With a Little Help from Bill Gates, the World Bank Creates a New Aid Conditionality

Wednesday, April 20, 2016

An alluring cast of speakers including the First Lady Michelle Obama, Queen Rania of Jordan, John Kerry, and Ban Ki-moon, among others, spoke at last week’s World Bank Spring Meetings in Washington DC. Bill Gates was the guest star of the Bank’s final live-cast panel discussion, “A New Vision for Financing Development with Bill Gates.

A New Vision for Financing Development (credit: World Bank )
A New Vision for Financing Development, Credit: World Bank

With $43.5 billion in assets, the Bill and Melinda Gates Foundation (BMGF) is a major player in the field of international aid. Seated next to the World Bank President, Bill Gates, the former CEO of Microsoft, outlined three game-changers to ensure development. First, donors need to be constant in their commitment to development. Second, development requires new tools such as seeds, vaccines, or digital technologies. Third, “and perhaps most powerful,” declared Gates, the development community’s technical expertise should foster the adoption of best practices around tax, health, agriculture, and other areas. “How we use the expertise conditionality to drive the adoption of best practices faster is a big question for us,” he concluded.

Bill Gates’ mention of “expertise conditionality” should make us pause and reflect carefully on the words to understand the true implications.

During the 1980s, the concept of “aid conditionality” was the arsenal used to implement the World Bank and IMF’s Structural Adjustment Programs (SAPs), which imposed policy reforms as conditions to provide loans to developing countries. The SAPs forced the withdrawal of state intervention in key areas such as agriculture and deregulation of economies, which impoverished millions in developing countries.

Even though the anti-SAP backlash forced the World Bank to terminate the program, the goal of driving market-based, pro-private sector policy reforms in developing countries was not abandoned. While officially withdrawing the SAPs in 2002, the Bank launched a new project: the Doing Business index, which ranks countries according to “the ease of doing business.” As documented in a series of reports produced by the Oakland Institute, the Doing Business, deceitfully labeled “knowledge project,” is used to influence policy-making and reduce or do away with developing countries’ economic, social, and environmental standards.

The Doing Business’ annual rankings have been successful at driving “pro-business” policy reforms around the world. An estimated 525 reforms were inspired by the index between 2003 and 2014. These results spurred offshoot projects including the 2013 “Enabling the Business of Agriculture” (EBA), which benchmarks areas such as seeds, fertilizers, markets, transport, machinery, and finance, to determine whether countries’ laws facilitate doing business in agriculture or not.

The Gates Foundation is among the five international donors bankrolling the EBA, which it deems a powerful tool to inform policymakers of the nature and extent of regulations they need to put in place to attract investments.1 Besides the EBA, the foundation is engaged in other agriculture-related policy advocacy, especially in Africa. The largely Gates-funded Alliance for a Green Revolution in Africa (AGRA), for instance, advised and lobbied the governments of Ghana, Tanzania, and Malawi, among others, to adopt pro-business seed and land policy reforms.2 And it continues to finance the African Agricultural Technology Foundation (AATF), an institution that coordinates research and advocacy work on new technologies in agriculture, including genetically modified crops.

During the panel, Bill Gates and Jim Yong Kim concurred on the need to leverage increased private sector financing in development through business-friendly policies. While the World Bank President hailed countries who made “unpopular” policy choices, critical to “let private sector investors feel comfortable,” Gates hammered away the need to “reform the system” and underlined development aid’s capacity to influence the process.

Both ignored their co-panellist and Governor of the Reserve Bank of India, Raghuram Rajan, who called for development efforts to support the policies that developing countries want. Rajan also noted that global transparency on taxes and removal of barriers imposed by rich countries on exports from the developing countries would help build a more equitable world.

It would appear from the panel that it is easier for the Bank to implement top-down policies with the help of a multi-billionaire than to partner with developing countries to tackle deeply-rooted market flaws and tax evasion. If there is any irony in partnering with a private, tax-exempt foundation like the BMGF to give lessons on public governance to the rest of the world, the World Bank fails to see it.

Footnotes