IFI’s plans against poverty; a new approach or more of the same?: The case of Togo
Published on Thu, 2012-09-27 13:18
Since the first decade of the 21 century, the World Bank and the IMF have promoted the Poverty Reduction Strategy Papers (PRSP) as a brand new methodology, better than their controversial structural adjustment plans. But, in spite the change of names, the Bretton Woods institutions still consider economic growth as an unavoidable step in the fight against poverty, with little mention to the distribution of wealth. Togo is an example. Samir Abi, president of non governmental organization Visions Solidaires, analyzed the recently finished second Togolese PRSP validation process.
The participation of civil society representatives in the last stage of the process was not enough to take out the most questionable elements from the final paper, according to Abi. “The big priority in Togo’s policy for the future is […] a dream of growth of proportions like that of China,” warned the expert. “Under pressure from the financial institutions and other donors, the document foresees the private sector as the engine driving this growth” and “greater liberalization of the economy,” Abi added.
“To show goodwill, the [Togolese] authorities invited civil society organizations to take part in the process, but in spite of this move the document is still confined to elitist circles in the administration and is a very long way from 99% of the country’s population,” regretted Abi in his analysis.
Samir Abi evaluation of the process reads as follows:
PRSP II in Togo: A dream of accelerated and inclusive growth
The workshop to validate the Togolese government’s second Poverty Reduction Strategy Paper (PRSP II) came to an end last week in the most luxurious hotel in Lome. All major public and administration authorities had come together for the occasion, and what emerged was a document that will determine the country’s future in the period 2013-2017.
The PRSP was promoted by the donors of funds, including the World Bank, and it is one of the changes advocated by international financial institutions in recent years to modernize their image, which has been tarnished by structural adjustment plans. In fact, at the start of 2000, the World Bank and the International Monetary Fund (IMF) realized that the priority should be the fight against poverty, in line with the Millennium Development Goals (MDGs). These institutions then launched a large number of national Poverty Reduction Strategy Papers (PRSP) as part of the Heavily Indebted Poor Countries (HIPC) initiative.
Needless to say, this initiative involved large numbers of consultants who in many cases were ex-officials of international and regional financial institutions converted to the “PRSP area”.
But in the last analysis, the final balance years later is still the same: more and more liberalism and no poverty reduction at all.
The Togolese Government backed the international financial institutions’ solicitation in the HIPC initiative and set about drafting a first strategic poverty reduction document in February 2001. The country’s socio-political situation at that time prevented that first draft from being developed and it did not see the light of day until April 2009. It contained measures to “improve” the negotiation climate, according to the international financial institutions. Those steps included economic liberalization, fiscal, judicial and land reforms, the privatization of public industries. The implementation of those measures made it possible for Togo to obtain some reductions in its external debt within the framework of the HIPC initiative, in December 2010.
That first cycle came to an end late in 2011, and the process of drafting a second PRSP was begun. This was aimed at providing a reference framework for Togolese government policy in the 2013 to 2017 period. Experts from the ministries coordinated with foreign consultants to draft the new document. To show goodwill, the authorities invited civil society organizations to take part in the process, but in spite of this move the document is still confined to elitist circles in the administration and is a very long way from 99% of the country’s population.
After some months of work, the document’s name was changed, at the government’s request, to the "Accelerated Growth and Employment Promotion Strategy” (Stratégie de Croissance Accélérée et de Promotion de l’Emploi, SCAPE). This choice of title is revealing as it strips away the veil: the big priority in Togo’s policy for the future is growth. And what is more, it is a dream of growth of proportions like that of China. Under pressure from the financial institutions and other donors, the document foresees the private sector as the engine driving this growth. This means easy acceptance for the measures taken to facilitate greater liberalization of the economy to ensure the well-being of the private sector.
But where does this leave poverty?
This debate came to the surface during the validation workshop, which finished last week, thanks to different civil society actors from Togo and from the academic world who had not participated in drafting the PRSP but who came to the debate to express their opinions. There were in-depth discussions about growth in the committees and then in the final plenary session.
With the experiences of many countries in mind, the civil society actors beseeched the Togolese government representatives to consider that growth and job creation are not synonymous with the fight against poverty because the distribution of wealth across the country is not questioned. To cater to these criticisms, the consultants went on to talk about inclusive growth that would involve not only an increase in economic wealth but also improved social structures.
In reply, experts pointed out that wealth distribution is closely linked to the remuneration of the factors of production and depends on whether more emphasis is placed on capital or on labor. Supporting evidence for their view is that in recent years the Togolese state has had recourse to many foreign private investors and greatly liberalized the economy, in line with IMF advice, so as to promote growth, but this has had no effect in terms of poverty reduction. Some 68% of the population of Togo is still living in extreme poverty.
The debate moved on to the contradictions with the policies of the United Nations (UN) organisms and agencies. On the one hand, the UN is promoting the MDGs, but on the other hand the Bretton Woods institutions are imposing policies that restrict countries’ margin for manoeuvre and prevent them from achieving the MDGs.
It became evident in the debates that the question of financing growth, especially in the debt panel, was simple ignored in the strategy document. In the continuation of the debates, the role of the States’ central banks in the West African Economic and Monetary Union (UEMOA) was also defined. Togo, like the rest of the countries in the UEMOA zone, is linked to France with monetary agreements and has no room for manoeuvre in monetary policy.
The restrictions associated with the common convergence policy at the heart of the UEMOA and with the strict inflation limit rule imposed by the Bank of France are impeding the launch of real public financing policies in the economy. In addition, there is a current debate in the European Union about the debt crisis. During the work of the committees, various voices issued a reminder that there are 8,000 billion CFA francs from the UEMOA States in the vaults of the Bank of France while at the same time these countries are obliged for their investments to have recourse to contracting credits on financial markets, which means they are securing loans at rates that are rising sharply.
Unfortunately the passions expressed and the waves of arguments unleashed during the concluding plenary debate had no impact whatsoever on the content of the final document. The only new elements that were introduced thanks to the efforts of civil society organizations were the transfer of funds from citizens of Togo living abroad as innovative sources of finance for growth, and a demand for greater protection for Togolese in the informal sector.
The SCAPE/PRSPII of Togo has been born.