Nyerere’s relationship with the World Bank started cordially
in 1961 when the bank was fully aligned with Nyerere’s socialistic vision of
agricultural and educational reforms, and it played a major role in influencing
the country’s first two five year plans. It peaked between 1968 to 1973 during
the tenure of Robert McNamara as the World Bank’s president, after which it
went downhill as Nyerere’s failure to implement industrial reforms made it
difficult for him to service the bank’s loans. The dialogue is set in the mid
80’s when their relations reached a nadir.
Julius Nyerere (JN):
Gentlemen, I have been notified that WB has suspended all further aid for
Tanzania. You know this will prove disastrous for our country. We need to
discuss ways to sign the Standby Agreement before things get out of control.
World Bank representative
(WB): Mr. President, the bank is very concerned about the state of the economy
in the country. The GDP growth has been
negative for the last four years, the rate of inflation stands at 45%, the debt
service ratio has increased from 8.6% in 1979 to 70% this year. For instance, in
the 70’s we provided $256 million for agriculture, but out of ten projects
audited by our Operations Evaluation Department, 70% had negative rates of
return. We need you to implement our recommendations at the soonest; otherwise
we are afraid we won’t be able to help with further loans.
JN: Firstly, our economic
crisis was caused by the increase in oil prices in 1974 and 1979, the war with
Uganda and the severe drought. The recent drop in global agricultural prices
doesn’t help. We have taken many steps recommended by the World Bank, but you
must realize it will need time. Further currency devaluation and dismantling
the state enterprises would shatter my country. We need support to restructure
the repayment of loans and disburse more loans so that we can get back on our
WB: I’m afraid the board
has decided that we won’t be able to help you till we see evidence that all our
recommendations are being implemented.
JN: That’s rather
unfortunate, the World Bank is supposed to help countries like us to develop,
but it has become so commercialized that it bullies us to move in a direction
that could prove catastrophic.