IFI governance

Background

UK civil society meeting with UK World Bank Executive Director Gwen Hines

9 April 2013

29 April 2013 | Minutes

Attendees

World Bank:
Gwen Hines, UK World Bank Executive Director
Simon Bor, Advisor to the Executive Director

DFID:
Paul Heeley, International Financial Institutions Department

NGOs:
Peter Chowla, Bretton Woods Project
Petra Kjell, Bretton Woods Project
Tim Jones, Jubilee Debt Campaign
Emma Seery, Oxfam GB
Hannah Stoddart, Oxfam GB
Richard Harkinson, London Mining Network
Monica Stephen, International Alert
Helen Tugendhat, Forest Peoples Programme

World Bank strategy

NGO points:

  • thoughts on Jim Yong Kim’s speech and content on strategy, what is feasible, what do you want to fight for?
  • shared prosperity of particular interest, there is good and not so good things in there
  • will there be a WB strategy on progressive taxation, for example, to drive down inequality or will it continue to be old school?

Gwen Hines’ response:

  • the speech was good, this is a key issue for the development committee this time, but it’s not a strategy, it’s setting the framework for discussion and overaching goals to guide a strategy
  • the detailed strategy is for discussions to come and will be fully presented at the annual meetings, that strategy will look at what the Bank can do differently – it’s not business as usual
  • board has been asking questions too, for example, on what the overaching goals will mean for future Bank work in particular countries and sectors. Full strategy may have sub-level targets e.g. on education, stunting
  • Guardian leak was of early version. Final version is better, including on gender and environmental sustainability
  • On poverty target:
    • goals and targets: 3 per cent by 2030 is good. Keeps focus on extreme poor and countries furthest behind. $1.25 dollar a day target is really important still for many countries, especially fragile conflict states.
    • DFID’s view is that 3 per cent by 2030 is very ambitious. To achieve this, the Bank will need to focus very seriously on how to help achieve radical change in countries with fast growing populations and stubbornly high poverty levels like DR Congo and Nigeria
    • We want WB to get serious about its marginal impact – where it can tip the balance, to achieve the 3 per cent target
  • On shared prosperity target:
    • There was a debate about how to measure this and which measures to use. Board often talks about income inequality. This target is the best indicator to use. Gini is too complex.
    • WB is trying to go for simplicity, not too many targets – so only 1 shared prosperity target was chosen. What comes next is more interesting, about how the Bank pursues this in its work.
    • UK is happy with target on raising incomes of the bottom 40 per cent. This can lead to good discussions in particular in MICs, to get into issues around inequality, as well as inclusive growth and jobs.
  • Look at the India country strategy, it’s the first example of a country strategy trying to use the new goals to shift WB behaviour
  • The 40% target works to shift the focus down, on the most vulnerable. But for others (for example people focussing on small holder farmers) this target might entail them shifting focus upwards above the poorest of the poor – so that they have to think more about supply chains.
  • Common Vision recognises Bank will need different approach for Congo vs Brazil. Credit to JYK for trying to set out a strategy for the whole WBG, including IDA, IBRD, IFC and MIGA.

NGOs response:

  • good to hear there was debate about 40 per cent target, but question not about 10 vs 40 per cent, measures of metrics should drive target, including looking at the top – redistributive agenda is crucial, see Ravillion

Gwen Hines response:

  • Should talk to DFID Chief Economist Stefan Dercon about Ravillion work, as DFID thinks Ravallion got it wrong; in particular on India, DFID modelling came up with different answers
  • There is lots of discussion on redistribution, but the strategy has to last for 20 years
  • New WB chief economist Kaushik Basu brings a lot of depth on this to the Bank, what countries, such as India, need from the international system – where are the gaps. This will be different from country to country, so much more nuanced

Private Sector/IFC

Financial intermediaries

NGO points:

  • welcome land statement by JYK, but disappointed by lack of recognition of CAO FI audit response
  • FIs involved in land acquisitions, increased risk of land grabs, would like feedback from CODE meeting on this
  • Question re UK position on FI accountability

Gwen Hines response:

  • I didn’t attend yesterday’s meeting at CODE. Not yet seen final read out. Very much a live debate. (Note: DFID subsequently clarified that UK Alternate Executive Director Stewart James did attend the meeting)
  • wouldn’t take the management response as final say on this
  • best to come back on this one, look out for CODE green sheet (ie summary of meeting outcome) when it comes
  • part of larger debate on IFC, how far down the chain they are responsible
  • different views on this
  • UK view is that they do have to be accountable down the line. Aware of practical challenges, but if we invest, we need to hold to the term of the original investment, and track results. Looking to IFC to come back with proposals that are realistic but effective.
  • need to talk to private sector clients to find a match of what they track and what we track; similar discussion happening on the BROE (Biannual report on operational effectiveness) and the IFC impact
  • IFC roadmap is interesting, how to take DOTS etc to the next level
  • Spoke to CAO, and IFC person responsible (James Scriven) on the back of CAO report, want to hear from IFC what can be practically done, considering financial and staff capacity (e.g. spot check data)
  • IFC is having conversation with range of people regarding lessons
  • Part of wider push to shift Bank Group focus to implementation and impact
  • A WBG Global Footprint review will happen this year, including on how many people are on the ground vs in DC

Doing Business

NGO points:

  • will send CSO recommendations on DB for review
  • four main areas of recommendations – improving development outcomes and impacts, how DB is being used and improve this, substance of indicators
  • What will the UK input into the consultation?
  • On process, what will happen after the report?

IFID response:

  • following the NGO meeting 1 ½ month ago, UK put together a submission to the Panel that should be able to be shared
  • DB is a very useful product, popular and effective in getting regulatory reform on the table
  • want to focus on problems with implementation of DB reform programmes on the ground
  • Want the report to focus on substance, less about rankings
  • First panel will look at content of the report, but not on usage and how this can be changed
  • On process, not decided on the final steps – will be a report back, but undecided on how to process

Gwen Hines response:

  • The whole thing is controversial, even doing the review – some board members would like to kill off the survey, especially rankings.
  • still useful product, looking at development outcomes and impacts can lead to interesting discussion in countries – e.g. difficulties in setting up business and how to tackle this, but less usefulif just focus on counting how many days it takes
  • mixed views, but a lot of developing countries do think DBR is useful to leverage reform in their own governments

Safeguards

NGO points:

  • calls from civil society to expand scope to include all financing instruments
  • challenges to effective implementation, there are three key areas: M&E and supervision problems (IEG pointed this out) should be part of discussion; low rates of application of existing policies including categorisation problems; staff incentives – should be discussed alongside content
  • a more detailed submission on implementation concerns will be shared with the UK Delegation

Gwen Hines response:

  • absolutely agree, when discussing policies and strategies, we need to talk about implementation. Everyone agrees that we need something that actually works, that gets applied
  • there are trade offs and complications, and we should have a discussion about this in the context of supervision, which has been recognised as a priority for improvement, on the back of IEG etc. There are resource constraints that should be looked at, incl in the global footprints review. On staffing issues, there needs to be a combination of skills and guidance, and incentives for teams to help them fix problems
  • there is lack of clarity on accountability at the moment that needs to be rectified, including what is mandatory, what is guidance and what is good practice; this clarity over different levels of responsibility is particularly important for safeguards. End April a new WB accountability framework led by Caroline Anstey will be launched, including new portals, best practice and learning from failure;
  • Safeguards shouldn’t be an add on check list at the end. There needs to be a mind-set shift to how to design the programme from the start to maximise the good impact, for example on women etc; the WBG President is keen on this
  • a lot of talk about IFC Performance Standards review, which had extensive and expensive consultation framework, perhaps using some of those lessons for this safeguard review
  • still very much up in the air, but they are taking on board a lot of feedback
  • the review is tasked to investment lending, hard to see how the IL safeguards can be looked at with regards to DPOs for example.
  • also partly as clients are steering away from IL as the safeguards are hard to deal with
  • it’s not about compromising quality, but the need to streamline and look at implementation
  • there are examples of country teams doing up-stream analysis, safeguards then is about checking extra things specific to the project at hand
  • P4R review coming up next year, so this will be picked up then
  • DPO has had a retrospective, it’s still work in progress, so need to sort out overall WBG strategy before looking at DPOs
  • the scope was discussed heavily, and a decision was made

NGO points:

  • Oxfam and IDI has drafted a safeguard on land tenure, to be submitted to the safeguards, based on voluntary guidelines, so positive that WB statement confirmed their importance in the JYK speech
  • should allow the WB to recognise multiple forms of tenure, WB confirmed this in statement
  • ref to UN Special Rapporteur report, which also raised the issue of scope and incentives – what progress has been made on the UK’s position on human rights, including WB and human rights

IFID response:

  • pleased talking about implementation, including capacity, would like to see more interest in procurement too
  • the division of responsibility between client and the WB is interesting, including on risk – should we rank risk at the beginning and then forget about it or review it as we go along
  • HR was flagged in the safeguards inception report, UK will be thinking about this as part of the review
  • have precedent set by IFC PS, as a spirit of direction
  • question how the different components add up to HR concerns and the balance of emphasis on different elements
  • disability, gender, etc, will also be discussed, which intersect HR
  • have to recognise that HR interpreted in different ways, there is politics on the board
  • main issue for UK is to what extent does the overall package reflect HR
  • recognise HR cuts across everything, so it’s about where it gets captured in the overall vision
  • FCO have had a lot on recently and thus safeguards and Human rights discussion with them has not happened but we will be consulting them, as the lead on HR within the UK Government

Gwen Hines response:

  • as a personal interest would like to WB to be more about risk management, not either WB or country – too big a leap between the two
  • would like to see country systems as far as possible but with awareness of weaknesses with a risk management approach – strengthening country systems, but with safeguards to manage risk
  • on environmental and social issues, a lot of countries want to develop their own systems, but it takes time, so need risk management approach and for WB staff to be explicit with where the weaknesses are – need more honest conversation with countries, identifying real issues in upstream conversation, thinking about things like 5-year strategies and being more specific than having to just “build capacity”

NGO response:

  • on the risk management approach, this would make it important for DPLs and P4R to be part of the review
  • important to put HR in the vision, but if we are serious we also need to drop down to what is mandatory, guidelines, practicable, etc

AOB

Fragile states

NGO points:

  • UK IDA priorities on fragile and conflict affected situations (FCAS)
  • FCAS reform process 2 years on, what still needs to be addressed, and what are the next steps – including IEG review

Gwen Hines response:

  • this is a priority for the UK, trying to get the New Deal into the WB strategy. 3% target should help strengthen focus on doing better in FCAS. Also pushing for HR reforms, incentives/rules, and financial mechanism reforms
  • on IDA allocation, implementation capacity is important for UK, including getting good staff
  • World Bank’s Conflict, Security and Development Hub in Nairobi feedback is good, which also works beyond Africa, but of course need to go further
  • UK lobbies for specific countries to have more WB staff, eg Yemen
  • JYK in discussions with UNSG on countries like Congo, countries not achieving the MDGs; asking questions: what is the WB/UN role?, what can the multilateral systems do better on fragile states?

Mozal smelter, Mozambique

NGO points: partners calling for institutions including IFC to renegotiate the tax exemptions

Gwen Hines response: will follow up

Chixoy dam, Guatemala

NGO points: reparations and compensation on the Chixoy dam have been agreed but not paid

Gwen Hines response:

  • have had 1000s of emails from your supporters
  • have talked to staff, lawyers at WB and IDB behind the scene, will make top priority to respond as soon as the spring meetings are over

Next meeting will be mid May