Wednesday, May 24, 2006

World Bank, PBS, and Aid Politics for Dummies: Part 1

I haven’t been this excited about economics (and it might just be hormones) since I was a kiddie intern at a law firm and discovered that each copy I made for the partner ka-ching-ed the firm something like $1.50. I used to go home and record my august contribution to the corporate machine.

There is a fascinating conversation going on between Ethiopians in the Diaspora and the World Bank, and even for us econ-dropouts, it has been an epiphany. Let the choir say ‘Amen.’

I know. I know. Is there a subject any less interesting than economics? I hear ya. But trust me on this… something’s different.

So last December, after the Ethiopian government decided the best way to handle peaceful protest was to… negotiate in good faith to find a solution to the problem…. Ehhh… damn hormones. No. After the Ethiopian government thought it was best to shoot people and establish newly-minted concentration camps, the World Bank and donor nations took a principled stand and suspended direct budgetary aid. Who’hatt?! Did they ever.

But spring has sprung and donor nations and the World Bank got that itchy feeling. Talk about resuming aid to the Ethiopian government started. (By the way, donors who provide budget support to Ethiopia include the African Development Bank, Canada, the European Commission, Germany, Ireland, Sweden, the UK, and the World Bank.)

Tiny problem: with the Ethiopian government continuing to act like a goon (say, like, conducting the most deliriously bizarre trial against opposition leadership, journalists and members of civic movements this side of an Australian zoo), no decent human being would dream of rewarding it with a blank check.

Big Solution: Resume direct budgetary aid but don’t call it direct budgetary aid. This is your brain; this is your brain on World Bank.

Here is the flyer that started it all for me. It urges American taxpayers to hold the World Bank accountable, and not repeat past disastrous forays into lending money to authoritarian governments. There was an action item to call the lead economist, the country director and the country programme coordinator of the WB.

That was followed by a brilliant article in Ethiomedia, Is aid in Ethiopia a tool for, or a hindrance to, poverty reduction, written, I do believe, by our own Inde Hewan. Just brilliant.

The article points out a few examples of aberrant spending habits of budgetary assistance by the Ethiopian government (besides what it spends on “security and order”), including:

For example, the government has used funds earmarked for education for a two-week long highly politicised mandatory training of tens of thousands of high school and elementary school teachers on matters of “peace and security”. This training was intended to make the teachers cooperative in denouncing high school and elementary school children who have been protesting in many towns in Ethiopia against the imprisonment of opposition leaders and human rights activists.

So the country director of the World Bank, a Dr. Ishac Diwan, introduced a new way to resume aid in the form of a loan titled “Protection of Basic Services” (PBS). Terrible name for us dieheart aesthetes. Even more terrible news for those brave souls actually concerned with, what’s it called, substance.

PBS endeavors to funnel money not through the federal government of Ethiopia (which up until now has been standard practice), but through districts (local governments). This was distressing because the PBS was sans “the safeguards that accompany standard Bank investment projects.” Okay. Fine. Do it through districts. Tiny problem: the EPRDF has made sure a majority of the districts are controlled by the same party—the EPRDF. You see how that works? What is the difference between giving money directly to the government as opposed to the districts? Nothing. So…uhhh? Why go through the whole charade? Because. Three donor nations signed up for this, as Dave Chappelle would put it, malarkey: Canada, Ireland, and the UK.

Then, because the World Bank is badass like that, the district level focus changed to regional support- sort of like states. And who controls the states? Three guesses--- and one of them is not Tom Delay.

So the article basically lays out the discrepancy between the donor nations’ lip service about good governance (Tony Blair call your office) and their actions. Ethiopia’s rural poor cannot be aided if block grants are made through regional operatives, and in fact, the way this budgetary support is structured, it can have the opposite effect... so sayeth Inde Hewan.

Here’s a sentence I found intriguing, that later ‘splains a lot.

We are also keenly aware that, while there are many dedicated and competent staff in the Bank, incentive structures for promotion and recognition do not reinforce, but rather work against, motivations of staff to work toward reducing poverty.

Huh?! Read on.

Backing up a little, on March 10, 2006, Dr. Diwan had written a letter to Ethiomedia in response to the uproar about the introduction of PBS. I know I am an economics neophyte, but here is something I found a tad disquieting.

In justifying PBS and to refute calls to postpone its launching Dr. Diwan states:

An issue raised was that of whether the proposed Bank strategy and Protection of Basic Services Project might be postponed. With any significant delay, teachers' and nurses' salaries may go into arrears; children may go to school but may not learn anything in classes with too few teachers; malaria bednets will not be procured in sufficient quantities and the numbers of children exposed to malaria will remain very high; immunization of young children against the most basic of diseases will be severely curtailed; thousands of women who demand contraceptives will not be able to access them. It is difficult for us to justify delaying funding when these are predictably the results.

Question: what exactly does the Ethiopian government DO for a living if it can’t even provide these very basic needs for its citizens? You mean without donor assistance the EPRDF can’t pay salaries for teachers and nurses? And yet, the government machinery tells us that Ethiopia will enter middle-income nations soon what with all the economic growth coming out of its tushy.

In fact, according to Dr. Diwan,

the Bank has identified critical areas of need that require additional financing in order to be able to improve the lives of the poor. These areas include primary and secondary education, primary healthcare (especially for malaria, immunizations, and maternal health), safe water supply and sanitation, social welfare, and agricultural extension services that are provided by regional and local woreda level administrations.

(AllEmphasis mine.)

Hmm. So donor nations will take care of educating Ethiopians, providing them with clean water, immunization, social welfare… So what has the Ethiopian government been doing all these years? I mean, I know ethnic baiting and running around in Humvees is a lot of work, but really?

Part 2 is coming up. In the meantime, here are some excellent articles:

Addis Ferenjie has a superb interview with an economics Ph.D. (thankfully they still make them) who patiently explains to us the basics of economics and what this PBS means. For those of us whose eyes glaze whenever the subject of economics comes up, it is overwhelmingly useful and very economics- fara friendly.

Dr. Diwan responds to Inde Hewan’s letter.

And then, bara bing! A response to the response.

The Network of Ethiopian Scholars (fast becoming one of my favorite think tanks-- although why they don’t have their own website is beyond me) also respond to Dr. Diwan.

Let me be the first to thank Inde Hewan for her incredible work in bringing light to this story. I, for one, was frustrated by the working of aid, and could not understand why after billions of dollars in aid, Ethiopia and Africa have not made a dent in alleviating poverty.

Most of us in the Ethiopian Diaspora, very much including me, have been absent from this dialogue, and it is especially inexcusable since there are so many educated Ethiopians among us. Whatever our failures in the past, it appears we are finally saying “never again” to disengagement and apathy. I am in awe of people like Inde Hewan who have taken it upon themselves to stay involved, even when there is no overarching support system to help them. So, sister girl, salute.

It’s important to remember we can’t keep leaving Ethiopia’s welfare to others. We have to show up. As much as I harangue Carter, Blair, Clinton, the World Bank etc, I have come away with the fundamental understanding that each one of us has a choice: we either do our part, or bear witness to another cycle of poverty and misery geared to shut up yet another generation of Ethiopians. We should wish better for our children.

Dr. Diwan has very graciously invited World Bank employees of Ethiopian decent to a meeting to discuss this matter further. Maybe someone can update us.

The African Renaissance can’t be jump started by anyone except Africans.


On a different subject, Black Looks covered the story on the Ethiopian government’s magnificent show of ‘good governance’ by blocking Check out this brilliant comment from an “aeth”:

It is easy to assume that the Ethiopian government is blocking certain blogs because it wants to silence political opposition, however the fact that only a selected opposition blogs calls for a more detailed analysis. The Ethiopian blogosphere is dominated by extremist elements in Ethiopia; especially the majority of the blog writers were members of the military junta that ruled Ethiopia before 1991. Most escaped to the west as the criminal government collapsed. Today they call themselves Democrats, however if one is to read their blogs it is filled with hateful speech designed to ignite Ethiopia in to a genocidal nightmare.

Hm. So much for ‘detailed analysis.’ Is intractable mediocrity a prerequisite for everyone at the EPRDF?


Anonymous Witness Protection said...


Anchi, teneQabish! Lekas you were a "member of the military junta." Min aynet blogger nesh bakish?? kkkkkk..... Woyanes and their kittens really crack me up.

It's my first time posting a comment, but I've been religiously following Weichegud for some time now. Happy 1 year anniversary -- ande shama yilekosilishal!

What motivated me to comment today was your simple but powerful message -- "we can't keep leaving Ethiopia's welfare to others." If I may, I want to take that a step further and CHALLENGE my generation in the Diaspora - the young & the restless - to rise up at this critical moment in our nation's history. There comes a time in all our lives where we must stand up and fight for a cause that is much much bigger than us. If not now, when?

As you simply put it, "we should wish better for our children."

5:53 PM, May 24, 2006  
Blogger Wegesha said...

ETW, do you remember a while back when I suggested a discussion about armed struggle and you nearly bit my head off? I still have nightmres about that. Anyway, as if it was inevitable we seem to have headed in that direction. Regarding the recent turn of events and in light of what you said about being very cautious when forming alliances, what say you now? Despite my Oromoness, OLF rubs me the wrong way and you know I am the kind of guy who usually likes any kind of rubbing. I like the fact opposition parties are coming together but EPRDF also knows OLF is an extremist group and will use that point to isolate it and break the recently formed union of parties. So, to support or not to support, that is the question.

9:27 PM, May 24, 2006  
Anonymous Anonymous said...

World Bank need to learn to keep their money and their leap service to their closet. We need to take a responsibility and act now for the sake of our people. We need to say enough for being a play ground; we need to be a player. How come we late Dr Dawin used our poor country and poor people for his professional acheivement. Ethiopia is a pilot study for him and Jef Sac.... Gin Pig ..they will find a way to continue the project by changing the name from direct money to the government to Aid to the poor or PBS because Ethiopian poors will pay their life to protect their macroeconomy project or resarch...Which becomes poverty productin factory.... deeping Africa in poverty. I think world bank money given to Africa the majorty of the money used to develop Europe and America. Because the mone is Invested out of Africa. It would be better Melese and Dawin sign the contract and invest the money here and in UK. Atleaset the Ethipian people do not have to worry paying the lone and the interest. Thanks for the ind. news agency we have to make sure it does not mix with our money in the bank because thier money has blood on it. So it is now about tie we all go after world bank. We need to follow them every step and pass our message. The letter was very good and will give a lesson world bank because the dark days are over. Melese he use to go to the world bank and wallk with the money like he did a few month ago national bank in ethiopia.

10:06 PM, May 24, 2006  
Anonymous ye mankusaw welafen said...

be s'me ab... be s'me Ab! far be it from me to leap to any leap service and late anything stand in the way of a werlid bank lone..

let me be the second to congratulate inde hewan. there are those who do, and those of us who read. i'm in the process of transition.

5:10 AM, May 25, 2006  
Anonymous Jiraf said...

I am not an economics expert either, but thanks for plugging us in to the dialouge.

So without this PBS the Ethiopian government can't provide basic services like healthcare and school? But didn't Meles say the government has millions in cash reserves?

10:06 AM, May 25, 2006  
Blogger ggggtu said...

I don't know 'bout y'all, but I love PBS!!! If it wasn't for programs like Frontline, Nova, and McNeal Lehrer new hour, we would not be...oh wait, it's not that PBS?? Oh well, I guess it's one of those play on words and in this case, on letters - much like 'Clear Sky Initiatives' and 'No Child Left Behind' ..yeah right, no child left MY BEHIND!!! Oh, but I digress.

To me institutions like World Bank, IMF, and WTO are the 'legal' versions of the CIA, KGB, or to take it a step further, even the Soprano's. They are very secretive and are run by a few un-elected officials? Now, why would anyone think that these people have the interest the poor in rural Ethiopia at heart? Their goal is to keep third world countries in huge debts they can never get out of so corporations go in and rape their resources when these countries are unable to pay it back. May I suggest John Perkins' 'Confessions of an Economic Hit Man' to everyone to illustrate this point?

11:41 AM, May 25, 2006  
Anonymous Anonymous said...

Immature and pretty petty literary mambo jambo, unless releasing self from guilt, wouldn't help in anyway to advance people's cause.

Question to our political and economic GURUS inlcluding satirists

What should have been done with $30 Billion in 15 years for Ethiopian poors?


12:28 PM, May 25, 2006  
Anonymous Yohannes said...

"What does the Ethiopian government do for a living?" LOL.

Not only can't it pay for services, but government employees in the woreda level are going to go unpaid unless PBS is enstated, and quick. I thought foreign investment was 'flooding' into Ethiopia.

The Ethiopian government said Tuesday it had issued investment licenses for 17,000 investors with a combined registered capital of 231 billion birr (26.6 billion U.S.dollars) over the past 14 years.

12:56 PM, May 25, 2006  
Anonymous Gooch said...

Jiraf, I think he said 'milliYOns'. MilliYOns in cash, stashed among the tOnnes of evidence, I suppose.

Well, ETW, I'm just about to forward your post to various groups, as usual. You're making life so much easier for us.

Last anonymous, a lot more of the money should have been targeted towards social development and developing civil society. In addition, accountability should have been rigorously enforced.

In fifteen years of well-funded EPRDF rule, infrastructure has been strengthened. It isn't hard to take aid money meant for roads and build roads with it! Or to take money for education and increase primary school enrollment having gotten rid of Grades 11 and 12 for almost everyone.

What's hard is producing results when it comes to key variables such as poverty. During the EPRDF's rule, the level of povery in Ethiopia hasn't changed (page iii, Well-Being and Poverty in Ethiopia, World Bank).

Many folks out there are saying that we haven't got enough bang for our aid buck.

What we're saying is that in order to get more bang for our buck, in order to assure accountability and transparency and build a foundation for good governance, aid should not be sent to the government but instead sent through independent civil society.

1:14 PM, May 25, 2006  
Anonymous not genet zewdie said...


may i strongly suggest you NOT read 'confessions of an economic hit man.' will destroy your soul.

for an insight into WB, read any of josef stiglitz's papers- after he left the bank.

is anyone going to the meeting on friday that diwan called?

2:53 PM, May 25, 2006  
Anonymous Anonymous said...


I like your style of addressing issues without unrequired fanfares.

Just simple question, is there any data to quantify your assertion that civil societies are doing better than the government for the time & money allocated?
As far as NGOs, their programs and achievements are worst than the incumbent government, how then one suggest the worst as an alternative?

3:02 PM, May 25, 2006  
Anonymous Inde Hewan said...

fm, I too had to think about 'No Child Left Behind' as I was pondering the PBS name. Speaking of Child and Name: Well, the child PBS hath been born today: The Bank's board of directors gave it the green light this morning after lengthy deliberation. (That's what they always do: deliberate lengthily, then Woom, down onto the contract swooshes the stamp made of rubber!) These ferenji's. They tend to give children names before they are born. Let's do it the Abesha way, namegiving after birth (after all, since the money is being poured into some Ethiopian black hole, is it not our own child to name?) I suggest "Practically, Budget Support" (compromise with the ferenjis: They retain their PBS acronym, we give the child's initials a more fitting longform).

ETW, thanks for your sterling-as-always satirisation (does that word exist?) of my and Dr. Diwan's articles! By the way, I am the same culprit who was Addisferenji's interviewee. But make sure not to call me Dr. Hewan now -- sounds too eerily like Dr. Diwan!

Just only one small correction to your blog: Luckily I'm no longer lacking a support system: There's a small group of supa-dupa high-energy activists, who have recently created the Ethiopian American Civic Advocacy, and with whom I coordinate. A member of this group recently wrote a letter directed to Wolfowitz (it's on ethiomedia).

Unhappy birthday, "Practically"!

3:04 PM, May 25, 2006  
Anonymous Gooch said...

Thanks for the compliment, last anon.

Actually, I did not assert that "civil societies are doing better than the government for the time & money allocated". And I don't think you can assert that they are doing worse, either!

It is generally accepted that government does well if and only if there is good governance and accountability, and that a strong civil society relative to government is necessary for development. There's lot's of literature and debate on various shades and extents - I'll leave that up to you. Here's an easy start.

During the EPRDF's well-funded (counting aid AND debt relief, which is direct budget support) reign, despite more schools, clinics, roads, and electricity, we have:

1. A population crisis
2. Land holdings at record lows and shrinking fast
3. Environmental disaster - deforestation and erosion
4. No change in poverty
5. Only 1% annual growth in gdp per capita
6. Almost no change in agricultural productivity

This record by itself indicates a lack of good governance and a power imbalance between civil society and the government.

In this context, giving aid to the government is at best ineffective and at worst actually hurts development.

So it is time to reconsider the aid balance between government and civil society. After all, if things aren't working, we ought to try something different.

Let's empower the grassroots and grassroots institutions and emphasize on the roots causes of underdevelopment, the related duo of social underdevelopment and lack of democracy.

9:09 AM, May 26, 2006  
Anonymous Red said...

"Tiny problem: the EPRDF has made sure a majority of the districts are controlled by the same party—the EPRDF. You see how that works? What is the difference between giving money directly to the government as opposed to the districts? Nothing."

ATTN Readers! Just a reminder that Meles has also suspended the local election scheduled for this year after the drama he created after the May 15, 2005 election. Thus, if this PBS stuff ius continued by WB for the future, you can entirely kiss Ethiopian "local" politics, fail elections and self-governanc goodbye!!! EPRDF will continue, as it has so far, stoop down to even to the local levels to suffocating democracy as it did in the national and regional parliaments' elections. The WB needs to understand this PBS idea, however innocent they think it is, will further be a tool for the continuation of oppression of Ethiopians.

12:48 AM, May 30, 2006  
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