IFI governance

Background

Meeting between UK civil society and Susanna Moorehead, UK Executive Director to the World Bank

25 March 2010

6 April 2010 | Minutes

Present
DFID: Susanna Moorehead, Executive Director; Bridget Crumpton, Team Leader, World Bank Team; Melinda Bohannon, Senior Policy Advisor; Siobhan Clifford, Policy Advisor.

NGOs: Robert Bailey, Oxfam; Ruth Davis, Greenpeace; Alison Doig, Christian Aid; Jesse Griffiths, Bretton Woods Project (BWP); Melissa Hall, ActionAid UK; Amy Horton, BWP; Ama Marston, BWP; Alessandra Masci, Amnesty; Aaron Oxley, Results UK; Tom Picken, Friends of the Earth.

1. Energy strategy review
2. Possible World Bank loan to Eskom in South Africa, including coal plants
3. Health
4. World Bank Group governance reforms
5. IFC’s performance standards review and human rights
6. Agriculture
7. Education

1. Energy strategy review
Main NGO points

  • The Bank’s rhetoric on access and low-carbon is not matched by its investment portfolio, staff structure, weak definition of clean energy, and neglect of different approaches to increasing access. There is a need for political guidance to produce a step change – the UK should use its influence and help build a coalition for change including drawing on southern civil society support.
  • The Bank should have a clear, limited and focussed energy strategy that focuses on energy access for the poorest and helping countries move towards a low-carbon trajectory. Development doesn’t have to be carbon intensive – there’s a need for a holistic view including cost, health and gender impacts, spill-overs with jobs – as with food security. The Bank is mandated to alleviate poverty, but high-carbon investments can disable development in other countries and in the longer-term.
  • Much of civil society questions Bank role in climate finance – need for UN-mandated solution. Developing countries point out that climate finance should cover the costs of a transition to low-carbon development. In the climate investment funds (CIFs), there must be proper support for civil society involvement in decision making and monitoring.

Susanna Moorehead

  • The Bank’s consultation on its Energy Strategy in London on 12 April is very welcome. There is a lot of agreement between the UK’s position and that of NGOs, but there’s a need for a better narrative to convince others. In particular, we need to heed opinions of developing country governments as the Bank is a sovereign lender. The country led approach is important and means the Bank can’t impose solutions. There is time to construct the case for change – the new strategy will not be agreed until early next year. The more specific we are, the more influence we’ll have.
  • The White Paper ‘stretch’ target will be the basis of the UK government’s contribution to the Energy Strategy consultation. The UK government wants a more strategic role for the Board and greater accountability for Bank management, which would enable us to address the issue of the Bank’s reputation for funding certain forms of energy.
  • The consultation on 12 April will be an opportunity to hear views from developing countries and emerging economies. It would be interesting to hear more from Southern NGOs.
  • We’re very aware of the concerns about the CIFs. The UK wants to be innovative, take risks, and gather evidence about the effectiveness of different types of climate finance. No agreement has been reached on the Bank’s overall role in climate finance, and the Bank is careful not to interfere with wider negotiations about the overall global architecture.
  • Action: DFID to organise follow up meeting between NGOs and DFID climate change staff
  • Action: DFID to arrange follow up meeting with NGOs and DFID energy policy leads.

2. Possible World Bank loan to Eskom in South Africa, including coal plants

Main NGO points

  • We are supporting the call of partners in South Africa for the UK to vote against this loan.
  • Supporting the loan would not be consistent with the UK’s target for the Bank on clean energy or the upcoming Post-Copenhagen Prospectus.
  • It might help some industries which have contractual access cheaper energy but not support energy access because of tariff rises for the poor.
  • Alternative energy sources have not been properly explored or pledged matched funding as required by the Bank’s Strategic Framework for Development and Climate Change, though there is considerable potential for renewable energy.
  • The loan would be part of a country-systems pilot; a recent gap analysis suggests that Eskom would be responsible for planning for associated resettlement but has not yet done so.

Susanna Moorehead

  • The UK hasn’t decided how it will vote on Eskom on 8 April. Background papers were only released last Friday. We are looking into these issues but want to make sure we’re answering all of the right questions.
  • Action: DFID to organise a follow up meeting [this took place on 26 March] and reply on the specific points raised.

3. Health
Main NGO points

  • Two recent reports on health by the Bank’s Independent Evaluation Group were very critical.
  • Sector wide approaches (SWAps) emphasise process rather than outcomes, but outcomes must be measured and drive how work is done e.g. better civil society engagement. Monitoring and evaluation are non-existent and the UK must push the Bank to improve dramatically.

Susanna Moorehead

  • Yes, the UK is heavily engaged on health in the Board and agrees that a step change is needed – other organisations are doing better. The Prime Minister and President Robert Zoellick co-chaired the Task Force on Innovative International Finance for Health Systems.
  • The Bank has responded and is trying to transform its portfolio, focussing on health systems strengthening and reform of operational practices.
  • Action: Results UK to follow up on SWAps, with Jenny Amery at DFID.

4. Reform of World Bank Group governance
Main NGO points

  • Voting reform is our priority and we have supported international civil society and G24 calls for this round of reform to move to parity of votes between developed and developing countries. This requires most change at IBRD and the IFC. It should not be delayed to 2015.
  • The ‘development mandate’ component of any formula determining voting share is key and should take into account poverty incidence and population.
  • In terms of contributions to Bank finances, IDA contributions are relatively small and most of the Bank’s funds come from developing countries’ loan repayments to IBRD and the IFC.

Susanna Moorehead

  • As agreed at the Annual Meetings in Istanbul last autumn, the current round of governance reform, concluding soon, aims to provide a minimum transfer of at least 3% of voting share to developing and transition countries. There are also important changes proposed in corporate governance and a decision on a general capital increase is due.
  • Corporate governance reform is an exciting opportunity for the beginning of real change – encourage civil society to get engaged in the debate.
  • Voting reform is still being negotiated and the UK is supporting a transfer of votes to underrepresented developing countries. The formula for deciding voting share needs to reflect engagement with the Bank, including IDA contributions.
  • We don’t agree on parity as a principle – how do you define which countries fall into which category? The at least 3% vote transfer is in addition to the 1.5% agreed at the Annual Meetings in 2008. There is a much greater imbalance at the IFC between Part 1 and 2 countries; there is a different method for transfer in the IFC under discussion.
  • The UK is pushing for a dynamic formula to allow revisions every five years.
  • There is not a lot of support at the Board for including how much countries use the Bank as part of the formula.

5. IFC’s performance standards review and human rights
Main NGO points

  • The IFC’s lending has very important direct and normative consequences in terms of human rights but the performance standards are silent on them and can undermine rights by using weaker alternatives – letter has been sent to the IFC detailing our concerns. Human rights should frame the performance standards review.
  • Amnesty is looking at the performance standards review from a human rights perspective and wants to know how the UK will approach this and how civil society can engage.
  • How will the Bank’s gap analysis comparing the performance standards and international human rights frameworks be followed up?

Susanna Moorehead

  • We welcome this discussion – agree human rights are very important.
  • Action: NGOs to send report to DFID once published, and DFID to follow the report up with a meeting with NGOs, and to find out what has happened to the IFC’s gap analysis.

6. Agriculture
Main NGO points

  • Bank spending on agriculture has declined in recent decades but is set to triple in the next three years, to become a very significant proportion of IDA spending.
  • Women and smallholders can help ensure food security. Attention to gender is vital, but agriculture and gender are weaknesses within DFID.
  • ActionAid concerned that the current Bank agriculture strategy does not learn key lessons – will soon be launching a report on the Bank and agriculture, with an event at the spring meetings.

Susanna Moorehead

  • UK is discussing these issues with the Bank: We agree that the Bank needs to focus more on agriculture. The report is very timely given the food crisis and increased attention to food security. US engagement provides further opportunities. DFID has focussed on nutrition – a new strategy has just been published.
  • The Bank’s record on gender is mixed and the UK is pushing for it to be properly integrated into operations. The 2012 World Development Report will focus on gender.
  • Action: ActionAid to follow up with relevant DFID staff

7. Education
Main NGO points

  • There’s a huge funding gap on education, which predates the financial crisis.
  • The Fast-Track Initiative (FTI) is displacing IDA spending – Results UK will be releasing a report on this soon – which is troubling as the Bank is the largest donor to education.
  • The Bank is slowing disbursement of funds from the FTI and particularly ineffective for conflict-affected and fragile states.

Susanna Moorehead

  • The World Bank is no longer the default supervising entity of FTI funds. The FTI Board have agreed that country governments will be able to choose whether the Bank or another agency will oversee FTI implementation
  • Fragile states are a priority for DFID’s education strategy If FTI is displacing IDA spending, we need to understand properly why it is happening – for example is it caused by Bank decisions or client government decisions?