International Herald Tribune
By Kevin Watkins
OXFORD, England Rich countries are ardent advocates for democracy all around the
world. But when it comes to the International Monetary Fund and the World Bank,
government of the many by the few is the preferred option.
Developing countries are systematically denied a voice in decisions that profoundly affect
the lives of their citizens. Nowhere is the democratic deficit more keenly felt than in Africa.
With votes weighted to reflect their financial stakes, rich countries enjoy a built-in majority
on the executive boards of the IMF and World Bank. Membership of the two institutions
now totals 184 countries. The Group of Seven industrial countries account for around 40
percent of the total votes.
At the other extreme, Africa accounts for a quarter of the membership and just over 4
percent of the vote. Belgium (population 10 million) has more votes than Nigeria,
Ethiopia, Zambia, Tanzania, Mozambique and South Africa combined (total population
around 300 million). If it came to a vote, Africa might as well stay at home.
Africa's voice is further weakened by an unwieldy - and profoundly unfair - system of
executive management. Responsibility for day-to-day management of IMF programs
resides with 24 executive directors. Each of the five biggest stakeholders - the United
States, Germany, France, Japan and Britain - has a director. Other industrial countries,
like Italy, the Netherlands and Denmark, appoint directors that oversee small multicountry
constituencies. Africa has just two executive directors to represent 44 countries.
The upshot is that underrepresentation is compounded by political overload. The sheer
size, diversity and, in some cases, competing interests of these constituencies make it
difficult to forge a consensus, let alone challenge industrial countries.
Some Northern governments see the whole issue as a diversion from the central
challenge of tackling poverty. Others argue that giving Africa and the developing world a
greater voice would open the door to reckless mismanagement. These views are shortsighted
and potentially dangerous.
In international economic governance, as in national governance, greater democracy can
improve the quality of policy. Consider the perennial issue of African debt. In 1996, when
the Heavily Indebted Poor Countries Initiative was adopted, African directors at the IMF
and World Bank warned that it was fatally flawed. Rich countries could ignore their advice
with impunity - and did.
The human costs for Africa have been immense. Heavily indebted countries continue to
transfer over $2 billion a year to creditors, diverting resources needed to generate growth
and invest in health and education. Ethiopia is still spending more on debt than it spends
This week, debt is once again on the agenda of the annual IMF-World Bank meeting. The
United States and Britain accept that the current initiative falls far short of what is needed,
and that for many countries, a total write-off is required. This is what Africa proposed
eight years ago.
Some very modest reforms could improve the responsiveness and efficiency of the IMF
and the World Bank. The starting point should be an overhaul of the voting structure.
When the IMF and the World Bank were established in 1944, two categories of votes
were created. One was linked to financial stake. The other, the "basic vote," was
allocated as an entitlement of membership to give the organizations a genuinely
international character. Over time, the share of "basic vote" has been eroded to less than
2 percent of the total - one fifth of the level in 1970. Reversing this process would give
Africa and other developing regions a stronger voice.
The executive management system also needs reform. There should be more African
executive directors, each of them representing no more than eight countries.
Would Africa use an enhanced voice responsibly? Democracy is a messy business.
Doubtless mistakes will be made. Then again, mistakes are already being made. And
without democracy and accountability, how can international financial institutions
establish the credibility and legitimacy needed to manage our increasingly interdependent
Kevin Watkins is director of the UNDP's Human Development Report Office. Ngaire
Woods is director of the Global Economic Governance Program, Oxford University.
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