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The World Bank’s quiet push for privatisation in Afghanistan

29 November 2007

The World Bank is currently sponsoring a policy in Afghanistan that will lead to the privatisation of more than 50 state-owned enterprises (SOEs) over the next two years. This month Christian Aid and Eurodad published new research expressing concerns regarding the Bank’s continued practice of attaching economic conditions to its aid to developing countries.

Evidence from Bank IDA grant documents to the Afghan Government clearly shows that these privatisations have formed a key plank of the Bank’s wider economic reform agenda in Afghanistan since at least 2005. For instance, progress in developing a national privatisation policy and the drawing up of a list of the SOEs to be privatised were two conditions for an $80 million Bank grant approved in November 2005. The policy has also featured in Afghanistan’s new national development strategy paper, which the Bank is strongly supporting.

During an official visit to Norway a week ago, the Afghan Education Minister commented that the privatisation policy was wholly decided by the Government. These declarations were followed by comments from the World Bank directors Kyle Peters and Alastair McKecnie to a main Norwegian newspaper, Dagsvisen, on 26 November, denying that the Bank had been involved in the privatisation of state owned enterprises in Afghanistan. If this was the case, it is a remarkable coincidence that Afghanistan’s locally designed economic development strategy is a replica of the strategies promoted by the World Bank in a wide range of developing countries over the last 15 years – particularly given the unique context and challenges facing Afghanistan.

“We have also discussed the situation in Afghanistan with education minister Haneef Atmar and we are aware that there is also support for privatisation of some state owned enterprises among Afghan authorities., Our question, however, is why then this should be included as an explicit condition for a World Bank loan?” says Atle Sommerfeldt, Secretary General of Norwegian Church Aid. He also adds that “each country should be given the opportunity to decide, on its own, the balance between the public and the private sector. While Afghan authorities have been positive to the privatisation of some enterprises, we are also aware that several reform-minded politicians are skeptical about the donor community’s push for privatisation in the education sector, something that education minister Atmar also mentioned in Dagsavisen. At the end of the day the only evidence of real national ownership is that such reforms are implemented without external conditions”.

But even if there was significant government ownership of this policy, it does not negate the evidence of considerable pressure from donors for rapid progress on privatisation reforms: documents on the Bank’s own website show how in late 2005 and early 2006 the Government implemented step-by-step policy recommendations made by the Bank, which culminated in the hasty adoption of a national privatisation policy in March 2006. In addition, it would not explain why the Bank saw fit to include privatisation as a ‘trigger’ (a Bank term for a condition) for aid to the Afghan state.

We are concerned that such policy conditions are still being attached to Bank aid, despite repeated assurances that it would no longer be pursuing this approach. Such a process also undermines democratic accountability in states because governments tend to become more answerable to donors than to their own citizens, due to the large size of aid budgets. For this reason we are supporting Afghan civil society groups to take up this issue with their government, as well as the Bank, and lobby for a proper consultation of Parliament, civil society and SOE representatives before further measures are taken in this area.

Christian Aid’s case study, “The World Bank’s quiet push for privatisation in Afghanistan”, can be obtained from Ben Hobbs at BHobbs@christian-aid.org