World Bank Funding in the Less Develop Countries: A Corporative Study of Nigeria and Indonesia

Abstract

Foreign aid was once perceived as the magic wand that would confer development on the less developed countries (LDC) of the world. Aid, in the form of long-term loans at concessionary rates from multilateral aid agencies could be applied to long-term infrastructural, social and industrial programmes. The failure of most of the LDCs to evidence economic growth and real development resulted in the castigation of multilateral aid agencies, especially the World Bank as neo-imperialist tools for the perpetration of under-development in the LDC. Nigeria and Indonesia are both former colonies who share a large number of features, and are member countries of the World Bank Group, the foremost multilateral aid agencies in the world. Both have availed themselves of lending from the World Bank and have been subjected to similar aid conditionalities. Nigeria, despite its abundant oil-generated resources and heavy borrowing has not developed; its economic and social indices have declined or stagnated. Indonesia on the other hand is characterized by far healthier economic and social indices. Due to the large number of features, which these two countries have in common, the objective of this study is to subject them to a comparative analysis. The study is undertaken to examine the role of World Bank funding in the two countries between 1984 and 1994; its impact, as well as the significance of each countries internal drive toward real development in the years under study. A comparative historical and analytical research method was used to collate and analyze data for interpretation of past trends in both nations. Internal development objectives, discerned through a review of national budgetary allocation to real development, combined with an examination of sectoral allocation of World Bank funding reveals the developmental thrust of each nation. Indonesia consistently devoted a larger portion and value of National budgets to real development. It employed World Bank funding either to supplement low internal sectoral budgetary allocations or to reinforce budgetary spending in other sectors. It combined good economics with good politics to address internal political problems and generate foreign exchange. It showed a marked commitment to a poverty-focused, agriculturally propelled development strategy with a commitment to infrastructural and rural development. The predominance of oil was de-emphasized. Nigeria on the other hand spent very little on real development in its national budgets. This low spending was not supplemented by foreign borrowing in any coherent manner, nor was borrowing used to reinforce budgetary allocations. Foreign borrowing was not incorporated into any discernible development objective. Nigeria did not address herself to the political and social dynamics of development in the years under study. It did not construct a coherent, real-development facilitating approach to the conduct of its economic affairs. Oil remains Nigeria's predominant foreign exchange earner. A poverty-focussed development strategy was not designed, its rural majority was largely ignored, and agriculture was not encouraged. Issues of equity and social justice did not feature at all. The resulting political, economic and social tensions there from must be addressed. Nigeria has to strengthen democratic and accountable governance. It must render enough to its people to engender the public trust, which it must have to take bold, new initiatives required to restructure her economy and achieve real development.