded the response to the health crisis. 4. Privatization and User Fees Privatization forms a centerpiece of the World Bank and IMF agenda. Reducing the size and scope of government, and privatizing state-owned enterprises and services, is a major element of World Bank and IMF programs. Under World Bank and IMF direction, control of health care services has increasingly been transferred from African governments to the private sector. The rationale is that health care services are better financed and more efficiently delivered privately. The World Bank has recommended several forms of privatization in the health sector. These include: the introduction of "user fees" for health services previously provided free of charge; the promotion of health insurance schemes; increased investments in private care in order to attract patients to private facilities. Through these measures, private services are made the primary focus of health care. Throughout Africa, the privatization of health care has reduced access to necessary services. The introduction of market principles into health care delivery has transformed health care from a public service to a private commodity. The outcome has been the denial of access to the poor, who cannot afford to pay for private care. For example, the introduction of user fees for health care services has been shown to sharply reduce access for those unable to pay. The World Bank and IMF have promoted "user fees" as a means of generating revenue for the health sector. They argue that these fees will tax the rich and that a system of exemptions will protect the poor from the costs. However, the evidence shows that user fees have actually succeeded in driving the poor away from health care services. Ghana, Swaziland and the former Zaire were among the first African countries where user fees replaced free, or almost free, services. In each of these, studies showed that the introduction of fees led to reduced utilization of these services [25]. Studies in C"te d'Ivoire have shown that those with income above the median make more use of medical services when a user fee is charged. But those with below median incomes reduce their use [26]. Across Africa, reports indicate that attendance at hospitals and clinics drops significantly after the introduction of user fees. Schemes intended to exempt the poor from user fees have been shown to be ineffective. A comprehensive UNICEF study discovered that such schemes are rare [27]. The study claims that poor people are generally unaware of such exemptions, and that there are often complex administrative barriers involved. The report concludes that the implementation of exemption schemes is infrequent and is applied in ad hoc ways. It therefore does not appear that user fees have been managed so as to collect revenues only from the rich. Instead, they have had the effect of closing off access to those who cannot pay. As a recent paper concluded, user fees "increase the barriers disproportionately faced by the poor when seeking health care."[28] Their failure to generate revenue has also undermined their economic rationale, as propounded by the World Bank and IMF. Another form of privatization involves the promotion of insurance schemes as a means to defray the costs of private health care. This is inherently flawed in the African context. Less than 10% of Africa's labor force is employed in the formal job sector [29]. Therefore, the vast majority of people are not eligible for insurance through their employer. Income levels in Africa are extremely low, and have been reduced further by wage cuts and lay- offs associated with World Bank and IMF austerity policies. Most Africans cannot afford the cost of private insurance. In view of such circumstances, insurance schemes cannot resolve the issue of access to private health care in African countries [30]. Beyond the issue of affordability, private health care is also inappropriate in responding to Africa's particular health needs. When infectious diseases constitute the greatest challenge to health in Africa, public health services are essential. Private health care cannot make the necessary interventions at the community level. Private care is less effective at prevention, and is less able to cope with epidemic situations. Successfully responding to the spread of HIV/AIDS and other diseases in Africa requires strong public health care services. The privatization of health care in Africa has created a two-tier system which reinforces economic and social inequalities. As health care has become an expensive privilege, the poor have been unable to pay for essential services. The result has been reduced access and increased rates of illness and mortality. Despite these devastating consequences, the World Bank and IMF have continued to push for the privatization of public health services. 5. Recent Developments: Reform or Repackaging? In recent years, there has been growing criticism of the impact of World Bank and IMF programs in developing countries. As a result, these institutions have shifted their public stance in favor of "poverty reduction." They have attempted to re-package structural adjustment to include greater emphasis on social development programs. The "Poverty Reduction" Spin Both the World Bank and IMF have proclaimed a greater commitment to "poverty reduction" in recent years. They have made it a requirement for countries to prepare Poverty Reduction Strategy Papers (PRSPs) as a condition for the receipt of new loans or debt relief. These papers are intended to be drawn up by national governments in consultation with civil society "stakeholders" and with World Bank and IMF guidance. They are to outline the priorities and strategies of African governments in their development efforts. In order to reflect their concern with social development, the World Bank and IMF have also renamed structural adjustment lending. The IMF now uses the term "Poverty Reduction and Growth Facility" (PRGF). The World Bank's new term is "Poverty Reduction and Support Credits"(PRSCs). The World Bank has also increased its funding for health, and for HIV/AIDS programs in particular. While the shift in focus towards prioritizing social development and poverty eradication is welcome, fundamental problems remain. New lending for health and education can achieve little when the debt burden of most African countries is already unsustainable. Debt cancellation should be the first step in enabling African countries to tackle their social development challenges. Additional resources to support health and education programs should be conceived as public investment, not new loans. The new spin on the World Bank and IMF priorities fails to change the basic agenda and operations of these institutions. Indeed, it appears to be largely an exercise in public relations. The conditions attached to World Bank and IMF loans still reflect the same orientation prescribed over the past two decades. The recent moves towards promoting poverty reduction have actually permitted these institutions to increase the scope of their loan conditions to include social sector reforms and governance aspects. This allows an even greater intrusion into the domestic policies of African countries. It is highly inappropriate that external creditors should have such control over the priorities of African governments. And it is disingenuous for such creditors to proclaim concern with poverty reduction when they continue to drain desperately needed resources from the poorest countries. Equivocation on User Fees In 1998, the Bank's Operations Evaluation Department reported that nearly 75% of projects in sub-Saharan Africa included the establishment or expansion of user fees [31]. As the negative effects of user fees have begun receive more public attention, the Bank has sought to distance itself from the promotion of these fees. In a policy statement at the end of 2000, the World Bank announced that it was stepping back from the promotion of user fees for basic social services in the developing world. It stated that it supports the provision of basic health care for free. However, it added that well-designed and well-implemented fees can be useful in mobilizing additional resources for these services in poor countries. It maintains that exemption schemes do work in some countries. Overall, it remains convinced that user fees can improve the quality of health care services being provided. It is difficult to ascertain whether the World Bank is still pushing user fees in practice. Indeed, it is not easy to monitor the content of the Bank's adjustment programs at all because of the lack of information disclosure on this form of lending. In the U.S., an important victory was achieved in 2000, when Congress passed language against user fees. This language requires the U.S. representatives to the World Bank and IMF to oppose user fees. These representatives must inform Congress within 10 days if any loan requiring the imposition of user fees is approved by the International Financial Institutions. Despite this victory, challenges remain. It has been documented in at least one case since then that user fees have been included in a loan package, despite this legislative language. This calls into question the commitment of the World Bank and, of its U.S. Directors, to ending user fees as part of World Bank and IMF prescriptions. At the IMF, no move has been made to indicate a new policy on the imposition of user fees in borrower countries. Water Privatization, a threat to future health The privatization of public water systems is a strategy being promoted by the World Bank in an increasing number of African countries. This involves the reduction of public subsidies for clean water. It also involves, in some cases, the introduction of cost-recovery measures for access to water supplies. This development represents a major cause for concern. Access to clean water is a vital public health necessity and a basic human right. The privatization of water can only lead to reduced access to safe water for poor communities. In Ghana, the recent moves towards water privatization are being opposed by civil society groups for this reason. Already, according to the Ghanaian Ministry of Health, half of all clinic visits in Ghana are due to water-borne illnesses. The groups opposing privatization are concerned that this move will further reduce access to safe and affordable water in urban areas [32]. Over two million people in developing countries die each year because of diseases related to lack of clean water. Many of these are children. Increased privatization of water in African countries can only increase the risk of ill-health among the poor. 6. Conclusion The free market fundamentalism of the World Bank and IMF has had a disastrous impact on Africa's health. The all-out pursuit of market-led growth has undermined health and health care in African countries. It has forced governments to sacrifice social needs to meet macroeconomic goals. This approach to development is fundamentally flawed. The failure to prioritize public health denies its significance in promoting long-term economic growth. As the WHO Commission on Macroeconomics and Health recently concluded, health is more than an outcome of development, it is a crucial means to achieving development [33]. Investments in Africa's health must therefore form a central part of any comprehensive development strategy. Economic and social progress in Africa cannot succeed in the context of the current health crisis. In order to address this crisis, it is necessary to tackle the structural factors that fuel it. The World Bank and IMF must accept responsibility for the devastating impact that their policies have had on Africa's health. If the U.S. is serious about responding to Africa's health crisis, it must use its power at the World Bank and IMF to end the harmful policies of these institutions. Endnotes for part 2 16. UNAIDS/World Health Organization (WHO), "AIDS Epidemic Update", December 2001 See http://www.unaids.org/epidemic_update/report_dec01/index.html 17. Salih Booker and William Minter, "AIDS in Africa: is the world concerned enough?", in Great Decisions, 2002 (New York, Foreign Policy Association, 2002). See http://www.africaaction.org/action/aids2002.htm 18. Turshen, Privatizing Health Services in Africa, p. 16. 19. Inter-Church Coalition on Africa (ICCAF), Beyond Adjustment: Responding to the Health Crisis in Africa (Toronto, 1993), p. 17. 20. ICCAF, "Beyond Adjustment," p. 19. 21. Kamkes, J., van der Meer, J., Mooren, H., and de Wildt, G., "Economic adjustment in poor countries is too painful for health care", Bulletin Medicus Mundi (No. 64, April 1997) (http://www.medicusmundi.ch/bulletin/bulletin641.htm) 22. B. G. Schoepf, C. Schoepf, and J. Millen, "Theoretical Therapies, Remote Remedies: SAPs and the Political Ecology of Poverty and Health in Africa," in J. Yong Kim, J. Millen, A. Irwin, A., and J. Gershman, J., eds., Dying for Growth. Global Inequality and the Health of the Poor (Monroe, ME: Common Courage Press, 2000), p. 112. 23. United Nations Development Programme (UNDP), Human Development Report 1997 (New York: Oxford University Press, 1997). 24. Jubilee 2000 Coalition, UK, Through the Eye of A Needle. The Africa Debt Report (London, 2000), p. 4. See http://www.jubilee2000uk.org/analysis/reports/needle.htm 25. D. Arhin-Tenkorang, "Mobilizing Resources for Health: The Case for User Fees Revisited", WHO Commission on Macroeconomics and Health (CMH) Working Paper Series, Paper No. WG3:6., November 2000. Available through http://www.who.int/cmhreport 26. WHO, "Financing Essential Drugs: Report of a WHO Workshop", document WHO/DAP/88.10, 13. Referenced in Turshen, Privatizing Health Services in Africa., p. 48. 27. S. Reddy. and J. Vandemoortele, "User Financing of Basic Social Services. A review of theoretical arguments and empirical evidence," 1996. See http://www.unicef.org/reseval/pdfs/Userfees.pdf 28. Arhin-Tenkorang, "Mobilizing Resources for Health." 29. The World Bank, World Development Report 1995 (New York: Oxford University Press, 1995). Referenced in Turshen, Privatizing Health Services in Africa., p. 61. 30. Turshen, Privatizing Health Services in Africa. 31. John Gershman, "The World Bank and Health". See http://www.bicusa.org/ptoc/htm/gershman_health.htm 32. For more information, see http://www.isodec.org.gh/isodec/campaigns.htm 33. For the final report of the WHO Commission on Macroeconomics and Health, see the section on the WHO website at http://www.who.int/cmhreport ************************************************************ This material is distributed by Africa Action (incorporating the Africa Policy Information Center, The Africa Fund, and the American Committee on Africa). 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