A joke of the affluent

In the global financial market, apart from private donations, there is ample money for investment in any country if the country has property rights, rule of law, democracy, and market based economic system. Bangladesh's infrastructure, as power or water, requires huge amount of hard money that the global private investors can provide, but our politicians have failed to turn Bangladesh into a destination for such investments.

Instead, the government and politicians rely heavily on agencies as The World Bank and IMF to finance their development and budgetary deficits. This distorted economic scenario ideally suits the business people who are increasingly dominating politics today. Our businesspersons (mostly) do not cherish competition in the free market but seek protection and liaison with bureaucrats and politicians. Many of them have made, or make astronomical profits in the infrastructure sector financed by the donors. When they, as politicians, are included in high profile discussions with donor governments, World Bank or IMF, it provides them a solid business advantage that those without political connections cannot have. That the businesspersons are there as party leaders also holding business stake in the same field of discussion is not only improper but also deplorable politics.

The World Bank has lately promised $3 billion plus loans to Bangladesh in the coming years provided the government abides by its recommendations and increases petrol and electricity prices. However, there is no doubt that the bank's more lending will only mean continued corruption, high cost, production delays, and shortfalls as now. Pouring down of capital can save a government but it cannot bring efficiency and competency in power generation or in reducing petrol prices.

The World Bank only several months back, to weed out corruption, had suspended loans for various sectors to several countries as Chad, India, Yemen, Kenya, Congo, Uzbekistan, and Bangladesh. May be, corruption is no more an issue with them as they entrust billions of dollars again to Bangladesh. In the 1980s and 90s, the World Bank, after repeated failures to develop the Third World, switched to 'adjustment lending' that meant that their loans depended on 'government policy changes and reforms'. The Bank stressed structural reforms, liberalisation, privatisation, and deregulation, but these were mere development rhetoric. There have been no significant reforms in the Third World including Bangladesh but World Bank bulk lending continues to reward inefficient governments, dictators, corrupt politicians that go hand in hand with equally corrupt and unfree economic systems.

Christine Wallich, World Bank Country Director in Bangladesh recently said, “95 percent of Bangladesh's population has access to safe drinking water, exceeding India, its far richer neighbour”. [The Financial Express May 13, 2006]. Bangladesh's people have 100 per cent access to drinking water but whether it is 100 per cent safe require no statistics. Nowhere in the country is water safe to drink without boiling and there are not too many households who can burn the extra fuel to do the boiling. Even Bangladesh's bottled mineral water is not 100 per cent safe. Hundreds die prematurely with dysentery and hepatitis without access to healthcare that World Bank funds sizeably. Furthermore, there is severe arsenic poisoning in drinking water in northern Bangladesh but that is a forgotten chapter.

To label Bangladesh's drinking water as safe and accessible to all and even surpassing its neighbours is implausible. Moreover, with the ICDDRB, the only reliable hospital for diarrhoeal diseases, filled daily with patients and running over capacity during the flood times when WASA water pipes freely mix with sewerages and other filth: our drinking water is very unsafe unless a joke of the affluent.

Moreover, Bangladesh's social indicators may look grand on paper but the reality is different. Statistics say that school enrolment is high and so is gender parity. However, low wages to teachers cannot bring quality education. They talk of infant mortality reduction but the standards of rural health centres or even those in cities are poor and many such centres are without doctors. Yet, the World Bank chooses to pat the backs of the government officials for attaining success. The World Bank measures success by the sheer amount of hard money they provide supported by seminars and publicity that belie reality.

For our foreign aid dependency culture, the development economists are to be blamed. They regard lack of capital as the prime cause of poverty and underdevelopment. They urge high taxes, mobilisation of internal resources, and international aid for quick capital accumulation to expend on outlays they recommend. For them it is morally wrong for richer governments not to provide higher percentage of their people's income to help us become as wealthy as them. As such, donor governments and agencies as the World Bank and IMF provide Bangladesh's additional requirement of capital and together with government's domestic measures to raise capital, irreparably damage the economy.

'Perpetuating Poverty' a Cato Institute publication notes that 'fifty years and hundreds of billions of dollars of aid from western governments -- tunnelled through the IMF, the World Bank, and a number of other multilateral aid agencies -- have had an impact on world poverty: it has helped keep the Third World poor just that -- poor'. It says that 'aid giving has failed because institutional lending is to governments and not individuals' or to the private sector.

Economies such as ours are poor not because of lack of resources, capital, geographic conditions or high population but because of destructive policies that bloat public sectors, protect ill planned industries and trade, expand bureaucratic controls, fix prices, impose high taxes, and construct complex regulations that sap private economic plan of individuals. Furthermore, it swells the authoritarian mind of the politicians who, in our illiberal system, hold the power to make or destroy businesses, or dole out state properties and privileges to whom they please.

The power sector is solely government owned that allows some power generation in the periphery but the market need is massive that only foreign private capital can fulfil. There has been no move for private power generation independent of the government.

Since the mid 1980s, the World Bank stopped financing the power sector demanding necessary reforms. It did not promote a policy that would encourage competition, as in a free market, but privatisation which has adverse political repercussions that a free market can clearly avoid. It did not push the government to liberalise the sector but demanded that prices increase despite acute sufferings of the already struggling people. For the failure of power, water, and petrol, it is the World Bank that is responsible for misguided policy advice and lending.

There are billions of dollars required but the infrastructural development needs to be open to competition and private investment without the bureaucratic red tape and political weaknesses as it is today. Apparently, as infrastructure development requires heavier investments the status quo are most reluctant to let it out of their control. For the people there will be McDonald's and Kentucky's, the foreign investments, flooding posh areas to impress upon the country, and the donors, how prosperous Bangladesh is becoming with aid and sound governance.

There is no country in Third World or even in the fourth, as in Africa, that has developed by World Bank loans or international aid. For a prosperous Bangladesh, for poverty alleviation, for sound social indicators, for cheap petrol and power, or for safe roads, our intelligentsia must dump development theories and embrace free market capitalism, and confidently follow China or Hong Kong that developed splendidly without foreign aid dependency.

The real private investment opportunity and the necessity are in building Bangladesh's infrastructure but only if our politicians, bureaucrats, and the businesspeople, who loathe market competition, would permit. The World Bank and IMF's promise of money, demands for price rise, privatisation that does not work, and, of late, hobnobs with politicians is nothing but a comic story for the public.

Nizam Ahmad is Director, Liberal Bangla, UK.