DEVELOPMENT: U.S. Groups Tout Legislative Assault on User Fees

By Emad Mekay Reprint | | Print |

Emad Mekay

WASHINGTON, Sep 25 2001 (IPS) - Activists upset over the imposition of user fees for basic services in developing countries are welcoming a pilot decision by U.S. lawmakers to strengthen Washington’s opposition to the practice, and vow to continue their battle as the bill winds its way through Congress.

“I am optimistic that the bill will finally pass,” says Joanne Carter, legislative director of Results, a non-governmental organisation (NGO) that campaigns against user fees and other aspects of World Bank and International Monetary Fund (IMF) economic restructuring programmes that, in the group’s view, have adversely affected millions of people. “What happened is extremely important because the bill came on bi-partisan grounds.”

The U.S. House of Representatives’ subcommittee on international monetary policy and trade adopted Friday a bill that, among other things, seeks to dissuade the Asian Development Bank and other multilateral development banks from insisting that borrowing countries require their people to pay user fees, also known as service charges, in exchange for basic healthcare and primary education.

If passed, the new law would require the U.S. treasury secretary, whose department sets policy toward the banks, to instruct the regional banks “to oppose user fees or service charges in impoverished countries, directly or under the guise of community financing, cost-sharing, or cost recovery mechanisms, for primary education or primary healthcare.”

The United States is the largest shareholder in the World Bank and IMF and also is among the most influential board members of development banks in Asia, Africa, and Latin America.

Activists say Washington’s resistance to user fees could signal opposition among other rich nations and major shareholders like Germany, Japan, and France.

“There is a great deal of satisfaction among (anti-user fees) institutions,” says Soren Ambrose, policy analyst with the U.S. Fifty Years Is Enough Network. “Assuming that the final language of the law will not allow for more loopholes, we are gratified.”

Activists say they are optimistic the bill will close an escape route in a previous law that allowed international financial institutions to continue to impose these fees, especially on health and primary education, while claiming that waivers or exemptions were made to the poor.

Whether that optimism is rewarded remains a decidedly open question, according to veteran Bank- and Fund-watcher Nancy Alexander. The institutions have a history of “back-pedalling” on such issues, says Alexander, executive director of Globalisation Challenge Initiative.

In October 2000, Congress took the historic step of requiring the U.S. executive directors at the multilateral lending institutions to oppose including user fees among the conditions for poor countries to receive loans. Two months later, the World Bank and IMF signed off on Tanzania’s Poverty Reduction Strategy Paper, an economic blueprint that listed user fees for health services among its mandates.

Multilateral lenders and some borrowing governments say user fees are designed to help recover some of the cost of providing social services in countries under fiscal and budget stress. Cost recovery has come to be seen as an essential component of deficit reduction in countries where government revenue falls far short of expenditure.

NGOs counter that, in reality, user fees have excluded millions of poor people in developing nations while failing to achieve their original goal of raising money.

It is not always clear whether user fees were imposed by the lending agencies or whether they merely endorsed government proposals, activists acknowledge. Nevertheless, they insist the World Bank and IMF share the blame because, by including cost- recovery provisions in loan agreements and other policy documents, they endorse user fees and give them contractual weight.

User fees have been introduced for water and other social services since the lending agencies began pushing ‘second generation’ reforms including the sell-off of state enterprises and reduced state spending.

But as signs began to surface that user fees were at times responsible for worsening the plight of the poor, U.S. lawmakers became more amenable to standing against further backing of the surcharges.

“Once they knew that this was actually happening, the representatives became convinced that this must be stopped,” Ambrose says. “They simply were not aware.”

Last year, a researcher for the U.N. Children’s Fund (UNICEF) in Zambia reported witnessing the arrival at hospital of a 14-year- old boy suffering from acute malaria. His parents were unable to pay the registration fee – the local equivalent of 33 cents – and the boy was turned away. “Within two hours, the boy was brought back dead,” UNICEF stated.

Elsewhere in Africa, researchers found that introduction of relatively modest fees for a sexually transmitted disease (STD) clinic in Nairobi, Kenya, led to a decline in attendance of 40 percent for men and nearly two-thirds for women over a nine-month period. Failure to treat STDs can drastically increase the likelihood of transmission of HIV/AIDS.

Conversely, when Malawi eliminated a modest school fee in 1994, primary enrolment soared by 50 percent almost overnight – from 1.9 million to 2.9 million pupils.

Lenders continue to promote user fees on the grounds that properly applied cost-recovery policies should lead to better and more efficient public services and a fairer allocation of general tax resources.

MDBs, the largest public source of development financing in the world, argue that user fees prevent the rich from using free services intended for the poor – a claim hotly contested by activists.

In reality, activists charge, most rich people do not use public clinics or public primary schools in the first place. “It is often those with political clout and savvy who can get waivers in any case, not the poor,” according to a report by Results.