Select Committee on International Development Appendices to the Minutes of Evidence - Sixth Report


Memorandum from Dr Joseph Mullen: Director, Masters Programme in Poverty, Conflict and

Post-Conflict Management, Institute for Development Policy and Management,

The University of Manchester


  This submission refers to the overall approach of the World Bank and the IMF to the recent crisis in Rwanda and Burundi--and the ramifications of the conflict in the Democratic Republic of Congo.

  When the crisis in Rwanda first broke in 1990, the World Bank staff were the first to flee the country and the office was left at short notice in the hands of local staff. The breaking of the crisis coincided with the visit of a Structural Adjustment mission and had been followed by an IMF ESAF credit. One current theory would suggest that the economic decline in pre-crisis Rwanda was partially attributable to the fiscal discipline, reduction in social expenditures and institutional reforms which were conditional for support by MFIs and bilateral donors. The popular disaffection with these measures was then manipulated by political extremists which eventually led to the genocide of over 1 million people in 1994. The Bank in particular distanced itself from Rwanda throughout the crisis and the early post crisis reconstruction period, leading one to suggest that its commitment was to financial risk aversion rather than to development of a fledgling state.

  Contemporary developments in Burundi indicate that there is a correlation between crisis and risk aversion by the Bank. The level of poverty in Burundi (ranked 169 out of 174 in terms of the Human Development Index) has increased by 60% over 5 years--on the basis of the Bank's own Poverty Assessment (Note sur la Pauvreté 1998). Concurrent with the increase in poverty, which has been exacerbated by the political crisis and the imposition of sanctions by neighbouring states (critical for a small landlocked country) has been a substantial decline in support by the World Bank. From 12 projects in 1993, six have been curtailed or closed, four are due to terminate at the end of the current fiscal year and two will remain active. These programmes are supported only by local staff.

  There is a clear signal from the Bank that when poverty increases, particularly due to conflict, the available finance for post-conflict reconstruction is not made available. While studies are made of poverty in these situations, the investment response of the Bank is timid or mute (fortunately, other IFIs such as IFAD are willing to revitalise their programmes and create innovative financial approaches to meet the crisis).

  The Committee should look at (1) a potential correlation between economic dislocation which could be policy induced (IMF-W.B.) and internal conflict and (2) the phasing out of investment programmes during post conflict reconstruction and increasing impoverishment.

Dr Joseph Mullen,

Institute for Development Policy and Management

12 October 1998

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