On 30 April 2008 the Johannesburg High Court ruled that prepaid water meters, which had been installed in poor townships in Soweto beginning in 2004, were a violation of South Africans' constitutional right to access to sufficient water. Judge MP Tsoka ruled in favour of five residents of Soweto's Phiri township who had filed suit against the City of Johannesburg and Johannesburg Water. The city had launched Operation Gcin'amanzi (‘Save water’ in Zulu) in 2001, in an attempt to reduce unaccounted water use in the city's poorest districts. City officials had argued that poor township districts were wasting water because of their decrepit apartheid-era water infrastructure. In 2006, Operation Gcin'amanzi received a ZAR320-million loan from the French Development Agency to complete installation of prepaid water meters in Soweto (O'Reilly 2006). The city had hired a French multinational corporation, Suez, to install the meters, which automatically disconnected water supply after residents consumed a free allocation (of 25 litres per person per day, or the equivalent of two toilet flushes per day for a household of eight). Beyond the allotted amount, the resident had to pay in advance for water. Although prepaid water meters were outlawed in Britain in 1998 because of public health concerns, South Africa sought to become a model for the technology – with an eye toward expanding its use on the African continent (see Ruiters 2006, Von Schnitzler 2008).
Beginning in 2004, township residents were forced either to accept the prepaid meters or to face total disconnection from the city's water supply (Lindiwe Mazibuko initially chose the latter option and, for seven months, resorted to walking three kilometres to obtain water from a reservoir). Residents in wealthier areas, with far larger water consumption rates, faced no such restrictions. Judge Tsoka highlighted the discriminatory nature of the municipality's provision of water in his judgment, finding that:
The underlying basis for the introduction of prepayment meters seems to me to be credit control. If this is true, I am unable to understand why this credit control is only suitable in the historically poor black areas and not the historically rich white areas. Bad payers cannot be described in terms of colour or geographical area. There may be as many bad customers in the historically rich white areas as they [sic] are in the historically poor black areas. Bad debt is a human problem not a racial problem. (Mazibuko and Others v. City of Johannesburg and Others 2008, p. 59)
The Phiri case – the first ever to deal explicitly with the right to water – was the latest development in post-apartheid battles over the provision of housing and ‘basic services’ such as water and electricity. After the African National Congress (ANC) came to power in 1994, millions of people were hooked up to water, electricity, and telephone lines within a few years. Millions, however, were later disconnected for being unable to pay their bills. At least 40% of new telephone lines were out of service by 2003 and ten million people had been disconnected from water (McDonald 2003, see McDonald and Pape 2002). Municipalities' moves to privatise service provision and implement ‘cost-recovery’ mechanisms – with prepaid water meters as the most extreme example – gave rise to a number of social movements beginning in 1999, including Johannesburg's Anti-Privatisation Forum, the Treatment Action Campaign, the Anti-Eviction Campaign, the Landless People's Movement, and the Abahlali baseMjondolo (‘shackdwellers’) movement (see e.g. Ballard et al. 2006). Minister for Safety and Security Charles Nqakula reported that there were more than 6000 recorded protests across the country in the 2004/2005 financial year (Delaney 2007). Quieter protests abounded as well; some people disconnected their prepaid water meters and reconnected their households and neighbourhoods to the city, circumventing the meters. Others reconnected their electricity following cut-offs (see e.g. Ruiters 2006, Kasrils 2003). Of course, battles over urban governance and service provision are not new to South Africa; rent boycotts and calls for ‘one city, one tax base’ were key features of urban anti-apartheid activism from the mid 1980s.
The ANC's approach to urban governance and service provision has aimed to overcome the spatial inequalities created by apartheid legislation. However, by adopting a range of techniques circulating at the international level, the ANC's approach has rapidly become a model for ‘public–private partnerships’. The story of how private-sector-led shelter and service provision became viable options – while more direct state-led attempts at redistribution fell off the policy agenda – reveals much about the structuring of urban space, permissible claims, and political demands at the turn of the twenty-first century. In South Africa and many other countries in the Global South, the World Bank had a large role in shaping the direction of urban governance and in framing the ideal relationship between states, markets, and citizens. This study will examine such framing processes through the World Bank's trial-and-error efforts at urban assistance in the 1970s and 1980s. Specifically, I will trace the bank's arguments about the ideal role of the state in housing and service provision. Over this period the World Bank encouraged governments to withdraw from providing public housing directly, and to instead act as an ‘enabler’ of market forces. The ‘urban poor’ were thus encouraged to construct ‘self-help housing’ through the bank's sites and services and slum upgrading approach.
This study draws on World Bank internal memoranda, mission reports, and staff reviews found in the archives of Michael Cohen, a head staffer in the World Bank's urban division from 1972–1999, as well as on speeches and publications.1 In contrast to other studies of public housing, urban assistance, and the role of international financial institutions, my study seeks to clarify the World Bank's self-conceptions, rather than focusing solely on the outcomes of its actions. My inquiry is guided by the following questions: How was the relationship between the postcolonial state, market, and its citizens envisioned within the bank? What was the state's projected role as ‘enabler’ of market forces and the private sector meant to involve? Though focused on the 1970s and 80s, the article will conclude with a brief discussion of South Africa in the early 1990s, when the World Bank (after two decades of practice in promoting privatised land and housing markets) counselled the African National Congress on its post-apartheid policies. The ANC's adoption of these policies has resulted in explosive confrontations with civil-society activists who hold alternative visions of the role of the state in housing and service provision.
The World Bank started to focus on urbanisation and urban development in the late 1960s, paralleling a rising interest in urban space among social theorists. Beginning in 1970 with the publication of Henri Lefebvre's The urban revolution, scholars began to theorise urban space and urban society as conceptual units in their own right. Contesting Marxist scholarship that focused on the shift from an agricultural to an industrial world, Lefebvre argued that an additional transition had occurred – from an industrial to an urban world – and that this shift had ushered in profound changes in social organisation. Before 1970, urban research in sociology and other social sciences had been largely descriptive, and research was usually framed in a technocratic fashion in order to meet the needs of housing and urban development policy (see Smith 2003). In this paper, I approach the assumed divide between theoretical and technocratic approaches to urban space differently. My analysis of the World Bank's urban assistance projects focuses on understanding the theory implicit in such technocratic approaches, and how these theories have shaped urban possibilities by altering the way people think about the relationship between states and markets. My approach draws upon the work of scholars who have theorised the role of experts and expert knowledge in producing political and economic subjectivities (Elyachar 2005, Mitchell 2002, 2005, Ferguson 1994). I will conclude with a discussion of how the African National Congress in South Africa relied upon such expert knowledge from the World Bank to construct a more palatable narrative of the post-apartheid economy. The narrative relied on advice from the World Bank that was based on the bank's experiences in urban assistance elsewhere on the continent and in other parts of the world.
Existing literature on the World Bank and its policies is polarised. The bank itself has published thousands of reports, policy papers, and other documents reflecting upon its mission and direction. Critics – and there are many – have savaged the bank, particularly after its forays into structural adjustment beginning in the 1980s (see e.g. Bond 2006, Easterly 2005, Mkandawire and Soludo 1999, Olukoshi 1998, Walton and Seddon 1994). For all their differences, both bank publications and the writings of critics tend to obscure the evolving relationship between what the bank set out to do, what it in fact did, and what it then had to say about its actions. The bank was indeed part of an effort to remake the relationship between states, markets, and citizens. But bank officials constantly traversed a wide gap between ideology and practice; this gap was particularly pronounced in the case of mission staff who were in charge of implementing bank policy in any given country. The World Bank often talked up a neoliberal approach, but its walk was sometimes more of a Keynesian stumble – revealing an awareness that the ‘free market’ is rarely ever free (or self-regulating), and that attempts to ‘jumpstart’ it often necessitate continued intervention.2 Such contradictions have been rife at the bank. For instance, neoliberal calls for the state to bow to private-sector service provision sometimes entailed voucher systems or other forms of government subsidy to ‘enable markets to work’ on their own. And calls to minimise state intervention have often, in practice, resulted in bloated bureaucracies needed to manage unwieldy bank projects and to oversee cost recovery.3 On the other hand, the displacement of local public servants by World Bank consultants and by bank mandates that governments cut costs through payroll cuts has been significant. Given the scale and scope of the World Bank's operations, it is worth understanding this disconnect between ideology and practice. The World Bank has attained a reputation as a polished neocolonial enterprise despite its daily actions, which look much more like over-confident games of trial-and-error – with devastatingly high stakes. Nonetheless, the bank has managed to influence the relationship between governments and their citizens by reframing entitlements. Understanding the World Bank's framing is essential to understanding the constraints it places upon current modes of political engagement.
In examining accounts of World Bank practitioners (some of which are discussed publicly for the first time in this study), the tensions between neoliberal theories of urban development and the frustrations of implementing such theories come squarely into focus. Pure utopian accounts of how the market should be able to provide for the poor while reducing the burden on the state were forced to give way to practical realities. Within the Bank, staff who recognised the failure of the neoliberal model saw a need for states to underpin markets while at the same time subduing popular aspirations for development. The gap between theory and implementation was thus filled by an explicit plan to hold standards down and to depress expectations. Although bank practitioners were constantly forced to navigate the gap between theory and practice – and between popular expectations and outcomes – throughout the 1970s and 1980s, the prominent account of the World Bank during this period is of a self-confident neoliberal institution. In contrast, this article explores the relationship between the recognition of the practical inadequacies of the market's ability to ‘deliver’ to the poor and the resulting need to dampen popular expectations and radically reframe entitlements.
First, some background on the World Bank. While the bank is typically associated with lending to ‘developing’ countries, this was not its original remit. The World Bank was established in July 1944 during a conference of 44 countries in Bretton Woods, New Hampshire. The United States government had been drafting plans for new international financial institutions for the post-war era since it entered the war in 1941 (see Toussaint 2008, pp. 9–10, Gilbert et al. 1999, Galambos and Milobsky 1995). The architects of these institutions sought to stabilise the global capitalist system and prevent a situation such as that following the 1929 stock market crash in which countries like France, Belgium, Italy, and Great Britain were unable to repay their external debts to the United States (Toussaint 2008, p. 10). It was thought that providing public capital through a number of public, multilateral institutions would mitigate the risk of private international investments (Toussaint 2008, p. 13). Officially called the International Bank for Reconstruction and Development, the bank focused overwhelmingly on rebuilding Europe after the war. Between 1946 and 1948 the bank granted over US$500 million to countries in Western Europe, and granted just one loan to a developing country (Toussaint 2008, p. 19, Kapur et al. 1997, pp. 71, 78).
In 1947–48 senior World Bank officials took several steps toward surveying developing countries and determining a potential role for the bank in development lending. Officials conducted survey missions in several countries (mainly in Central and South America) and began project discussions with officials in 20 countries (Kapur et al. 1997, p. 83). By the end of 1948 the bank had published its first income estimates for different parts of the world, showing that per capita income in ‘highly developed countries’ in North American and Europe was over ten times that in most ‘underdeveloped’ countries (ibid.). The Chinese revolution of 1949 further encouraged World Bank officials to incorporate an ‘under-development’ dimension into the bank's work, as a means for combatting what they saw as the rising threat of communism (Toussaint 2008, pp. 19–20). The World Bank's Fourth annual report, published in September 1949, expressed a newfound commitment to ‘economic development’ (Kapur et al. 1997, p. 83).
The bank began lending money at high interest rates to developing countries for specific projects such as roads, port infrastructure, and agricultural projects (Toussaint 2008, p. 21). Until 1962 the bank did not grant a single loan for a school, health unit, drainage system or drinking water conveyance (ibid.). The bank tried to ensure that its projects would be profitable and that money spent on infrastructure projects would go to companies based in industrialised countries. Based on the World Bank's own annual figures, in its first 17 years more than 93% of the money lent came back each year to the most industrialised countries in the form of purchases of goods and services (ibid., p. 22). The World Bank stopped making such figures public after 1962 when it became less politically palatable to boast about how much international aid was flowing right back to the United States and Western Europe (ibid., p. 22).
Beginning in the early 1970s, the World Bank and other international agencies began to focus on housing and shelter provision as key elements in what they called ‘urban assistance’ programmes. The scale of these urban assistance projects and the extent to which they sought to remake municipal governance was staggering. As Michael Cohen, former head of the World Bank's Urban Division, wrote in a 2001 article that took stock of the bank's urban assistance programmes:
Ten thousand urban centres in more than 150 countries received international aid. … From the Bank, projects, plans, investments, research and loans were used to mobilize and leverage local resources to provide needed housing, water supply, sanitation, transportation, environmental management, education, social services and community development. Some US $60 billion was transferred to these urban areas, in most cases through their national governments. The primary objective was to alleviate poverty… (Cohen 2001, p. 39)
Imagining ‘urban’ at the World Bank
The focus on urban development – or even ‘urban’ as a concept – is not intuitive. Throughout the 1960s, development donors preferred to focus on rural projects, as developing countries' cities were seen as ‘inherently complex and difficult environments in which to operate’ (United Nations Centre for Human Settlements/World Bank 1992, p. 21). Their populations – increasingly composed of migrants between the ages of 15 and 29 – were seen as ‘potential sources of upheaval’, whose frustration over a lack of employment opportunities could easily be converted into a politically dangerous force (ibid., p. 7). For their part, newly independent governments in Africa faced high levels of differentiation between urban and rural areas during the 1960s, as colonial attempts at ‘labour stabilisation’ begun in the 1930s had created a high wage urban sector and a large ‘urban–rural divide’ (Amis et al. 1990, p. 4). In the early to mid 1960s, government housing polices tended to focus on fostering a middle class by providing subsidised public-sector housing, particularly to civil servants (ibid., p. 5).4 In Lagos, for example, 62% of funds spent on public housing from 1957 to 1966 went into projects for high- and middle-income groups, while just 19% went to projects for middle- or low-income groups; the remainder went toward rehousing people who were displaced by clearance schemes (Barnes 1982, p. 7). With increased migration to urban areas by the late 1960s, many African countries began to see rising unemployment levels and more and more squatters in urban areas. Governments were not able to keep up with growing demand for housing. In Nairobi, for instance, the annual need for new housing was 9000 units by 1972 – not including the accumulated backlog from previous years. The city was expected to construct roughly 5000 units per year starting in 1965 in order to house the population at the prevailing growth rate, but they always fell thousands short of that target (Muwonge 1982, pp. 61–62).
As governments began to puzzle over the new ‘unemployment problem’ in urban areas, new trends in economics and anthropology began to draw attention to high levels of self-employment, which official employment estimates had overlooked. Economic anthropologist Keith Hart coined the term ‘informal economy’ in the early 1970s, following dissertation fieldwork among self-employed migrants in Accra (which he deemed a ‘study of modernization’, indicative of the dominant vision in development economics at the time) (see Hart 1969). Hart opened his 1973 article ‘Informal Income Opportunities and Urban Employment in Ghana’ with the following question:
Does the ‘reserve army of urban unemployed and underemployed’ really constitute a passive, exploited majority in cities like Accra, or do their informal economic activities possess some autonomous capacity for generating growth in the incomes of the urban (and rural) poor? (Hart 1973, p. 61)
Around the same time, the work of British architect John Turner was stirring up great interest at the World Bank. Based on his experiences in the slums of Lima in the late 1960s, Turner argued that squatters tended to solve their own housing needs, and thus that the ‘“problem” might be more accurately described as part of the “solution”’ (Amis and Lloyd 1990, p. 18, Turner 1976, see also Cohen 2001, p. 58). Turner's work inaugurated a total shift in the conceptualisation of slums.6 According to researcher Lisa Peattie:
a differentiation was made between the ‘slums of despair’ of the non-upwardly-mobile resident of old central cities in the USA and ‘slums of hope’ in the developing world, in which new urban migrants were struggling to make their way upward in a newly-industrialising economy. The shanties were not housing in deterioration; they were housing in process of improvement. (Peattie 1982, p. 132)
‘Urban’ became a concept and catchphrase at the World Bank in the late 1960s. It was thought that the bank's work in various sectors, such as transportation, water, and sewerage, needed to be seen as being part of a ‘larger urban context’ (Mattingly et al. 1984, p. 3). A working group under a Department of Special Projects ‘began to address the problem of describing what “urban” might mean in Bank terms’ (ibid.). In 1971, the working group produced the bank's first urban sector working paper, ‘Urbanization’, in which they identified concepts that, according to one bank staffer, ‘became basic tenets of urban practice in the Bank: for example, the focus on poverty in the urban context, on affordability and cost-recovery, on replicability at large scale’ (ibid.).
Robert McNamara's term as president of the World Bank began in 1968 (he came to the bank directly after serving as US secretary of defense, acting as a chief planner of the Vietnam War). McNamara ushered in a shift towards focusing efforts more directly on the poor in developing countries.7 Initially, this meant focusing on the rural poor. In a 1970 speech to the United Nations (UN) Economic and Social Council, McNamara attested to the bank's lack of knowledge about urban issues (Cohen 2007). In 1973, he reiterated the bank's commitment to attacking rural poverty in a speech to the bank's board of governors in Nairobi (McNamara 1973). Just two years later, however, McNamara made a speech at the bank's annual meeting in which he committed the bank to assisting the urban poor, focusing on the organisation's responsibility to alleviate poverty among the people crowding cities in the developing world at an ever-increasing rate. McNamara's argument turned largely on the potential of the ‘urban poor’ to be a destabilising force that might upset efforts to spur economic growth. He framed the threat in no uncertain terms:
Historically, violence and civil upheaval are more common in cities than in the countryside. Frustrations that fester among the urban poor are readily exploited by political extremists. If cities do not begin to deal more constructively with poverty, poverty may well begin to deal more destructively with cities. (McNamara 1975, p. 316)
Given prevailing ideas about urban areas as inherently complex and dangerous, it is not surprising that in the early 1970s when Bank staffers set out to tackle cities they began by quantifying everything they could about them. ‘Comprehensive city studies’ were meant to ‘provide a systematic framework for Bank activity’ (Mattingly et al., p. 4). But by 1974, such comprehensive studies had already gone out of fashion, as they were seen as being too time consuming. As one staffer put it, ‘they took a great deal of time, and at the end, we found that all the data had changed. People threw up their hands in frustration. There were too many ways of interpreting the data’ (ibid., pp. 4–5). Instead, staffers decided to focus on ‘small, simple things that were clearly needed – projects that would “get us in the door, give us an opportunity to build expertise and earn our bona fides”’ (ibid., 5). Thus began the focus on ‘sites and services’ and ‘squatter settlement upgrading’ projects.
The World Bank's first targeted attempt at urban development was in Dakar, Senegal. The World Bank's board of executive directors approved an US$8 million interest-free loan for 50 years to the government of Senegal in June 1972 (Cohen 2007, pp. 146–7). The World Bank's stated objective was to provide low-cost affordable housing and infrastructure (‘site and services’) to urban residents in Dakar (International Bank for Reconstruction and Development 1972). This represented a radical departure from public housing, as ‘the intention was to make housing affordable to low-income households without the payment of subsidies, in contrast to the heavily subsidised public-housing approach’ (Pugh 1995 in Davis 2006, p. 72). Rather than seeing urban slums as something to be demolished, the World Bank embarked on a plan of ‘slum upgrading’ and ‘sites and services’ that valorised the ‘self-help’ capacity of urban residents and facilitated a withdrawal of state and local government support for public housing. Instead of supporting single-family homes – an approach that had been favoured by the United Nations' Centre for Housing, Building and Planning, and the British and French governments' bi-lateral housing and urban planning programmes, and which had been implemented in Latin America – the World Bank sought ‘low cost solutions such as providing one water faucet for one hundred families’ (Cohen 2007, p. 145). The idea was that individual families would be given loans to buy materials with which to build their own homes on the sites. Rather than being entitled to public housing, low-income individuals and families were meant to pay for construction – allowing the Bank to recover any costs for the project from the poor.
Drawing on economist Milton Friedman's neoliberal theory of public choice, the World Bank's Dakar experiment sought to shift from an emphasis on supply to a focus on demand in housing provision. Michael Cohen describes the rationale for a ‘supply-side orientation’ thus:
Infrastructure projects often reflect a large ‘supply bias’, i.e. they reflect the design preferences of the engineers who build them, but such projects frequently are unconnected to the demand side or the potential users of these services. It should be no surprise that these projects frequently create services which the public utilities cannot sell. As a result, infrastructure projects frequently place local authorities in financial difficulties. (Cohen 2005, p. 24)
How far settlers can justifiably be subsidised in meeting the part of the total costs of the project allocated to them is a troublesome issue since socio-political judgments are inevitably involved. (IBRD 1974, p. 19)
In order to keep costs down, the Bank devised a model for high-density residential areas with a minimum of public infrastructure, services, and space (Dunkerley 1973). As Michael Cohen put it:
the challenge for project design was to reduce the costs of the project and thereby increase its affordability for low income households. … Density was the decision variable which could make that possible. Reducing costs meant reducing the size of plots per hectare, and in so doing, increasing the density and the number of households per hectare. Residential densities were to be increased rather than creating either public space or additional space for social facilities. (Cohen 2007, p. 147; original emphasis)
The Dakar project got off to a slow start, which forced bank officials to reflect upon their endeavour and its shortcomings. They had an ambitious implementation schedule – it had been assumed that ‘14,000 plots could be constructed and services provided in six years, with households beginning to build their self-help housing as soon as they received ownership of the plot’ (ibid., p. 147). While Michael Cohen (who worked on the implementation of the Dakar project in the 1970s) attributes delays, in part, to bank staff's ‘underestimat[ing] the time for policy and institutional changes to occur’, he also points to disagreements between the bank and the government of Senegal about the merits of the project and its approach. He writes:
Delays in implementation also reflected more profound second thoughts on the part of the Senegalese Government. … [T]hen President Leopold Senghor visited the site [in December 1974] and declared that all households in the project should have private water taps and toilets, both of which were clearly unaffordable by the majority of the intended low-income population. This signaled Government interest in settling a wealthier population on the site. Despite mixed messages and contradictory policies, the Government was legally bound by agreements it had signed with the World Bank, the implementation of the project continued… (ibid., p. 148, see also Bathily and White n.d., p. 98)
Mission reports on urban assistance projects often referred to the socio-political difficulties of implementing sites-and-services and cost-recovery programmes. Although most governments may have been doing a dismal job of delivering housing and services to low-income populations (and others were not attempting the job at all), they were often hesitant to formalise low standards. The reasons for this hesitancy varied. In the case of Kenya, reluctant politicians seemed to have tourism in mind, rather than the direct needs of Kenyans. According to political economist Richard Stern,
there was for some time considerable resistance – by President Kenyatta and other members of the indigenous bourgeoisie – to sites and services. The reasoning often heard was that, if building and sanitation standards were allowed to fall in Nairobi, tourism would suffer and international firms would hesitate to locate in Kenya. It was only when dilemmas and uncertainties developed within the governing coalition that the new international planning orthodoxy was grudgingly accepted. (Stern 1982, p. 93)
Implementing cost-recovery mechanisms at the municipal level was often considered to be too politically dangerous; governments might have agreed to implement cost-recovery schemes, but fail to put them into practice out fear of losing favour politically. (Tager and Patel 1979, p. 1). Altering the role of the state and the market in housing and service provision promised to change not only senses of entitlement, but also conceptions of citizens' obligations to the state. As a confidential interim report written by the Dakar project's evaluation bureau (not dated, but likely written in late 1978) observed, the bank had failed to take such political implications into account as it defined its urban approach:
The seeds of many of the problems experienced in project implementation can be traced back to the period of preparation (1969–73). During this time the Bank's urban policy was poorly defined; the policy (such as it was) was the antithesis of the policy being carried out in Senegal; and the OHLM [Office des Habitations à Loyer Modéré] did not have the capability of carrying out such a large, novel and politically sensitive exercise. (Bathily and White n.d., p. 28; original emphasis)
If in the early 1970s the bank was still struggling to define its approach to urban assistance, by the time McNamara made his speech on the need to tackle urban poverty in 1975, a fairly clear conception of the relationship between the state, the market, and ‘urban poverty’ had emerged in bank thinking. This view saw ‘urban’ as a distinct sphere facing a demographic threat. ‘Urban poverty’ was a function of economic dualism, with ‘two sectors’ – the informal and formal – existing alongside each other. And ‘(central) government’ was an entity that needed to step aside and allow markets to function more efficiently in order to provide housing to the poorest. Standards should be kept low when it came to housing and services for the urban poor. This would keep costs down – not for the government, but for the poor themselves, who were now expected to pay for their own housing and services.
McNamara articulated this dualist perspective of urban poverty in his 1975 speech:
To comprehend the pathology of poverty in the cities, one must begin with an analysis of the employment opportunities of the poor. Employment in the urban areas of the developing world is a function of an economic dualism that is widespread. Two sectors coexist side by side. One is the organized, modern, formal sector, characterized by capital-intensive technology, relatively high wages, large-scale operations, and corporate and governmental organization. The other is the unorganized, traditional, informal sector – economic units with the reverse characteristics: labor-intensive, small-scale operations, using traditional methods, and providing modest earnings to the individual or family owner. (McNamara 1975, p. 317)
After discussing the causes of urban poverty, McNamara focused more directly on what he saw as standing between the poor and access to housing and services such as water, sewerage, transport, and education. He argued:
The whole question of ‘standards’ of urban services works to the disadvantage of the urban poor for they are often written with middle-class or upper-income orientations, and have little relevance to the situation the poor find themselves in. Standards are important, but they must be formulated to meet realistic and attainable objectives. If the needs of the poor are to be met within a reasonable time span, public utilities and social services will have to be provided at costs which they can afford to pay. (ibid., p. 326)
The bank rapidly expanded its urban assistance programmes throughout the 1970s; by 1979, the bank had committed US$1.84 billion to help finance 45 urban projects in all regions (Tager and Patel 1979, p. 1). The World Bank had identified the subjects of its interventions as ‘the urban poor’, which its Urban Poverty Task Force estimated to be almost a third of the world's urban dwellers or 280 million people in 1979. According to the bank's definition, the ‘urban poor’ were officially ‘people with per capita incomes insufficient to meet minimum nutritional requirements (the absolute poor) or those with per capita incomes less than one-third the national average (the relative poor)’ (ibid., p. 2). As the next section will explain, apart from the definition based on income, the ‘urban poor’ were also conceived of as the ‘customers’ of World Bank urban assistance. The label succeeded in flattening various regional- and country-specific histories and forms of politics into a one-size-fits-all model. Since the ‘urban poor’ were to be found across the world – from Latin America to the recently independent countries in Africa to Asia – the World Bank had a (seemingly identical) ‘customer base’ around the globe. The World Bank similarly flattened questions of land allocation – often highly skewed given histories of colonial dispossession and spatial planning – and the prospect of land reform into a more manageable question of ‘sites’ to be parcelled out and serviced. This led one observer to comment in the late 1970s ‘that the World Bank was interested in sites, but not land’ (Cohen 2007, p. 146).
Institutionalising urban and educating a customer base
As ‘urban’ was institutionalised at the bank throughout the 1970s and early 1980s, bank staff began to sense the standardisation of the bank's ethos and operations. Over the course of eight months in 1983–84, three Massachusetts Institute of Technology (MIT) researchers conducted interviews and project debriefing sessions with members of the World Bank's urban staff ‘as part of a pilot effort to encourage the staff's reflection on practice’ (Mattingly et al. 1984, p. 1). The staff's reflection reveals much about how they conceived of urban assistance projects – and even more about the culture of ‘learning by doing’ at the Bank. In taking stock of the first 12 years of the bank's urban assistance work, the MIT researchers stressed the pressures which urban staff felt to accommodate to the institutional structure:
It is clear that [the] urban [division] has gone a long way toward establishing itself in the Bank. Staff has grown nearly ten-fold; projects, a hundred-fold. A body of professional expertise, skill and lore has been created. Throughout the developing world, a network of urban Bank customers has been nurtured. All of this has been done, however, in such a way as to require of urban staff and programs a fundamental accommodation to the dominant ethos of the Bank. In the wake of the McNamara era, and with the implanting of urban projects in regional departments, urban can survive only by continually maintaining its legitimacy, relevance, and credibility within a Bank context dominated by macro-economic ideas of Bank mission and by a control system closely bound to those ideas. (Mattingly et al. 1984, p. 6)
In their interviews with the MIT researchers, urban staff describe the extent to which the bank had standardised both its ‘criteria of rational practice’ and the specific ‘products’ it offered in terms of urban assistance. Each project had to legitimate itself in terms of the bank's key concepts: ‘affordability, cost-recovery, replicability, efficiency pricing’ (ibid., p. 11). Communicating these standards involved a ‘teaching function’: ‘interacting with the borrower involves a teaching function. Through conditionalities and through the process of negotiation itself, the host government must be brought to “understand things the Bank's way”’ (ibid., pp. 9–10). The bank offered not only money, but also a specific ‘tool kit’ or product line to go with it. The key element was making governments adopt the bank's language, conception and approach. As the MIT researchers observed:
There is, further, the idea of building up a body of educated customers who not only have developed ‘institutional competence’ themselves, but can educate others; even the Saudis, we are told, now talk to the Turks about ‘cost-recovery’. Within the Bank, there is the idea of building up a body of staff who ‘know the game’, as well as building up a kit of tools which permit the fine-tuning of the Bank's product line: sites-and-services, trash collection, urban transportation, tenuring. (Ibid., p. 12)
Despite the delight which staffers took in educating their ‘customers’, mission staff in various countries were not always confident about the extent to which technical assistance really sunk in. As the MIT researchers put it:
From the field mission perspective, the ‘economic policy dialogue between lender and borrower’ may appear as one in which borrowers ‘put up with the technical assistance because of the money’ and conditionalities are negotiated with the understanding that there will be a degree of softness in their execution. (Ibid., p. 8)
Some of these reservations made their way into mission reports. In December 1979, two Urban Division staff members submitted the first memorandum reviewing the bank's experience with urban projects in eastern Africa (Tager and Patel 1979). The report was unusually lengthy, as it hoped to give other Urban Division staff a sense of the scope and underlying principles of the East African project, and to situate the project within the overall context of urban operations for purposes of comparison with other projects. For these reasons, the report was remarkably candid; it offered frank assessments of the failures of sites and services projects to provide affordable housing for the poorest of urban households and to achieve cost recovery goals. Though none of the East Africa projects had been completed yet, the authors set out to provide a preliminary review of several aspects of the implementation experience, including: ‘initial occupancy, cost recovery, user preferences, and community participation’ (ibid., p. 2). In terms of the scale of the projects, the East Africa region accounted for a very small share of the bank's urban projects in the 1970s; of the bank's 45 urban projects receiving funding as of 1979, just seven of these were in East Africa. The bank provided US$117.5 million in loans to projects in East Africa, spread across Botswana, Tanzania, Zambia and Kenya.9 In each country, initial slum upgrading projects tended to focus on the capital or largest city, as it was hoped that success in such cities would have a positive demonstration effect and allow for expansion into secondary cities.
The authors began their description of the projects by commenting on how much the design of sites and services projects had evolved since the Dakar experiment began in 1972. The first East African projects focused on the provision of a few ‘standard features’, meaning relatively low-cost infrastructure standards and minimum services for dwellings. In each case, levels of services were bifurcated based upon the expectation that two different income groups would occupy the site. In Zambia I, for example, ‘basic’ plots had standpipes and pit latrines, while ‘normal’ plots had individual water and sewer connections. In Tanzania I, 10,600 sites were to be served by water kiosk, while 1600 plots had individual water connections. As in Senegal, the bank ran into problems involving the political viability of its slum upgrading and sites and services approaches. In Kenya, for instance, the government required that 100% of sites be provided with individual water and sewerage connections. By 1975, the projects ‘had come to include a wider mix of options (serviced plots only; plot with sanitary core; plot with sanitary core and kitchen; plot with sanitary core, kitchen plus bedroom) and a spectrum of service levels designed to meet different needs at varying prices’ (ibid.). This differentiation in terms of standard levels was further stretched in order to include ‘the very poor’, or the bottom 20% of the income scale. When Tanzania II was initiated in 1977, it provided ‘19,000 basic surveyed plots with a communal water supply only – in effect, an attempt to guide squatting through provision of secure tenure and potable water. The other services were designed to be provided in subsequent states as incomes permitted’. Kenya II, on the other hand, stretched in the other direction; here the authors observed that ‘the concept of differential charging has been extended to the sale for profit of larger, commercial plots, to permit even larger numbers of the urban poor to participate in shelter schemes (ibid.).
The authors also highlighted what they considered to be the bank's progress in terms of extending credit to individual occupants in order to build or improve their dwellings. The Dakar project had not contained such a credit mechanism, but by 1979, it had ‘become a standard feature in projects throughout the regions’. Botswana I was the first East African project to have a building materials loan programme. It made loans amounting to US$450 per household to pay for bricks, cement, sand and other building supplies – an amount considered adequate for building two rooms. Each East Africa project differed in terms of which types of institutions administered the loans and whether the loans were paid all at once or in stages (with each tranche subject to verification of progress on previous construction phases). The second-generation projects involved a shift from loans of materials to construction loans for the following reason:
In the earlier projects, no provision was made in the loan amounts for hiring labor, since Bank policy concerns favored the promotion of self-help defined in its very limited sense – each beneficiary household, itself, constructing a shelter. Experience, however, revealed a very different trend; most households (40–80%) used small contractors to build a major part of their shelter. Families appear to pursue this course because they lack certain building skills and experience and/or because they simply cannot afford to take time off from work. (Tager and Patel 1979, p. 7, see also Keare and Parris 1981, p. 4)
The report's authors were frank in their conclusion that, in several key aspects, the projects were failing on their own terms. They focused on failures in terms of actually providing housing to the poorest 20% of urban households and cost recovery. On provision of affordable housing to the poorest, the authors made the following observation:
With regard to the target beneficiaries in sites and services, plots are currently not affordable to the poorest 20% of urban households. But that is a social and political constraint to design; it has proven impossible to design technical solutions which at the same time are socially and politically acceptable to governments – thus ultimately to the users – at a cost low enough to be affordable to the poorest. Another observation arising from the experience is that the income groups benefitting from site and services appear to be slightly higher than anticipated at the time of project design. This is due to at least two factors: rapidly rising construction costs, requiring an upward adjustment in the income cut-off points of intended beneficiaries and pressure from middle income groups for whom few, if any, shelter programs usually exist. (Tager and Patel 1979, p. 20)
On cost recovery, the report authors attribute the ‘dismal’ record in the East Africa projects to an inability to reconcile technical solutions with social and political dynamics. As in other World Bank documents examined here, they describe cost recovery as being important because it ‘provides a disciplining mechanism for holding standards down to affordable levels’ (Tager and Patel 1979, p. 4). However, not all governments or urban residents were keen on having their standards adjusted in this way. The authors write:
It is important to note here that collections performance in our project areas is necessarily linked to municipal collections of monies owed to them in property taxes, water and other utility tariffs, and public housing rents. The record in most municipalities is dismal. We believe that in earlier projects, Bank staff did not pay enough attention to the need to establish simple, workable, and well manned mechanisms for collections. But even more important, the analysis of social/cultural practices and political realities in project cities was not rigorous. The result is cost recovery targets for our projects which are completely out of touch with the social/political environments where the projects are located. Thus while the goal of full cost recovery should be maintained, the mechanics and setting of targets for achieving the same requires careful attention. (Ibid., p. 18)
And yet, publicly, the idea of the state as an ‘enabler’ of the private sector was gaining a chorus of support on the international development scene. The concept of ‘enablement’ had been around for decades, but it was gaining a higher public profile among international housing authorities. Bilateral and multilateral agencies began targeting housing and shelter provision and urban poverty alleviation in similar ways in the 1970s and 1980s. In line with the World Bank's approach, such agencies construed the role of the state as an ‘enabler’ of market forces and private-sector service provision rather than a direct provider of housing and other services. The United Nations Centre for Human Settlements (UNCHS/Habitat) began to articulate this role explicitly after 1976, recommending that governments concentrate on creating incentives for households, non-government organisations, and the private sector to provide shelter and services (UNCHS/Habitat 1998, Hansen and Vaa 2004). This anti-statist and pro-market approach became even more fashionable in the 1990s, riding a wave of triumphalist rhetoric after the end of the Cold War.
Indeed, the World Bank model had been conceived in the context of the Cold War in contrast to a Soviet model of centralised planning and public housing. At the end of the Cold War, the bank saw a ‘competing lender’ fold and it perceived an opportunity to consolidate a neoliberal world economy. In a September 1992 paper entitled ‘A new focus on aid for urban development’ prepared by UN-Habitat and the World Bank and circulated to a restricted group ahead of the Organisation for Economic Cooperation and Development's Development Assistance Committee meeting in November 1992, the anonymous authors describe this opportunity under the heading ‘The “one-model” world economy: the end of choice?’:
The rapid collapse of the Communist regimes in Eastern Europe and the subsequent disintegration of the Soviet Union has had important consequences for macro-economic policy and for development strategy choice in the developing countries as well. The first consequence has been the termination of an important source of political, economic and technical support for those Third World countries which had attempted wholly, or in part, to emulate the centrally-planned model of economic development. The second consequence has been the reduction in policy choice. Although the ‘Third Way’ appropriate for the ‘Third World’ was never found during the Cold War struggle, a lot was learned. Innovation did take place. What the changed international political environment of the 1990s will do to this independent innovative spirit in developing countries is unclear. On the other hand, it has also been argued that the failure to conform rigorously to the market economy model has been responsible for the absence of positive economic performance in many developing countries. (UNCHS and the World Bank 1992, p. 11)
If the emphasis is on user satisfaction, if users are seen as clients, not as beneficiaries, then one would also assume that there will be a greater willingness to pay for these services. Participation can therefore be part and parcel of sound economic management. (Ibid., 13)
The World Bank would publicly declare its support for the ‘enabling’ framework in a 1993 policy paper called Housing: enabling markets to work, authored by Stephen K. Mayo, the Urban Development Division's principal economist, and Shlomo Angel, a housing policy consultant. The policy paper began with a clear statement of the policy direction it recommended for the bank and its borrowers in years to come:
[The paper] advocates the reform of government policies, institutions, and regulations to enable housing markets to work more efficiently, and a move away from the limited, project-based support of public agencies engaged in the production and financing of housing. Governments are advised to abandon their earlier role as producers of housing and to adopt an enabling role of managing the housing sector as a whole. (Mayo and Angel 1993, p. 1).
The World Bank and South Africa's transition
The same year that Stephen Mayo and his co-author published this policy paper advocating for the enabling framework across the bank's urban policies, he also focused on how the framework might be applied in South Africa. In 1993, he drafted a paper called Housing policy reform in South Africa: international perspectives and domestic imperatives (Mayo 1993). Though the World Bank had refrained from lending to the apartheid state (it did, however, remain in conversation with the African National Congress in exile), the bank sent a mission to the country in 1990 once it was clear that a transition was imminent. The Bank would attempt to shape the ANC government-in-waiting's urban policies into market-based programmes in line with the ‘enabling framework’.
It is important to clarify that what follows is not a comprehensive account of the emergence of the ANC's neoliberal policies in post-apartheid South Africa. The fact that the ANC was influenced by techniques circulating at the international level is well known, and has been ably discussed by others (see e.g. Harrison et al. 2003, Huchzermeyer 2003, Marais 2001, Bond 2000). In order to give a full account of the World Bank's influence on the ANC's emerging urban policy, it would be necessary to examine how proposals for state-led redistribution (such as the ANC's Reconstruction and Development Programme, or RDP) fell off the table. Instead, this final section makes a contribution to existing accounts by fleshing out the World Bank's role in pre-emptively de-legitimating certain forms of political engagement and protest.
After decades of honing its approach to ‘urban assistance’, the World Bank was prepared to lend its expertise to the transition from apartheid in South Africa (see World Bank Mission 1991).11 In his authoritative study of South Africa's 1990–94 transition period, political journalist Hein Marais writes of early and extensive World Bank involvement in the transition, noting that ‘the World Bank soon after the 1990 thaw had opened channels to the ANC and the trade unions, and enlisted researchers associated with the democratic movement in its projects. “This is the only country in the world where we speak to the opposition,” its representative [Isaac Sam] later boasted’ (Marais 2001, p. 128, see also Bond 2000). South African journalist William Gumede describes the sheer force of the bank's influence:
It was an onslaught for which the ANC was wholly unprepared. Key economic leaders were regularly ferried to the head offices of international organizations such as the World Bank and IMF, and during 1992 and 1993 several ANC staffers, some of whom had no economic qualifications at all, took part in abbreviated executive training programmes at foreign business schools, investment banks, economic policy think tanks and the World Bank, where they were ‘fed a steady diet of neo-liberal ideas.’ It was a dizzying experience. Never before had a government-in-waiting been so seduced by the international community. (Gumede 2005, p. 72)
An analysis of World Bank publications and internal memos on the institution's work in South Africa during the transition reveals the approach to economic policy it prescribed for the ANC government-in-waiting. Stephen Mayo pushed the bank's ‘enabling framework’ in his 1993 paper on housing policy reform. The paper draws on work done in the early 1990s in South Africa as part of a joint programme of the United Nations Centre for Human Settlements and the World Bank (the Housing Indicators Programme), as well as part of several World Bank missions to the country. Mayo writes:
An appropriate overall framework for housing policy in South Africa could be the ‘enabling framework’. … Within such a framework, the role of government is an important one, though one primarily of enabling and facilitating the activities of the private sector – individuals, businesses, and community based organizations – to provide and maintain housing. In South Africa, the key elements of such an approach involve action on three broad fronts: (1) stimulating the demand for housing, (2) facilitating housing supply, and (3) creating an appropriate institutional framework for the management of the housing sector. (Mayo 1993, p. 7)
In November 1993, just months before the national elections which would bring Nelson Mandela and the ANC to power, the ANC's acceptance of the World Bank's economic recommendations was solidified when the party entered into a secret US$850-million loan agreement with the International Monetary Fund. The statement of intent attached to the loan expressed an acceptance of World Bank recommendations and would be fulfilled with the rapid introduction of neoliberal policies from 1996 onward. As William Gumede writes:
The secret letter of intent that accompanied the loan pointed out the dangers of increases in real wages in the private and public sector, stressed the importance of controlling inflation, promised monetary targeting, and trade and industrial liberalisation, and argued in favor of the virtues of market forces over regulatory interventions. (Gumede 2005, p. 77, see also Marais 2001, p. 134)
By 2000, threats to law and order through illegal reconnections (theft of water and electricity) were managed by the state often using private security companies to whom law and order actions such as cutting water, removing infrastructure, and carrying out evictions were outsourced. (Ruiters 2006, p. 294)
The World Bank has hailed its ongoing work in South Africa as ‘a unique opportunity to pilot our evolving role as a “knowledge bank”’, strengthening the role of the private sector and cost-recovery mechanisms to an extent unheard of in most other countries (World Bank 1999, Foreword). In the early and mid 2000s, former President Thabo Mbeki relied heavily upon classic World Bank conceptions of urban poverty to justify prioritising a business-friendly atmosphere over direct government investments in the poor majority. While the dual economy thesis has been discredited by social scientists and activists who point to the fact that the ‘two economies’ actually represent a unified economic process,12 Mbeki relied on this thesis. In mid 2003, he began speaking of ‘two economies’ co-existing within South Africa's borders. Though some hailed this as a step forward, arguing that it indicated a renewed commitment to addressing the needs of the country's poor, it soon became evident that this constituted a way to leave certain divisions unaltered and to justify a lack of fundamental change in wealth ownership within the ‘first economy’. Rather than focusing attention and resources on the ‘second economy’ directly, Mbeki argued that investments and gains in the ‘first economy’ would eventually translate into benefits for the ‘second economy’. As he stated in his February 2004 State of the Nation address:
We must continue to focus on the growth, development and modernization of the First Economy, to generate the resources without which it will not be possible to confront the challenges of the Second Economy. This is going to require further and significant infrastructure investments, skills development, scientific and technological research, development and expansion of the knowledge economy, growth and modernization of the manufacturing and service sectors, deeper penetration of the global markets by our products, increasing our savings levels, black economic empowerment and the further expansion of small and medium enterprises. (Mbeki 2004 in Greenberg 2004, p. 2)
Senegal is two nations. One is approaching middle-income levels. It has access to middle class levels of education, public services, health care, housing, financial services, social protection, and urban amenities. The other – larger – nation exists near or below the poverty line. It is rural or lives in urban slums and is ill fed, ill clothed, ill housed, insecure, and uneducated. (World Bank 2003 in Cohen 2007, p. 154)
Notions of rights, the role of the state, and the appropriate form of political claim-making represent key points of contention in the post-apartheid order. Despite its bold language on socio-economic rights, the country's constitution enshrined only a minimal role for the government in providing access to housing, health care, food, water and social security. These are all included in the bill of rights, but it is immediately added that provision of such rights depends on the state's financial and administrative capacity. (The right of children to adequate shelter in section 28(1)(c) of the constitution has no such limitation, however, and it was on this basis that squatters won government-provided alternative shelter upon eviction in the landmark Grootboom case in 2000) (Government and Others v. Grootboom and Others 2000). As the Constitutional Court's decision on the right to water reveals, the government need only partner with the private sector to install a prepaid meter – whether or not Soweto residents can afford to keep them on is not of concern. Phiri residents and the Coalition Against Water Privatisation had hoped that the constitution would bear out a more active role for the state in ensuring real access to basic services. They brought the case out of a hope that South Africans were not just customers, but citizens whose rights must be ensured by the state, not the market.
Although the ANC's policy decisions are attributable to a number of factors, many of which are outside the scope of this paper, the World Bank played a fundamental role in ensuring that private-sector-led shelter and service provision were of central focus. The bank's trial-and-error attempts to frame the relationship between states, markets, and citizens as one of government ‘enablement’ of the private sector throughout the 1970s and 1980s were crucial in devising an urban policy framework for post-apartheid South Africa. As evidenced by bank mission reports, one element that the bank consistently underestimated was the difficulty of implementing cost recovery in light of socio-political concerns. Indeed, as the South African government has piloted ever more extensive cost-recovery measures, the political reaction from its citizens – many of whom refuse to be customers in this way – has been explosive. South Africa is therefore an important case in terms of the political fallout of the bank's ‘enabling approach’ for governments, as activists continue to fight to redefine the relationship between the post-apartheid state and its citizens.
Note on contributor
Amanda Alexander is a PhD candidate in history at Columbia University and a JD candidate at Yale Law School. Her research interests include land and housing, prisons and social movements in the United States and South Africa. She has held visiting researcher positions at the University of Cape Town's Research Chair in Land Reform and Democracy and the University of KwaZulu-Natal's Centre for Civil Society.