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World Bank pushes Malawi agriculture privatisation

5 April 2004


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The World Bank is demanding the privatisation of the Malawian agricultural marketing board as a condition of its latest structural adjustment loan. The way the Bank has manoeuvred to persuade Malawi’s parliament to accept this shows the limits of ‘country ownership’. It also demonstrates key weaknesses in one of the World Bank and IMF’s new tools, Poverty and Social Impact Analysis (PSIA) studies which are supposed to outline likely consequences of key reforms so as to enable a better debate on policy design. A Malawian civil society campaign coalition which has mobilised against these planned reforms expressed its concern with how the World Bank and other donors have pushed their agenda on this issue “at the expense of the food security of the poor”.

The privatisation of the state marketing board in Malawi (ADMARC) has been an objective of the World Bank for 10 years. It represents a central element in an approach to agriculture that holds that full liberalisation of the sector will be best for poor women and men. This approach has been increasingly questioned in Malawi and other countries in the region, particularly in the context of the recent food crisis. Many commentators believe the full liberalisation of other elements of the agriculture sector under Bank and Fund advice was a major cause of the food crisis and the subsequent deaths in 2002.

Because of the controversy over the proposed reforms, including studies by civil society groups, the Bank agreed to commission a Poverty and Social Impact Analysis. This research showed that ADMARC’s important role in supporting the lives of poor women and men would be destroyed by privatisation. But, presumably embarrassed by the results, the Bank delayed publication of the study for two years, withholding it until just after the Malawian parliament had agreed to the reforms.

a carrot for grants and loans

In late December 2003 legislation was rushed through a special parliamentary session turning ADMARC into a limited company, the first stage in the privatisation process. This session was boycotted by many MPs, partly because they had already expressed opposition to the privatisation of ADMARC in two previous hearings. Civil society campaigners expressed concern that ADMARC privatisation was being “used as a carrot for grants and loans”. This was borne out by the Bank’s response to the parliamentary vote, a February announcement of a new $50 million structural adjustment credit with the privatisation of ADMARC as one of its conditions.

The civil society and official impact analysis studies agreed that ADMARC is clearly in need of reform, but demonstrate that it plays a vital social role in ensuring market access for the rural poor by running subsidised markets country-wide. These markets would close under privatisation and the small and weak private sector would be unlikely to fill this gap, leaving a dangerous vacuum in service provision that directly threatens people’s livelihoods.

Civil society groups have mobilised to publicise these issues, with a major campaign during 2002 against the privatisation of ADMARC. An active media campaign resulted in a series of high-profile national debates. Parliament was closely involved, and in particular the Agriculture committee which carried out its own analysis showing the harm that privatisation would cause to the poorest.

The decision-making process and its outcome are being declared unacceptable by Malawian civil society groups. They are “demanding that any conditionality regarding ADMARC is immediately removed from the new loan” and encouraging civil society groups in other countries to take action in their support. Groups pushing the Bank to conduct Poverty and Social Impact Analyses will also need to ensure far greater control over the process of commissioning, reviewing and disseminating such studies, to ensure that they enrich debate rather than sit on shelves until the World Bank or IMF browbeat parliamentarians to accept their agendas.