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Africa: Issues for the World Bank

AfricaFocus Bulletin
Apr 11, 2012 (120411)
(Reposted from sources cited below)

Editor's Note

Despite the tilted voting structure and the likely victory of the candidate nominated by U.S. President Obama, the contest for the new World Bank president, who will be chosen next week by the World Bank board, has been the subject of unprecedented open debate. Any of the three candidates would, in different ways, break the mold of selection of a white male American economist or foreign policy veteran. But, of equal importance, and much less discussed, any of the candidates would also head up an institution with a contradictory mix of old practices and new ideas, despite the demise of the market-fundamentalist "Washington consensus."

The examples of contradictions between analysis by specialists and the practice embodied in country loans and advice are too numerous to mention. See, for example, http://www.africafocus.org/docs10/ag1010a.php, on a sharply critical World Bank report on land grabs in 2010, or the current evaluation by the bank's own Independent Evaluation Group on climate change (http://www.worldbank.org/ieg/climatechangeII/index.html), which stresses energy efficiency and renewable energy infrastructure in contrast to the high-profile World Bank emphasis on carbon offset financing.

This AfricaFocus Bulletin contains three recent articles from the Bretton Woods Project, focusing on current issues on the World Bank agenda, including climate change and gender. The regular updates from the Bretton Woods Project (http://www.brettonwoodsproject.org/)provide a very useful critical view of the World Bank and other international financial institutions.

Another recent article criticizes the bank's estimates of poverty as over-optimistic and "econocentric." http://www.brettonwoodsproject.org/art-569952

Another AfricaFocus Bulletin published today, not sent out by e-mail but available on the web at http://www.africafocus.org/docs12/wb1204b.php, features excerpts from the new book by World Bank chief economist Justin Yifu Lin, on the "New Structural Economics." Lin argues that sustainable growth rates of over 8% are attainable for many developing countries, including African countries, if they strategically plan to move up the industrial production chain as China moves into higher-wage production areas.

The best place to follow the contest for the World Bank presidency is http://www.worldbankpresident.org

Other sources on the World Bank presidency contest include:

"My call for an open, inclusive World Bank," By Jim Yong Kim Financial Times, March 28, 2012
http://tinyurl.com/8yjxa6e

"What Should the World Bank Do?" by Jose Antonio Ocampo Project Syndicate, April 4, 2012
http://tinyurl.com/7r353kp

"My vision for a World Bank that serves everyone," By Ngozi Okonjo-Iweala Financial Times, April 9, 2012
http://tinyurl.com/74zg6of

Okonjo-Iweala and Ocampo appeared earlier this week at events of the Center for Global Development in Washington, for which webcasts are available at http://www.cgdev.org/content/article/detail/1426093/

Kim's "listening tour," which has taken him to Addis Ababa, Beijing, Shaoxing, Tokyo, Seoul, New Delhi, Brussels, Brasilia, and Mexico City, is covered in the U.S. "Treasury Notes" blog (http://tinyurl.com/7vc8jsh). He goes to Moscow after his interview with the World Bank board today.

For a good summary critique of the process, plus a succint outline of substantive issues to be confronted, see Peter Chowla in the Guardian for Apr 13, at http://www.guardian.co.uk/commentisfree/2012/apr/13/world-bank-glimmer-possibility-change

For previous AfricaFocus issues on economic issues, visit http://www.africafocus.org/econexp.php


Update

The authors of the Diagnostic Study of the Lord's Resistance Army, which was excerpted in a March 14 issue of AfricaFocus Bulletin have just published an article in the Journal of Eastern African Studies with a military assessment of the requirements for successful military action against the LRA, incorporating elements of the assessment that were excluded from the final Diagnostic Study for political reasons. They conclude that "Given that unsuccessful military operations against the rebels have typically resulted in LRA retaliations against civilians, the paper urges caution in pursuing such options and awareness of likely civilian consequences. First, do no harm."

An abstract of the study, by Ronald R. Atkinson, Phil Lancaster, Ledio Cakaj, and Guilaume Lacaille, is available at http://www.tandfonline.com/doi/abs/10.1080/17531055.2012.669591 591. The full paper is available to people at institutions subscribing to the journal, or by payment of a singlearticle fee. The corresponding author may be contacted at atkinson.uganda@gmail.com.

++++++++++++++++++++++end editor's note+++++++++++++++++

New World Bank president: what's on the agenda?

5 April 2012, Update 80

Bretton Woods Project

http://www.brettonwoodsproject.org/art-569964

An unprecedented competition for the Bank presidency, with two experienced developing country candidates nominated in addition to the US candidate, has raised demands for reform of the Bank's approach to middle-income countries, human rights, environmental issues and the private sector, among others.

On 23 March the Bank board closed nominations for the successor to Robert Zoellick, who had announced his intention to stand down at the end of his first term in June (see Update 79). Three candidates were put forward: the US government nominated Dartmouth College president and American national Jim Yong Kim; South Africa, Nigeria and Angola nominated Nigerian finance minister Ngozi OkonjoIweala; and Brazil nominated former Colombian finance minister José Antonio Ocampo. Although American professor Jeffrey Sachs, from Columbia University in the US, had publicly campaigned for the job, he withdrew when Kim was nominated.

Okonjo-Iweala and Ocampo have been finance ministers and held senior management jobs in multilateral organisations, Iweala as a former managing director of the World Bank, and Ocampo as a UN under-secretary general. Kim was a department head at the World Health Organisation.

This marks the first time there has been a contest for the position, although the US act of nominating someone shows their desire to cling to the long-standing unwritten convention that the head of the Bank is always American. The surprise nomination of Kim - who had not featured in prenomination speculation - and the emergence of a three-way competition strengthened campaigners' demands for a more open selection process going forward. Elizabeth Stuart of NGO Oxfam International said: "It is no longer tenable for the US to anoint the World Bank's leader behind closed doors. The Bank will undermine its legitimacy if this interview process is a charade with a pre-determined outcome. The three candidates should debate each other publicly, so that when the selection is made, the world knows why."

Reforms needed

Assessments of the three candidates have dominated media discussions and created debate about key reforms needed at the Bank. Academics and commentators agree that the next president must bring focus to the Bank's sprawling range of activities, the only question is how.

One of the most pressing issues is how to work effectively with large emerging market countries. At a BRICS (Brazil, Russia, India, China and South Africa) summit at end March, the leaders called for "a multilateral institution that truly reflects the vision of all its members, including the governance structure that reflects current economic and political reality." While governance reform is not strictly in the power of the Bank president, the president can argue for and demand changes in the alignment of power among shareholders. And then, according to Roberto Bissio, coordinator of NGO network Social Watch, "the Bank should practice what it preaches and welcome some competition". Instead of trying to co-opt any BRICS institutions (see Update 80), the Bank "should not interfere with the emergence of alternatives that would offer more choices to its country clients."

While sorting out a bigger role for middle-income countries, the next Bank president is also being called upon to protect the rights of people affected by Bank projects. The Bank currently does not recognise that it has a duty to respect and protect human rights, generally categorising human rights as 'political' rather than 'economic' or 'poverty' related. Titi Soentoro of Indonesian NGO Aksi said, "if the Bank is going to boost the role of middle-income countries that must go hand-in-hand with strengthened environmental and social safeguards."

The environment is one of the key battlegrounds for the next administration, with past efforts to dub the Bank an "environment bank" annoying civil society groups who have long pointed to the damage done by Bank-funded projects, not least because of its funding of fossil fuel power plants while ignoring the needs of vulnerable people for energy access (see Update 75). The Bank has consistently positioned itself in international public policy-making as a protector of global public goods, from climate change to biodiversity (see Update 80). Red Constantino, the Philippines-based coordinator of the BASIC South Initiative said: "The Bank has no business generating global public goods when it can't even get the basics of climate change right. It needs to stop thinking markets, particularly carbon markets, are the solution to all problems. It needs to step aside and leave management of climate finance to more democratic institutions like the UN."

Finally, while the past decade has seen a trend of the Bank's direct finance to middle-income country governments shrinking as a proportion of their total financing, there has been a massive increase in the size of the Bank's private sector operations through the International Finance Corporation (IFC), where it is lending increasing amounts to corporate operations in middle-income countries. Additionally, the IFC is starting to adopt financial structures used by Wall Street investment banks, with half of its funding is now being routed through financial intermediaries. The IFC is also the part of the Bank that has been most criticised for facilitating 'land grabs' by foreign investors looking to acquire agricultural land in developing countries (see Update 78). Soren Ambrose of NGO ActionAid International said: "The big risk is that the new president will leave the IFC to its own devices instead of trying to curtail its out of control practices. The IFC needs a complete overhaul, from project selection, to staff incentives and sectoral focus, so that it ceases being corporate welfare and truly focuses on a development mandate."


On a carbon market mission: The World Bank at the Durban climate summit

|7 February 2012 Update 79

Bretton Woods Project

http://www.brettonwoodsproject.org/art-569554

While steaming ahead with new carbon market initiatives, the World Bank attracted further criticism and suffered potential setbacks on agriculture and on the Green Climate Fund (GCF) at the UN climate negotiations in Durban.

As the UN's Framework Convention on Climate Change (UNFCCC) summit opened in Durban in November last year, the Bank's climate record came under renewed scrutiny. People from all over the world joined the Global Day of Action and other protests to voice their concerns about the Bank's involvement in climate finance during the summit. A group of civil society organisations, including the BASIC South Initiative and the Sierra Club, launched the report Unclear on the concept: How can the World Bank Group lead on climate finance without an energy strategy? It argues that the Bank should finally agree a low-carbon energy strategy that ends funding for dirty energy and promotes access to clean energy. The report states that, in the last four years, nearly half of the Bank's energy lending went to fossil fuels, and less than 10 per cent went to promote energy access for the poor. It also notes the Bank's heavy involvement in establishing and promoting carbon markets.

Weakened role in the GCF

A major outcome of the summit was the adoption of the GCF (see Update 78, 76, 74). The Bank's role in the GCF has come under criticism from developing countries and civil society organisations. While the Bank will hold the interim trustee position for the first three years, civil society groups, such as Friends of the Earth, broadly welcomed that the GFC's permanent trustee will be selected through an "open, transparent and competitive bidding process", thus avoiding making the World Bank the 'default' GCF trustee. A hard-won victory for developing countries was the inclusion of a noobjection procedure, which lets designated country authorities put limits on the private sector's direct access to GCF funding.

While the US pushed for the interim secretariat to be hosted by the Bank, resistance from developing countries led to a shared arrangement between the UNFCCC and the Bank-housed Global Environment Facility (GEF, see Update 8). However, many civil society groups did not think the agreement went far enough. Lidy Nacpil of Jubilee South said: "the fund is being hijacked by the rich countries, setting up the World Bank as interim trustee and providing direct access to money meant for developing countries to the private sector".

A new report released in December by UK NGO World Development Movement questions the Bank's direct financing for private entities in climate finance. Power to the people? How World Bank financed wind farms fail communities in Mexico claims that electricity produced under the Bankhoused Clean Technology Fund (CTF) in Oaxaca, Mexico, will not contribute to increased energy access among the state's population who have no electricity. Instead, the electricity will be sold at a discount rate to the world's largest company, Walmart.

Still pushing for carbon markets

The Bank's push for forest and agricultural carbon markets (see Update 77, 74, 73, 59) was confirmed by the launch of the third tranche of the BioCarbon Fund during the summit, set up to enable access to carbon markets for the least developed countries with a focus on reforestation and agriculture projects, such as REDD+ and soil carbon. The Bank also launched the new Carbon Initiative for Development to enable least developed countries to tap into carbon markets through carbon-credit-generating projects (see Update 78). The manager of the Bank's carbon finance unit said: "If one thing was achieved in Durban, it is that market mechanisms are very likely to be part of the future." Furthermore, the IFC is pushing for private equity (see Update 79) as an "untapped" climate finance source in a new report. Accelerating the growth of climate related private equity investment argues that private-equity and venturecapital funds are "uniquely suited to financing climate friendly investments," calling on multilateral financial institutions to help accelerate their growth in emerging markets.

During the summit, the Bank continued its efforts to drum up support for "climate-smart agriculture", which includes a controversial proposal to produce carbon credits from storing carbon in the soil (see Update 78, 77). Concerned by the Bank's activities, over 100 civil society groups, including ActionAid and Kenyan organisation African Biodiversity Network, signed up to a letter asking African negotiators to reject soil carbon markets. Teresa Anderson of the Gaia Foundation said "the World Bank's aggressive push for a 'mitigation programme of work on agriculture' [...] is a Trojan horse to bring in carbon offsets based on farmers' soils. Soil carbon offsets will promote a new spate of African land grabs, and put farmers under the control of fickle carbon markets." This was echoed by Simon Mwamba of the East African Small Scale Farmers' Federation, who said: "Climate-smart agriculture is being presented as sustainable agriculture - but the term is so broad that we fear it is a front for promoting industrial, 'green revolution' agriculture too, which traps farmers into cycles of debt and poverty."

Despite the Bank's push, no work programme on agriculture was agreed in Durban. However, a compromise text was reached that requests the UNFCCC's scientific and technological advisory body to consider issues related to agriculture at its next session in May, meaning that agriculture is now on the official UNFCCC agenda.

Reducing Emissions from Deforestation and forest Degradation (REDD+, see Update 78, 76, 75) also continued to attract critique and the outcomes of the negotiations, including decisions on safeguards and financing, were met with disappointment by indigenous peoples groups. A new coalition formed during the summit, the Global Alliance of Indigenous Peoples and Local Communities against REDD and for Life, called for a moratorium on REDD+ until their concerns have been addressed, arguing that their very existence is under threat. Tom Goldtooth, Director of the Indigenous Environmental Network, said: "At Durban, CDM and REDD carbon and emission offset regimes were prioritised, not emission reductions. All I saw was the UN, World Bank, industrialised countries and private investors marketing solutions to market pollution. [...] I fear that local communities could increasingly become the victims of carbon cowboys, without adequate and binding mechanisms to ensure that the rights of indigenous peoples and local forested and agricultural communities are respected."


World Bank's gender WDR: too little, too late?

|1 November 2011 Update 78

Bretton Woods Project

http://www.brettonwoodsproject.org/art-569233

The World Bank's flagship annual publication pushes gender equality up to the Bank's agenda, but critics express concern about its implementation and unwillingness to consider gender a women's rights issue.

The World Development Report (WDR) 2012: Gender Equality and Development - the first to focus on this issue - was released in September. It documents progress in narrowing gender gaps in education, health and labour in the past 25 years and maintains the Bank's past approach to gender as an economic issue, stressing that greater gender equality "can enhance productivity, improve development outcomes for the next generation, and make institutions more representative." This promotion of gender equality as "smart economics", which started with the launch of the Bank's Gender Action Plan (GAP) in 2007, has been criticised for failing to treat gender under a women's rights framework (see Update 75, 74). However, the WDR recognises that economic growth does not always lead to gender equality. Female mortality, school enrolment and earnings are some of the areas identified where gender gaps are still most significant.

Rachel Moussié from NGO ActionAid International argues that the WDR falls short in addressing what to do when gender inequality persists despite economic growth: "Rather than simply 'sticky' issues, these are fundamental areas of resistance - which economic growth alone cannot address." The WDR also does not recognise that women are disproportionately represented in the informal economy and that their workload increases during economic crises, contradicting previous research findings that "the impact on women is under-reported because their work in the home remains invisible", according to Moussié. "With so little information available, how can the Bank be sure that women are not unduly affected?"

Shahra Razavi, of the United Nations Research Institute for Social Development, said in an October paper the WDR was ultimately a "missed opportunity". "By failing to engage seriously with the gender biases of macroeconomic policy agendas" and "reducing social policy to a narrow focus on conditional cash transfers", she argues, "the report is unable to provide a credible and even-handed analysis of the challenges that confront gender equality - and appropriate policy responses for creating more equal societies."

What implications?

During the the Bank's September annual meetings, its ministerial level Development Committee endorsed a paper detailing the implications of the WDR for the World Bank Group and said it "look[s] forward to reviewing its implementation in a year". Also, a road show of events to disseminate the WDR around the world kicked off in October and will continue in 2012. However, Elizabeth Arend of USbased NGO Gender Action warned that "historically, WDRs have had virtually no impact on actual Bank investments and policies."

The implications paper says the WDR "provides a framework that highlights the importance of household responses to the functioning of markets and institutions' ”formal and informal." It also lays out five directions to capitalise on the WDR: informing country policy dialogue on gender equality; enhancing country-level gender diagnostics; scaling up lending for domestic priorities identified by WDR 2012; increasing the availability of gender-relevant data and evidence; and leveraging partnerships, global and country-level, to help implement priority actions.

But Marina Durano, of the international feminist network Development Alternatives with Women for a New Era, pointed out that it "does not mention whether gender equality considerations will inform a reformulation of Bank assessment tools used to determine lending allocation, such as the Country Policy and Institutional Assessment [CPIA, see Update 43], in order to ensure that Bank policies and their macroeconomic policy advice support the gender equality aspirations set out in the WDR". Moreover, Durano said the implications paper does not explain how the Bank will work alongside other institutions promoting gender equality, such as the United Nations Human Rights Council and the Convention on the Elimination of All Forms of Discrimination against Women: "There is a big difference between an approach to development that recognises gender issues as human rights, and the Bank's approach to a world without poverty that considers gender an economic issue. How can we ensure that the Bank complements these approaches, particularly when it has money to back up its 'advice'?".

A Four-Year Progress Report on GAP published by the Bank in May claims that its "operations have become significantly more gender-informed since the launch of the GAP", while the implications paper states that, in the last five years, the Bank "allocated more than $65 billion - to improve girls' education, women's and mothers' health, and women's access to credit, land, agricultural extension services, jobs and infrastructure services." But Arend disputed the Bank's commitments to gender, noting that its "'social development, gender and social inclusion' investments have actually decreased from $1.25 billion in 2007 to $952 million in 2010", or just 1.6 per cent of its $58.8 billion 2010 budget, according to the Bank's own 2010 annual report. A July report from UN Women also criticised the Bank for dedicating only $7.3 million to gender equality components in public administration, law and justice projects between 2000 and 2010 - just 0.001 per cent of the total $874 billion in grants and loans allocated in the period.

Arend also highlighted the lack of indicators to measure gender impacts in Bank's project appraisals, which makes it "virtually impossible to determine whether Bank investments actually improve gender equality." A September report by Gender Action and Friends of the Earth International on the Chad-Cameroon Oil Pipeline and the West Africa Gas Pipelines exemplifies the severe gender impacts that Bank investments can have in practice (see Update 72). Partially funded by the World Bank, the pipelines did not have "pervasive gender inequalities [taken] into account in project design." The report found that they "increased women's poverty and dependence on men; caused ecological degradation that destroyed women's livelihoods; discriminated against women in employment and compensation; excluded women in consultation processes; and led to increased prostitution."


AfricaFocus Bulletin is an independent electronic publication providing reposted commentary and analysis on African issues, with a particular focus on U.S. and international policies. AfricaFocus Bulletin is edited by William Minter.

AfricaFocus Bulletin can be reached at africafocus@igc.org. Please write to this address to subscribe or unsubscribe to the bulletin, or to suggest material for inclusion. For more information about reposted material, please contact directly the original source mentioned. For a full archive and other resources, see http://www.africafocus.org


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