Bank plays blocking game in Accra aid negotiations

29 September 2008

By Lucy Hayes, Eurodad

The influence of the World Bank was felt in Accra when developing countries and donors met at a resplendent conference centre for the recent High Level Forum on Aid Effectiveness. The Bank, together with the OECD and the Ghanaian government, were the joint organisers of this event that hosted some 1,200 participants including 80 civil society representatives.

The World Bank negotiators – reportedly succumbing to pressure from their largest shareholder – had joined the United States and Japan in a push to close down the text of the political agreement and not agree anything more ambitious on key issues before the ministerial meeting on the final day. As Yao Graham, from Third World Network Africa warned, “Once again we see global power relations being reinforced and the demands of civil society and developing country governments sidelined.”

But the Accra meeting was saved from being a total wash-out by last minute negotiations following the arrival of ministers, who finally agreed the Accra Agenda for Action. Although it includes nothing revolutionary, it could mean some improvements in aid transparency, accountability, predictability and an increase in the use of country systems, if donors put their commitments into action.

However policy conditionality, civil society’s bête noir of World Bank development assistance (see Update 60, 58, 53), survived intact, despite determined efforts by developing country governments and civil society organisations alike to get an agreement to reform it. One minor concession was to increase the transparency of conditionality with an agreement that “donors and developing countries will regularly make public all conditions linked to disbursements.

Negative publicity about the Bank’s positioning on conditionality was partly diverted by its support for the untying of food aid in a press statement released just before the negotiations began. The Bank itself would be totally unaffected by such a move but this was a key priority for developing countries, and had considerable support from Europeans. In reality the issue was sidelined even before the game began. Despite developing country and European arguments, the words “food aid” did not even appear in the final text, never mind a commitment to untie it.

Support by the Bank during the negotiations for the US position not to strengthen donor commitments to use developing country financial management and procurement systems is indicative of the influence the Bank’s largest shareholder has over it. This is an issue the Bank logically should have been championing. The Bank comes near the top of the donor league in channelling more than half its aid through such systems (see Update 60).

Very controversially however, the Bank gets to be the judge of the quality of public financial management systems, and is a major player in promoting more open competitive procurement, many argue at the expense of developing countries’ ability to protect nascent national industries. The US comes nearly bottom of the table, channelling five per cent of its aid through developing country systems and is particularly resistant to ceding control of the procurement of its aid.

The OECD’s 2008 monitoring survey on aid effectiveness was published in August, measuring donor and developing country performance against twelve indicators. The World Bank scores relatively well against most indicators and in particular has made progress in reducing the number of parallel implementation units. But the monitoring process is plagued with problems. The text of the report notes that the indicators on increasing programme-based aid and improving technical assistance are extremely untrustworthy. And the Bank still gets to be the judge and jury of three of the indicators – namely on public financial management, ownership and results contradicting their commitments to “mutual accountability”.

The Accra Agenda for Action recognises some of the problems with the current indicators and monitoring process and that these will need to be reviewed. But the overarching problem, which the Accra summit threw into even sharper relief, is a larger one. An aid system based on ownership and mutual accountability needs a new home. An OECD/World Bank managed process is simply an ineffective way to negotiate effective aid reform.