For 30 years, the International Monetary Fund (IMF) and World Bank have remade much of the developing world according to a market fundamentalist ideology.
The results — measured by lost wealth, stunted social indicators, depletion of natural resources and trashing of the environment, rising inequality and concentration of income, damage to indigenous communities, or many other standards — have been catastrophic.
Can the ongoing harm be undone?
Consider one very small example, with not-so-trivial consequences: the case of school fees in Kenya.
In the 1980s and 1990s, the IMF and particularly the World Bank told developing countries to adopt user fees for education. The institutions have enormous power to impose conditions on developing countries eager to get loans, especially heavily indebted countries that need new loans to pay off old debts and keep their economies functioning.
Why should families be charged for sending children to school? The idea was that school fees can help pay for the cost of schools, especially as the Bank and Fund demand government spending cutbacks.
In practice, and predictably, school fees proved a disaster.
Mary Njoroge has recently retired after 31 years in the Kenyan educational system. Her final post was Director of Basic Education in the Ministry of Education.
Njoroge says that, “even as the fees were introduced, poverty levels were rising in most of the country, and the parents were not able to pay the fees. That led to many, many children dropping out of school — just because of the inability of parents to pay the fee.”
In Kenya, Njoroge says, school fees were a very important revenue source. They became an inadequate substitute for lost federal revenue — and the existence of school fees became a rationale for further federal spending cuts.
“It was from the fees that the schools could buy books, buy chalk, buy exercise books and any readers that they were going to use,” Njoroge says. “Fees also paid for the running of the school, the overhead of the school. That money was very important. The schools were not going to be able to run without it.”
Not surprisingly, the poorest families were hit the worst by this policy, and girls worst of all. There were no exemptions for the poor, though exemptions have proven an utter failure in other places.
For poor families, says Njoroge, “Initially, the choice was if children have to go to school, which children would go? And boys were the ones sent to school in the very poor communities and girls were left at home. Eventually, even that became difficult and for the very poor communities both boys and girls dropped out of the school system. Only those who were able to afford the school fees were left to continue.”
By the start of the 2000s, spurred by outside pressure, the World Bank came to recognize that school fees were a failure. But Kenya and other countries had come to rely on fees, and it wasn’t obvious how to do away with them.
Then, something transformative happened.
In the 2002 presidential elections, Mwai Kibaki ran on a platform that highlighted a commitment to eliminate user fees for education. This promise helped Kibaki get elected. And then he delivered on the promise. Njoroge oversaw the initiative to get rid of school fees.
“When the new government came in and announced that in the new year  children could attend school without paying fees,” says Njoroge, “we witnessed an additional 1 million new children in our schools, over and above the 5.9 million who had already been in the school system.” An additional million came soon thereafter.
User fees had locked the schoolhouse doors to a quarter of Kenyan children. Abolishing fees opened the doors.
Njoroge says that improved tax collection and better systems for financial accountability paid for most of the additional costs — both the lost school fees money, and the money needed to teach so many more kids. The excitement around the initiative also attracted donor funding.
This surge of new students into classrooms created significant transitional problems, says Njoroge, but now teachers have been trained how to handle bigger classes, and how to teach multi-grade classrooms.
Eliminating school fees has been a grand success. “When the fees were lifted, says Njoroge, “we immediately saw the kids at school. It led to investment of resources by the government into the education system. It led to developing new strategies to finance the education program in a transparent and accountable manner, which also has attracted international donors.” And the Kenyan example has inspired many other countries to follow suit, including more than a dozen nations in Africa.
Everything is not perfect. Fees are still in place for secondary schools.
And the system needs to hire more teachers. Which brings the story back to the IMF and World Bank.
Teaching the additional 2 million kids in primary school requires at least 40,000 new teachers, Njoroge says. Kenya has about 60,000 trained teachers who are unemployed, but Njoroge says that Kenya cannot hire new teachers, because agreements with the IMF restrict its ability to increase budgetary outlays for teachers.
But just as user fee policy was changed even though it once seemed un-reformable, so too shall IMF policies that directly and indirectly block countries from undertaking desperately needed investments in healthcare and education soon come to an end.