IFI governance


UK NGO meeting with the Secretary of State for International Development, on the World Bank

Tuesday, 30 September 2008, DFID, 1 Palace Street

30 September 2008 | Minutes


NGOs: Jesse Griffiths, Coordinator, Bretton Woods Project; Phil Bloomer, Director of Policy and Campaigns, Oxfam; Alison Doig, Senior Advisor, Christian Aid; Nick Dearden, Director, Jubilee Debt Campaign; Claire Melamed, Policy Coordinator, ActionAid UK; Sarah Hague, Economic Advisor, Save the Children; Glyn Davies, Director of programmes, WWF-UK

DFID: Rt Hon Douglas Alexander MP, Secretary of State for International Development; Anthony Vigor, Special Advisor to the Secretary of State; Sally Taylor, Head of International Financial Institutions Department (IFID); Gerry Duffy, IFID

1. World Bank governance

The following points were raised by NGOs, drawn from the common European NGO statement on World Bank governance reform, which was circulated:

Governance reform of the Bank is the next key challenge for pushing forward the ownership agenda after Accra.

Parity is the key demand from developing countries, and NGOs: does the SoS support this in principle? Does the SoS agree that progress should be across the Bank, including the IFC?

Transparency is also critically important: will there be further progress through the upcoming disclosure review?

Open, merit-based leadership selection also important.

In response, the Secretary of State said:

He met Zoellick the previous week, governance will be one of the main items at the Annual Meetings.

Doesn’t think there’s a huge momentum behind the concept of parity.

Thinks there should be enough momentum to agree changes under the existing timeframe; not convinced there will be a greater appetite for reform in the future. Will need to take a judgement on whether to agree measures to make some progress, or press for more reform but push agreement into the future.

Despite the cost being low for IDA countries ($17m), they do not take up the subs, which would give them quite a lot more votes.

His measures of progress would be stronger representation for Africa, and presidential selection.

On transparency, said the Bank has a presumption of disclosure. . SoS said he had some sympathy with not releasing notes of Board meetings as there needed to be space to have full and frank discussions; he noted that the Bank rules are similar to those here, where Cabinet has the space to discuss issues freely.

Actions: BWP to send SoS further specific information on NGO transparency concerns.

2. Climate Change (including strategic framework and climate investment funds)

The following points were raised by NGOs:

World Bank governance reform is also critical to the Bank’s legitimacy and effectiveness to expand work on climate change: considerable developing country and civil society resistance to the Bank expanding this role, partly because of this lack of legitimacy.

Must ensure climate investment funds (CIFs) don’t detract from building the post-Kyoto framework through the UN. ‘Sunset clause’ is vitally important, needs to be reinforced at Copenhagen.

A critical issue is that the importance of climate change is reflected across all Bank work. Important that clear indicators are developed to measure WB progress and drive incentives, such as the counting the carbon emissions rigorously from all WB activities, and measuring the funding for clean energy versus fossil fuel projects. If the WB set itself transformational targets, it would mean the Bank might be able to play a leadership role.

Need to have a strong message that adaptation activities will be pro-poor. No conditionality by the back door.

Loans not only mean that developing countries will end up paying part of the costs of climate change activities, but also mean that certain projects – which produce a return- will be prioritised over others. A particular risk for protecting ecosystem services – vital for combating climate change.

Must ensure that all funding is additional to existing aid commitments.

The Secretary of State and officials made the following points:

It was important to make sure funding for adaptation and mitigation is available now, but have been scrupulous in ensuring that this doesn’t pre-judge the outcome of Copenhagen. Copenhagen will be a complex negotiation; important that Europe speaks with one voice. Knows that the UN Secretary General is determined that Copenhagen will deliver. The Bank is working to ensure it’s not usurping the UNFCCC, and won’t attach policy conditions to its climate change work. The governance of the CIFs is 50/50 developed and developing countries. The risk that the Bank undermines the process is small in comparison to other factors that threaten success.

Thinks the ‘penny has dropped’ at the World Bank. It’s introducing a smarter climate lens. Zoellick says that climate change needs to be ‘baked into’ the development cake. Its energy portfolio is shifting towards low-carbon energy. WB says their expenditure on fossil fuel projects is falling, not rising. Supports this move. Climate change will be a feature of this and future Annual Meetings. The challenge will be in implementation. Zoellick’s focus on implementation should be an asset.

DFID faces similar issues in terms of making sure climate change is integrated across its activities.

Countries need energy and power – need to have the conversation about how to finance this. Decisions need to be made by countries, but recognise that the WB has a responsibility too. But we must recognise where countries are.

Zoellick makes the point that hydropower will happen anyway, it’s important that NGOs don’t instinctively oppose.

If coal is to be used by countries, important to make sure all relevant steps have been taken when making that decision, including looking at alternatives. Less than 0.5% of worldwide investment in coal is by the IFIs.

Loans are highly concessional if you examine the terms, and Bali called for this. If you look at the level of requirements, then loans must be part of the package. But need to have further conversation on this.

UK working with the Dutch government on producing reliable numbers on the scale of resources need; current estimates are wildly divergent. This will help analyse how much additionality is required; to feed into the Copenhagen process. There is a manifesto commitment on additionality.

It is important for NGOs to get the messages right on climate change – at the moment, NGOs criticise the Bank for doing too much (arguing that it undermines the UNFCCC process/adaptation fund etc) and also for the Bank not doing enough (not helping countries adapt, not taking climate change seriously etc).

3. Other business

(a) Food and fuel crisis

The following points were raised by NGOs:

Food crisis is still critically important: must keep it on the agenda, but focus on the longer term, underlying issues, not just the immediate needs.

World Bank has a long way to go in recognising that governments need to be brought back into the equation on food and agriculture.

The Secretary of State and officials made the following points:

More optimistic on this: Zoellick was one of the first to highlight the importance of food price increases, and is personally committed to the issue; real progress was made in New York; WB is working well with the World Food Programme (WFP).

WB recognises importance of the underlying issues, even if in public it says more on supporting the WFP and immediate needs.

DFID has invested £400m for research on agriculture; recognises the importance of this. It’s an opportunity to flip the debate to ‘Africa can feed the world’ through, for example improvements in seed technology, infrastructure and irrigation. There would be a huge global public good benefit to African success.

(b) Health sector work

The following points were raised by NGOs:

Effective states are key to health as well as agriculture. Recognise DFID’s role in pushing the importance of building health systems, but the WB is not as strong in support of this as it should be. Can we persuade the Bank to move from passive to pro-active support for ending user-fees?

The Secretary of State and officials made the following points:

Zoellick is committed to this; pleased he’s joined task force.

Italy G8 presidency will be a key opportunity.

Recent good conversations with PEPFAR; surprised at the degree of flexibility they support (versus traditional focus on vertical approach.)

(c) Education finance

The following points were raised by NGOs:

Issue is WB procurement rules holding up disbursement of FTI cash.

Action: BWP to send more information on FTI & WB procurement.