World Bank says to poor nations: Be more efficient
WASHINGTON — While rich nations try to avoid traffic jams on their electronic information highways, many people in poor nations lack even dirt roads. One billion people lack clean water, and double that number have no access to electricity or adequate sanitation.
While such figures are staggering, the World Bank in a study says poor nations can do much more for themselves in improving living standards. They should put more effort into refining the quality of basic services rather than increasing their quantity, according to the bank's 1994 World Development Report, entitled ``Infrastructure for Development.''
Bank economists cite a troubling excess of public workers in developing nations and too many investments in infrastructure that generate little or no returns. Half the labor in African and Latin American railways is estimated to be unnecessary, for example. Roads are built but then badly maintained, hurting farmers who cannot take goods to markets.
``The price of this waste, in forgone economic growth and lost opportunities for poverty reduction and environmental improvement, is high and unacceptable,'' states World Bank President Lewis Preston. As managers of important services, he says governments must abandon their bureaucratic methods and adopt a more commercial approach, in these ways:
* By operating public services more like businesses.
* By increasing competition among utilities to make them more efficient and accountable, while giving users more options.
* By allowing users to design and operate systems, such as irrigation, so that the services are more tailored to their needs.
Roughly 40 percent of the World Bank's total lending has gone toward the construction of roads, tunnels, bridges, water systems, electrification, telecommunications, and a host of other projects that raise the living standards for the world's developing countries. Governments have put 20 percent of their own funds into these efforts.
The result, according to Mr. Preston, ``has been a dramatic increase in services.'' Since 1980, he says, ``the share of households with access to clean water has increased by half; power production and telephone lines per capita have doubled.''
But lending for infrastructure projects by rich nations and multilateral banks has leveled off since the mid-1980s, a trend that is particularly disturbing given burgeoning birthrates and stepped-up migration to cities, which put even more stress on existing basic services.
In this arena, the World Bank is the major player; its presence serves as a catalyst for other lenders, both government agencies and commercial banks, to join in the financing. The Bank has extended $34 billion in infrastructure loans for 300 projects over the past five years; the Bank's financial planners expect to continue to lend roughly $7.5 billion annually for the foreseeable future.
With resources shrinking relative to rising demands, asserts Gregory Ingram, chief author of the 1994 report, governments can generate savings by working more efficiently. But he says nations going through economic austerity are limited in their capacity to build infrastructure.
Political leaders, he explains, find they run a smaller risk of jeopardizing public support if they abandon plans to build airports and tunnels than they would if they slashed public payrolls or pushed down wages. But, he warns, there is a real danger in ``neglecting maintenance'' of infrastructure during this period.
Will World Bank lending be tied to countries' willingness to slash overstuffed payrolls and other cutbacks in bureaucracy? ``Very much so,'' Ingram says. He stresses that governmental red tape is really an ``issue of governance. The sad fact is that you can't do a lot of these reforms without the enthusiastic support of government.''
``Privately financed projects are typically more efficient,'' Ingram adds, but only an efficiently operating public sector can create an environment for the private sector to flourish.