The Royal African Society

Africa, the IMF and the World Bank

Author(s): Michael Hodd
Source: African Affairs, Vol. 86, No. 344 (Jul., 1987), pp. 331-342
Published by: Oxford University Press on behalf of The Royal African Society
Stable URL: http://www.jstor.org/stable/722746
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 AFRICA, THE IMF AND THE WORLD
BANK

MICHAEL HODD

THIS ARTICLE STARTS with a brief review of the control of the IMF and the
World Bank, their operations and the nature of their involvement in Africa.
It then considers the evolution of IMF and World Bank policy prescriptions
in the context of Africa. Finally it offers explanations for the recent adop-
tion of these policies by many African countries when it has been argued that
these policies run counter to minority vested interests having control of
political power.

The IMF and Africa

The International Monetary Fund was established in 1944 with a wide-
ranging set of responsibilities. Briefly, these involved establishing
monetary co-operation between nations, expanding the growth of world
output and trade, maintaining exchange stability, encouraging multilateral
payments, and using its influence and resources to correct balance of
payments disequilibria.
The operating structure of the IMF is such that member countries are
allocated quotas, the size of which are reviewed every five years. Members
deposit currency to the amount of these quotas with the IMF, 25 per cent
being in reserve assets, the remainder in domestic currency. Quotas are
measured in special units, Special Drawing Rights (SDRs), with, at present,
an SDR worth slightly more than SUS1. Quotas totalled SUS 91 billion in
1984, with total International Reserves at $127 billion, and world imports
running close to SUS 500 billion. 1
Countries are able to borrow 25 per cent of their quotas on particularly
easy terms; the conditions for higher levels of borrowing are progressively
tougher. The IMF has several other funds available for lending for specific
purposes, such as the Buffer Stock Financing facility which is used to lend to
countries setting up stabilizing stocks of commodities which experience
large supply and price variations.
The control of the IMF is determined by its voting rights. Each member
is allocated 250 votes, plus one vote for every 100,000 of SDRs in its quota.
The quotas and votes of the 18 Industrial, 43 African and 80 other LDCs
members of the IMF in 1984 is given in Table 1.

Michael Hodd lectures in economics at the School of Oriental and African Studies, University
of London.
1. OECD, Geographical Distribution of Financial Flows to Developing Countires (Paris: OECD,
1985)

331

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332 AFRICAN AFFAIRS

TABLE 1
IMF Quatas a Votes

Quotas ?/O of
Country Grouping SDR (m) Votes votes

Industrial (18 countries) 62,240 626,900 67 5

Africa(43countries) 3,734 48,090 5 2
OtherLDCs(80countries) 23,267 252,670 27 3

Source: IMF Annual Report 1984.

Up until 1979, IMF loans were made subject to borrowing countries

adopting policies that would bring the balance of payments back into
equilibrium. For a developing country, equilibrium was interpreted as a
condition whereby the value of imports of goods and services, including
interest and dividend payments, is balanced by the value of exports, receipts
of official loans and grants less repayments, and net private investment by
foreigners.
The IMF lends money for short periods, usually a year or eighteen
months and interprets its responsibilities on banking principles, that is the
need to ensure that the loan principle and interest are repayed. This has led
the IMF to insist on a mix of policies which it judges will improve the
balance of payments, making foreign exchange available for repayment of
the loan and interest. Invariably the Fund has pressed for reductions in
government spending and limits on the creation of credit, together with
devaluation.
From 1979 on, the Fund began to insist on policies with much broader
objectives, policies that, in its opinion, would make better use of the land,
manpower and capital resources at the borrowing country's disposal. The
measures now included the ending of the monopoly position or privatization
of parastatal marketing and manufacturing enterprises; redirection of credit
from the public to the private sectors; the ending of price controls and
subsidies; the raising of real interest rates closer to international commercial
levels; the removal of exchange and import controls; and the lowering of
tariffs. These measures have the unambiguous effect of re-directing the
economy toward the allocation of resources by market forces.
By 1982, 19 countries in Africa had taken IMF loans involving con-
ditionality. In 1986, Sierre Leone and Tanzania, who had fiercely resisted
taking loans with conditions attached, finally agreed terms with the IMF.
The major African countries currently resisting IMF-imposed policies are
Nigeria and Sudan. Sudan is currently reported as moving closer to agree-
ment with the IMF,2 while Nigeria has adopted many of the policies that

2. African Business, August 1986.

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 THE IMF AND THE WORLD BANK 333

would be demanded by the IMF, with the exceptions of devaluation and

trade liberalization.

The World Bank and Africa

The International Bank for Reconstruction and Development (IBRD or

the World Bank) was founded in 1944 with a briefto make long term loans to
assist development via the accumulation of capital in the poorer countries of
the world. Membership of the World Bank, and the ability to borrow from
it, are conditional upon membership of the IMF. The Bank is owned by its
shareholders, and was set up with a subscribed capital of $37 billion, of
which one tenth ($3 7 billion) is paid in. In 1980, in a move to maintain the
Bank's lending ability, the subscribed capital was doubled to $75 billion,
with, again, one tenth being paid-in.
The Bank operates by borrowing, mostly from the US, Japan, West
Germany, Switzerland and the OPEC countries, and lending these funds.
Funds are borrowed at particularly favourable rates as the Bank is
empowered to call on the un-paid-in capital to repay loans in the event of
default. There is thus negligible risk in lending to the Bank. In addition,
the Bank is able to lend the paid-in capital, on which it pays no interest.
Thus, for example in 1981, the Bank was able to borrow funds at 9 1 per
cent, but with the use of the zero interest paid-in capital, the net cost of funds
to the Bank was only 6 1 per cent. The Bank lends at 0 5 per cent above the
cost of its borrowed funds. In 1981 this meant that the Bank lent at 9 6 per
cent, a margin of 3 5 per cent over the cost of the funds. The Bank pays no
dividends to its share-holders.
In 1956, the Bank set up a subsidiary organization, the International
Finance Corporation (IFC), which makes loans at close to commercial rates
to private sector enterprises. In 1960, the Bank set up a second subsidiary
organization, the International Development Association (IDA), to dis-
burse loans to the poorest group of developing countries at highly con-
cessionary rates. These loans are made from grants contributed by
member governments. IDA disbursements are made at zero interest, with
a 0 75 per cent charge to cover the Bank's administrative costs. IDA loans
have a 10 year grace period, and a 50 year maturity. Net flows of funds to
Africa from the World Bank comprised $US 614 m of IBRD loans (1984),
SUS 107m of IFC investments (1985), and SUS 761m of IDA loans
(1984).3
In the main, voting within the IBRD depends on shareholdings, within
IFC on ownership of the capital stock, and within IDA on contributions.
As with the IMF, a small number of votes are allocated to each country

3. OECD, Geographical Distribution of Flows; IFC, Annual Report (Washington: IFC, 1985).

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 334 AFRICAN AFFAIRS

TABLE 2
IBRD, IFC a IDA Votes

IBRD IFC IDA

?/O ?f % ?f % ?f
CountryGrouping votes votes votes

Industrial (18countries) 67 1 65 6 65 4
Africa (43 countries) 4 7 4 5 7 6
Other LDCs (80 countries) 28 2 29 9 27 0

Sources: World Bank, Annual Report

IFC, Annual Report.

irrespective of contributions or ownership. In IDA, some regional group-

ings of countries, comprising both LDCs and industrialized countries, elect
directors who exercise votes on behalf of the group. Effective control of the
three bodies is as indicated in Table 2.
In the years up to 1963, the Bank concentrated on lending for
infrastructure-mostly transport, electricity and water projects-with some
lending to schemes that enabled larger farmers to adopt modern methods
involving fertilizers, pesticides and mechanization. Between 1963 to 1968
the Bank extended its activities to education and state-owned industries.
During the 1970s, the Bank began to lend to schemes that aided small
farmers and provided basic services to rural areas, supported urban housing
and services schemes, and made loans to finance oil and gas exploration.
In 1979, the World Bank initiated a programme of Structural Adjustment
Loans (SALs). These loans are for longer periods (about 5 years) than
IMF loans, and are designed to tide countries over until their balance of
payments positions can be strengthened by changes in the structures of their
economies. Loans are only made to countries that have come to an agree-
ment with the IMF. Conditions involve broadly similar policies and have
in addition stressed adjusting domestic energy and agricultural prices to
world levels, removal of subsidies to industry, the introduction of pro-
grammes to improve marketing and management institutions, and reforms
of parastatal organizations.
From 1982, the World Bank has made Sector Adjustment loans to facili-
tate structural changes within a particular areas of the economy. From
1985, the World Bank has instituted loans under a Special Facility for Sub-
Saharan Africa. Sector Adjustment and the Special Facility loans have
involved similar conditionality to SALs. Nineteen African countries-
Burundi, Equatorial Guinea, Ghana, Guinea, Guinea-Bissau, Ivory Coast,
Kenya, Madagascar, Malawi, Mauritius, Niger, Rwanda, Senegal, Somalia,
Sudan, Togo, Uganda, Zaire and Zambia have accepted conditional
World Bank lending in the 1980s.

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 THE IMF AND TE WORLD BANK 335

Evolution of IMF and World Bank Policies

The IMF balance of payments adjustment policies stem from standard
economic analysis of the major influences on the components of a country's
international payments. Private investment flows and aid receipts are not
considered susceptible to policy-induced changes in the short-period.
Adjustment can be affected by a reduction in economic activity, that is, a fall
in the level of domestic output which will reduce the demand for imported
raw materials and investment goods, and which, by reducing incomes, will
reduce demand for consumer good imports. Reductions in government
spending, allied to increases in taxation, with reduction in the availability of
credit to investing bodies and consumers are prescribed to achieve the
reduction in activity. These measures are judged to have a fairly rapid
impact in reducing imports.
Devaluation is urged to increase exports and to encourage domestic pro-
duction of goods to replace imports. Imports are made more expensive and
this encourages switching to domestically produced alternatives. In the
African context of countries producing, in the main, small proportions of
total world supplies of their export commodities, exports are considered to
increase by higher domestic prices encouraging greater production. The
devaluation effects are considered to take longer to affect imports (there may
be limited domestic alternatives to imported fuels, machinery spares and raw
materials for manufacturing); Africa's exports of minerals require lengthy
investment programmes and most agricultural exports require several years
before plantings yield crops. An important component of IMF thinking
has been that devaluation alone will not improve the balance of payments; it
must be accompanied by a reduction in the money supply, which in Africa
invariably requires a reduction in the public sector budget deficit.
Although a mix of devaluation and expenditure reduction is theoretically
able to correct the imbalance in international payments while maintaining
full employment of resources, in the African economies short-term adjust-
ment has tended to rely heavily on reducing expenditure, with consequent
adverse effects on employment and incomes.
World Bank lending and aid to Africa starts from the premise that
economic growth and the raising of living standards depends on accumulat
ing capital, both in physical plant and equipment, and by increasing the
education and skills of the labour force. In many cases, the introduction of
new and better methods of production requires the appropriate equipment
incorporating the new techniques and an appropriately skilled labour force
In the 1970s it was thought that the distribution of income could be made
more egalitarian by concentration aid on rural projects and schemes aimed at
benefiting the urban poor.
In the 1950s and 1960s, the consensus of development economists was
that market forces were not effective in meeting the development needs of

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336 AFRICAN AFFAIRS

poor countries. Their were dissenting voices such as Bauer and Yamey4
and Johnson,5 but they did not find themselves with influential roles in
formulating policy. For a quarter of a century poor countries constructed
tariff barriers behind which industrial projects, often government financed
or subsidized, produced manufactured goods that were previously
imported. Exchange rates were fixed and, with the onset of domestic
inflation due in part to increased public expenditure giving rise to budget
deficits, there were balance of payments difficulties leading to overvalued
currencies which were maintained at fixed levels by batteries of trade and
exchange controls. Attempts to control prices led to goods disappearing
from shops and the emergence of black markets. Parastatal marketing
boards purchased agricultural export crops at controlled prices, invariably at
well below the world price. Substantial public sector programmes in edu-
cation, health, infrastructure and industrialization were initiated. Foreign
capital was subjected in some cases to nationalization and almost invariably
to restrictions which discouraged further investment.
In the 1 970s concern that development did not benefit the poorer sections
of the community, led to aid being re-directed and governments being urged
to change their budget allocations toward projects designed to help rural
communities and poor urban groups. But a more fundamental change in
thinking was provoked by the performances of the newly industrializing
countries, South Korea, Taiwan, Singapore and Hong Kong. A major
impetus was provided by the work of Little, Scitovsky and Scott,6 who
argued persuasively for the benefits to be gained from taking advantage of
the opportunities offered by world markets. In the African context, the
World Bank's Accelerated Development in Sub-Saharan Africa,7 published
in 1981 and mostly now referred to as the Berg Report after the name of
its principle author, tactfully acknowledged that external conditions and
legacies of the Colonial period had contributed to poor economic perform-
ance, but laid a substantial part of the explanation on the adverse effects of
government intervention in the economy. These views were reinforced by
other World Bank opinion, notably in the World Development Report of
983.8

The Assessment of IMF a World Bank Policies

The IMF approach to balance of payments problems has been heavily
criticized in that the over-riding concern with correcting deficits has led to

4. P. T. Bauer and B. S. Yarney, The Economics of Underdeveloped Countries (Cambridge:

Cambridge University Press, 1957).
5. H. G. Johnson, Money, Trade and Economic Growth (Allen & Unwin, 1962).
6. I. M. D. Little, T. Scitovsky and M. F. Scott, Industry and Trade in some Developing
Countries (Oxford University Press, 1970).
7. World Bank, Accelerated Development in Sub-Saharan Africa (Washington: World Bank,
1981).
8. World Bank, World Development Report (Washington: World Bank, 1983).

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 THE IMF AND THE WORLD BANK 337

insistence upon expenditure reduction which has been costly in terms of

output lost and unemployment created. In addition, the policies have been
criticized in terms of their effectiveness in meeting the narrow objectives set
by the IMF. Under half those accepting IMF loans achieve their balance
of payments and inflation objectives, and only one-fifth achieve their growth
targets.9
The effectiveness of aid has been attacked by critics from both the left and
right of the political spectrum. The left sees it as reinforcing inequality and
an agency for continuing the increases in wealth ofthe Industrial countries at
the expense of LDCs.10 The right argues that much aid is wasted, that it
often only succeeds in increasing consumption expenditure rather than
investment, and that it undermines the ability of LDCs to solve their own
problems. 11 The empirical evidence for Africa is not conclusive. Studies
show no systematic relationship between che amount of aid received and the
rate of growth. 12 The lack of general empirical support is acknowledged by
the World Bank. 13 Nevertheless, the World Bank goes on to conclude that
most aid has been productive and helpful to development on the basis of case
studies of seven countries, three of which, Kenya, Mali and Malawi, are
African.
I have myself discussed in detail the general theoretical arguments and
the empirical evidence for Africa bearing on the effectiveness of market-
orientated policies.14 There are arguments to support both intervention
and reliance on market forces depending on the nature of the market struc-
tures observed. Thus the theoretical arguments are not decisive in the
absence of firm empirical evidence.
The overall impression of the empirical evidence is as follows. There is
strong empirical support for the effects of price incentives on the production
of export crops and for the benefits to be gained from taking advantage
of export opportunities. There is equally strong evidence for the more
efficient use of resources in private manufacturing, agriculture, mining and
marketing enterprises as compared with state-owned operations. There is
some evidence that countries with price structures that more closely repre-
sent scarcities, in particular those that have less overvalued currencies, have
exhibited better economic performance over the past two decades. There
is no strong evidence that the reform programmes will make the distribution
of income more egalitarian or help those sections of the population in most
poverty.

9. T. Killick (ed.), The Questfor Economic Stabilisation (Heinemann, 1984).

10. C. Payer, The World Bank (Monthly Review Press, 1982).
1 1. P. T. Bauer, Dissent on Development (Weidenfeld and Nicolson, 1971).
12. D. Wheeler, 'Sources of Stagnation in Sub-Saharan Africa', World Development, (1984).
13. World Bank, Aidfor Development: the key issues (Washington: World Bank, 1986).
14. M. Hodd, 'Africa and the Market Economy', (unpublished paper, London, 1985).

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338 AFRICAN AFFAIRS

Major concern centres on two issues. First is deciding what is the most
desirable timing and sequencing of reform measures, particularly for
economies that have departed substantially from price structures that reflect
scarcities. There are fears that political stability will be strained by the
substantial adjustments required and that certain sequences of reforms will
make economic performance worse. Second, in the light of the initial
improvements, but subsequent recessions experienced in South America, 15
the question arises whether initial upturns in growth, balance of payments
and inflation indicators experienced in some reforming African countries
can be sustained.
Overall, on the basis of the evidence, there is reason to be cautious as to
whether the whole package of IMF and Word Bank reforms will provide
politically feasible and sustainable improvement in economic efficiency,
growth and price stability, or make the distrsbution of income more
. .

egai 1tarlan.

Impetus for policy change in Africa

It is clear from the voting structures of the IMF and World Bank that
these institutions are in the control of the industrialized countries. This
gives these countries the ability to make access to funds contingent upon
such policies as they see fit to impose. However, the funds provided by the
two institutions are modest in terms of the contributions they make to the
balance of payments positions of borrowing countries. Table 3 shows how
the Current Account (goods & services) deficits of African countries have
been financed. Table 4 relates these flows to the percentages of total
imports they finance.
It can be argued that the leverage of the IMF and World Bank is greater
than the sums provided by the two bodies, as other official funds and
private loans might not be forthcoming in the absence of IMF agreement.
However, it has been quite possible for countries at variance with the IMF
and the World Bank to continue to obtain loans from Industrial countries
and, indeed, some lenders have made positive efforts to fill gaps left by
lenders supporting IMF and World Bank policies. Tanzania is the most
notable example; despite an economic strategy resolutely at odds with IMF
and World Bank thinking (a heavily overvalued currency, substantial
parastal marketing and manufacturing, administered prices diverging sub-
stantially from world prices), Tanzania was second only to Sudan among
African countries in the total amount of concessionary finance received over
the period 197>83 and sixth among African countries in aid received per
head of population.16 What is more, Tanzania's receipts of concessional

15. A. O. Kreuger, 'Problems of Liberalisation', in A. C. Harberger (ed.), World Economic

Growth (San Fransisco: Institute for Contemporary Studies, 1984).
16. World Bank, Aidfor Development.

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 THE IMF AND THE WORLD BANK 339

TABLE 3
African Current Account Deficit Finance, SUSm

Finanee Souree 1970 % 1978 ?/O 1983 %

Private invest't 309 30 7 3,349 34 9 3,165 28-2

World Bank loans 106 10-5 608 6-3 1,142 10-2
Other OfFl loans 356 35-4 1,905 19 9 2,893 25-8
IMFloans -45 -40 155 1 6 1,319 11-7
Private loans 189 19-3 3,568 37 2 2,714 24-2

TotalDefieits 1,005 100 0 9,585 100-0 11,234 100-0

Souree: OECD, Geographical Distribution of Financial Flows to Developing Countries (Paris,

annually).

TABLE 4
African Sources of Deficit Finance in Relation to Imports

Ratio 1970 1978 1983

IMF/Imports ?,/O -0 5 0 4 2-5

WorldBank/Imports ?/O 1 1 1-5 2 9
All finance/Imp'ts ?/O 10 5 23 2 24 8

Total Imports $USm 9,527 41,233 45,345

Source: OECD Geographical Distribution of Financial Flows to

Developing Countries (Paris, annually).

loans increased significantly during the period when her interventionist

policies in the economy were being intensified. 17
Bates has argued that the economic structures and strategies of African
countries, prior to market-orientated policy reform, have biased income
distribution in favour of the minority of the population with effective politi-
cal power. 18 Employed urban workers and governing elites are seen as the
groups benefiting at the expense of the nearly 80 per cent of the total popu-
lation of Africa south of the Sahara living in rural areas and predominantly
engaged in agriculture. Bates concentrates on the operations of parastatal
export crop marketing boards with monopoly powers, which in general in
Africa have offered substantially lower prices to rural producers than have
been realized from the sale of the crops on world markets. By contrast,
cereal marketing boards have often subsidized prices of foodstuffs consumed
by urban dwellers. Overvalued currencies have reinforced the bias in the
distribution of real income, lowering the domestic price of export crops and

17. M. Hodd, 'Tanzania, the IMF and the World Bank sinee the Arusha Deelaration', (Paper
presented at a eonferenee on the Arusha Deelaration, Arusha, 1986).
18. R. L. Bates, Markets and States in Tropical Africa (Berkeley: University of California
Press, 1981).

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340 AFRICAN AFFAIRS

reducing domestic prices of imports, with the latter presumed to mostly

benefit urban groups. Work by de Melo & Robinson supports the view that
government intervention (they consider import controls) rather than market
solutions (devaluation) shifts income distribution in favour of the wealthier
groups in society.l9
If vested political interest is opposed to market solutions and if the finan-
cial leverage of the IMF and World Bank acting alone is not decisive in
imposing policy change, why then have so many African countries begun
substantial restructuring of their economies on market economy lines? This
is an intriguing question, particularly vFrhen the evidence is by no means
conclusive regarding the efficiency benefits and the nature of distributional
changes resulting from market solutions.
Various factors are possible by way of explanation. First, the nature of
the vested interests of the ruling elites may have changed over the two
decades that have elapsed since most African countries achieved their
independence. Continuous bias in the distribution of income has enabled
these groups to build up substantial private asset holdings. It may be that
they have more to gain now from a more rapid expansion of GDP than from
the continuation of the biased flows of the past.
Second, it is possible that the ruling elites have largely satisfied their desire
for personal aquisition and are now looking to improve the circumstances
of the wider community. This would be analagous to many captains of
industry in the l9th century in Europe and North America who turned to
increasing philanthropy in the latter parts of their lives.
Third, the World Bank and IMF are powerful purveyors of ideas as well as
finance. The IMF is in continual contact with the Governors of Africa's
Central Banks. It organizes workshops for Central Bank employees on
stabilization policies, and it publishes an academic journal, IMF Staff
Papers, which has disseminated important theoretical and empirical work
which has tended to support IMF policy prescriptions.
More successful, however, in influencing attitudes has been the World
Bank. It supports a powerful team of research economists of high technical
ability, comprising the largest group of professional economists anywhere in
the world working on development problems. These economists are
highly paid and are recruited world-wide. In 1985, the World Bank con-
ducted 11 Senior Policy Seminars, 19 Trainers' Seminars and 46 Direct
Training Sessions for senior employees of the governments of LDCs.20
The Bank has begun to publish a particularly popular and expensively pre-
pared annual review of development problems, the World Development

19. J. de Melo and S. Robinson, Trade Adjustment Policies and Income Distribution in Three
Archetype Developing Economies (Washington: World Bank Staff Working Paper No. 442,
1980).
20. World Bank, Annual Report (Washington: World Bank, 1986).

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 THE IMF AND THE WORLD BANK 341

Report, as well as publications in similar style on particular problems, such

as the Berg Report. The documents are designed to be readily assimilated
by those concerned with development problems, without a strong back-
ground in economic theory or statistical methods. These publications, it
might be argued, are selective in the case-study evidence they present and
occasionally gloss over technical objections that might be levelled at the
methods used to obtain results.2 1
These ideas have been important in changing attitudes in both the
Industrial Countries and Africa. In Europe and North America, donors
and commercial lenders have increasingly been persuaded that aid will be
unproductive and lending riskier in the absence of market-orientated policy
reforms by African recipient countries. This has led to more bilateral
donors and commercial lenders making aid, loans and rescheduling of debts
conditional upon agreement with the IMF and World Bank.
Increasing numbers of advisers in Finance and Planning Ministries in
Africa have been educated in American or European Universities, where
neo-classical economic theory is the almost universal starting-point for
analysis of the operation of markets and assessment of the efficiency of
economic systems. To a considerable extent this has involved a better
appreciation of the properties of competitive market systems, particularly
the nature of opportunity costs, the gains from trade, the international
mobility of capital, and the welfare implications of policy interventions.
Many of the arguments used in Africa to dismiss reliance on market forces,
primary product exports and foreign investment have not considered the full
implications of the alternatives involved. The general equilibrium nature
of neo-classical analysis, where a change in one market has effects on all other
markets, has not proved easy for non-economic specialists to grasp. But to
professional economists, the optimal properties of the competitive market
system have proved, over the decades, to be an extremely seductive set of
ideas.
The timing of adoption of policy changes has been the result of a mutually
reinforcing coincidence of factors. First, academic research work evalu-
ating twenty years of interventionist experience and rehabilitating market
forces gained momentum in the 1970s and has been expressed through
channels more readily accessible to policy makers inthe 1980s. Particularly
influential has been the analysis of the effects of pricing policy on export crop
production and the evaluation of parastatal performance.
Second, it has taken two decades since the early 1960s for ruling elites to
consolidate their asset holdings such that they might now be prepared to
consider development policies whose benefits might be spread more widely.
Finally, whereas at Independence there were but a handful of graduates to

21. See, to take one instance, the price distortions analysis in World Bank, World Development
Report, ch. 6.

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342 AFRICAN AFFAIRS

staff Planning and Finance Ministries and Central Banks in Africa, the
expansion of higher education and wide access to postgraduate study over-
seas has led to these institutions being increasingly able to engage technically
proficient indigenous staff. Steady promotion through the ranks has now
seen these recruits begin to occupy senior positions with considerable ability
to influence policy. Advice offered by expatriate experts from industrial-
ized countries has often been viewed sceptically in that it might be designed
to further the interests of those countries at the expense of LDCs. Ruling
elites are more receptive to advice given by their own indigenous experts.
Keynes was of the opinion that the power of vested interests was vastly
exaggerated compared with the gradual encroachment of ideas. For
present day African countries, the prevailing orthodoxy may have originated
with the defunct economists and academic scribblers who developed neo-
classical theory. But the more immediate influence is likely to be an African
technocrat in continual close contact with the research departments of the
IMF and the World Bank.

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