South African parliament. Picture: GCIS
South African parliament. Picture: GCIS

The ANC joined forces with the EFF in parliament on Tuesday in criticising the track record of the World Bank in developing countries.

The critique came after a presentation to parliament’s finance committee by World Bank senior economist Marek Hanusch on the bank’s report on SA called "An Incomplete Transition — Overcoming the Legacy of Exclusion in SA".

EFF chief whip Floyd Shivambu said the World Bank’s structural adjustment programmes had contributed to inequality so it could not meaningfully contribute to a debate on how to lessen poverty and inequality in SA. He said it would be foolhardy to even consider what the bank had to say and that instead it should explain its failures, which had exacerbated poverty.

One of the bank’s proposals is for the private sector to have a greater role in policymaking but Shivambu pointed out that whenever there was a shift in policy, the private sector almost always argued for retaining the status quo.

Committee chair Yunus Carrim (ANC) said a significant number of ANC activists of his generation would agree with Shivambu. There was "deep concern" over the role the World Bank has played and it needed to take responsibility for its failures in the developing world. Its policies of structural adjustment, which, in SA, had taken the form of the Growth, Employment and Redistribution programme (Gear) had "failed dismally", Carrim said and had contributed to poverty and inequality.

Carrim said he was taken aback by the World Bank proposal about the private sector having a greater role in policymaking, noting that, the private sector had too much say in policy but had not come to the party in terms of partnerships and investment. "So far, it has had a huge say [but] has delivered very little." He added that the World Bank’s approach over-emphasised the free market and did not recognise the need for state intervention.

In response, Hanusch said the World Bank had been very open about the mistakes it had made in the past. He said the private sector should be involved in policymaking as it was a partner in the country’s National Development Plan and was the main generator of jobs. The private sector needed to grow to create jobs but it also needed to be held accountable, regulated, and play within the rules of the country, "So it is important that policies do not have unintended consequences that could prevent job creation."

Hanusch stressed the critical importance of arriving at an amicable solution for the mining charter, given that investments in the sector will play a critical role in future growth.

One of the key proposals in the report is the creation of a social contributory pension fund which would allow South Africans to build assets. It would compel savings and allow recipients to receive dividends.

The report concludes that SA’s transition remains incomplete as the legacy of exclusion from the economy persists, in spite of the progress since 1994. "The legacy of exclusion makes it difficult to build a social contract. Symptoms of the weak social contract include low investment, low growth, unemployment, a volatile exchange rate, student protests, rating downgrades, crime and state capture."