IFI governance

Background

Meeting on the World Bank between DFID and UK NGOs

27 September 2010

4 October 2010 | Minutes

27th September 2010

Attendees

NGOs: Jesse Griffiths (Bretton Woods Project), Naomi MacAuliffe (Amnesty International), Peter Frankenthal (Amnesty International UK), Marcus Colchester (Forest People’s Programme), Aaron Oxley (RESULTS UK), Timeyin Uwejamomere (WaterAid), Janani Vivekananda (International Alert), Amy Smail (ActionAid International), Sophie Powell (Christian Aid)

DFID:Bridget Crumpton, Siobhan Clifford, David Griffith-Jones

Apologies: Stewart James, Alternate UK Executive Director to the World Bank fell ill and was unable to attend.

1. Review of IFC Performance standards

NGOs made the following points:

  • Is there any truth in the rumours that the consultation will be delayed 6 months? If this allows time to improve the standards and align them with John Ruggie, UN special rapporteur on business and human rights’ timetable, this would be good.
  • Disappointed with the first draft of the performance standards. Key elements of Ruggie’s framework not included, such as human rights impact assessments, proper human rights due diligence. The OECD guidelines, for example, are currently being drafted to be consistent with Ruggie.
  • The right of indigenous peoples to Free Prior and Informed Consent has been affirmed in international law, notably the UN Declaration on the Rights of Indigenous Peoples which the UK Government voted for since the last iteration of the performance standards, but has not been recognised  in the IFC’s draft of performance standard 7. Will the UK be supporting its inclusion?
  • Differences in views between Northern and Southern states should not be used as a pretext for holding up progress in integrating human rights. Developing countries have in the past been supportive of this agenda – if it is clear that it is about ensuring higher standards for companies, which can empower southern states to hold these companies to account. For example, the UN Human Rights Council, dominated by southern states has endorsed the Ruggie framework.
  • Understand that the drafting committee are waiting from signals from the board that they should include human rights – will the UK push for this?
  • CSOs are organising a workshop on the Performance Standards for EDs and their teams to take place on 8 October. Details will be circulated.

Officials made the following points

  • Action: will check on whether there is a delay
  • Agree that this is a very important issue, and the right time to be focussing on it. There has been extensive consultation, which is a good starting point.
  • Action: will relay these points back to the team working on the IFC and find out more information on what others are saying. Interested in particular on what southern groups are saying.

2. Internal reforms

NGOs made the following points:

  • There are many concerns about the internal reforms that are ongoing – including to investment lending, development policy lending, the new knowledge strategy etc – some of which we have talked about before.
  • Key issue to raise now is the lack of transparency and consultation on these reforms, though they will have far-reaching impacts. For example, we understand that the new corporate scorecard that is being developed will not be publically disclosed until the time of the first annual report against it – far too late to raise any concerns.
  • It is welcome that there will be consultation on the new results-based investment lending instrument – which we hope will follow the minimum standards set out by the Bank – but really there should have been consultation on the whole investment lending reform programme.
  • Is the UK pushing for greater transparency and consultation on these processes?
  • It’s still not clear that the longstanding issue of changing staff incentives has been properly tackled – still clear that in many cases they are trying to approve loans fast rather than following due diligence on, for example, performance standards and operational policies.
  • Greater use of independent or arms-length evaluations and assessments would help – for example, the new risk assessment body that is being set up as part of investment lending reform should, according to best practice, be independent, but won’t be in the Bank’s approach.
  • What has happened to the implementation review of OP 4.10? Was promised a long time ago.

DFID officials made the following points:

  • It’s an important year for reforms, including having an overarching strategy for the first time.  Question is how to track progress. Documents updating the current situation should be available for the development committee meeting at the Annual Meetings.
  • Good that there have been consultations on sectoral strategies, and that the results-based instrument will have consultation.
  • Encouraged by the appointment of the new Bank Vice President for Operational Policy and Country Services (OPCS) Joachim von Amsberg. He has recent country programme experience.
  • Want to see the board taking a more strategic role – due diligence should be at the right level. In many cases Bank staff are very focussed on this.
  • Incentives have been examined quite strongly in the current reforms.
  • Tracking decentralisation reforms closely.
  • Action: Will follow up on OP 4.10.

3. Palm oil

NGOs made the following points:

  • When Zoellick agreed to freeze funding to palm oil last year, he promised comprehensive strategy would be developed, and called for iterative consultations – this was a  positive step.
  • However the framework document that the Bank has produced is not such a strategy and is very disappointing. There is a long list of missing issues, including:
    • No new guidance criteria – instead it restates existing approaches
    • Doesn’t address the findings of the audit
    • Doesn’t say they will develop a way of addressing specific legal and policy issues in country – as 85% of palm oil comes from Malaysia and Indonesia, this approach is vital. For example, working closely with Indonesian groups – studies have shown that community groups have been misled over what the real legal implications are of land acquisitions.
    • Climate change is mentioned, but nothing in the framework about how issues will be addressed
  • Understand that the board discussion has been postponed – believe a more serious revision is needed.  Further consultation will be needed before this can become acceptable.  Would  like the UK to insist on a serious redraft, more consultation and adequate guidance otherwise we will not get positive development outcome. NGOs in our consortium many from Indonesia are not opposing WBG re-engagement in the sector but we want this to be on the right terms.

Officials made the following points:

  • A very important issue – aware of the international campaign, as are UKDel.
  • Public consultation process is a good starting point.
  • Action: will find out when it’s due to come to the board.
  • Believe there are positive elements in the document such as needing evidence on FPIC, help for resolving disputes, need for transparent and lawful processes, clear legal frameworks etc.
    • NB: NGOs challenged on these points – can’t see them in the document we have; is there another draft?
  • Action: DFID will link up with UKDel and their forestry team and revert on these issues.

4. Other issues

a. IDA

NGOs made the following points

  • You have seen our joint position that we believe the priority for the UK government should be reform of the Bank – no increase in IDA contributions should be agreed without substantive change on a range of issues. We have had discussions on this issue in the context of the Multilateral Aid Review.
  • On IDA and water: new WaterAid study coming out in November. Raises concerns including that World Bank support isn’t properly targeting the poorest, better monitoring needed, lack of civil society input, and that as loans get passed down towards  sub-national entities they increase costs for the end user. Some information also in the WaterAid MAR submission.
  • Sanitation is a missing element in the strategy going forward – no allocated funding to support it  although highlighted as one of the three focal issues in the strategy).

Officials made the following points

  • Welcome inputs made by NGOs into the MAR consultation process. World Bank has also made a robust input.
  • Next IDA deputies meeting 11-12th October.  The MAR will feed into making the IDA replenishment decision.  Preliminary findings should be available in December.
  • UK wants a much more robust results framework to hold IDA to account, including setting targets (won’t undermine country-based approach – should be possible to aggregate)
  • Share objectives on water – keen to see the study.  Executive Directors find this kind of evidence very useful. Keen to have further discussions on this.

b. Health and education

On health, NGOs made the following points

  • We have discussed health at length several times – is there any progress on improving monitoring?

Officials made the following points:

  • IEG report sent shockwaves round the Bank. This is a high priority for the current government.
  • New Bank director for human development has been appointed – seeing a positive response from Bank management, including a commitment to pilot results-based approaches in health.

On education, NGOs made the following points:

  • New announcement is good, though the transparency of the Bank’s figures is not clear – can’t see where they get the figure that it represents a 40% increase over 5 years.
  • Still concerned about the displacement effect where Bank has been reducing spending as FTI has been increasing.
  • If the goal is to combat displacement believe grants should be used, not loans, and that the increase should be over 3 years, not 5 –  which would mean an extra $1000 million per year and align with the Bank’s budget and replenishment cycles.
  • The education strategy review has presented opportunities and concerns. Still concerned, for example, that Bank is too instrumental and doesn’t adopt a rights-based approach, and that improving quality is important  (still concerned about their promotion of non-professional and para-teachers).

Officials made the following points:

  • There is a delay – strategy was due to be discussed by the Board in November, understand now that it has been pushed forward by a few months, possibly January.
  • This is a key part of the new Ministerial team’s agenda.  The education team can talk to you on more detailed policy points (NGOs – we are in touch with them).
  • Action: will find out more details on process and board dates.
  • Action:  RESULTS will provide additional input on displacement linking it to the points raised in the meeting, as requested.

c. Climate finance

NGOs made the following points:

  • This will be one of the two main items at the meeting with European Executive Directors in Washington – just wanted to say that main focus in that meeting will be lack of transparency and accountability on Bank’s activities in climate finance. Will also reiterate main concern that Bank’s large fossil fuel portfolio can’t be divorced from question of whether it is a suitable institution to manage climate funds.
  • Specific point on safeguards and the FCPF – we are getting contradictory information on whether they will apply: need to have clarity.  Same for situations where World Bank is taking on a fiduciary role to administer climate funds such as Norwegian monies for Guyana: again it is unclear if World Bank will apply safeguards or not. Can UKDel clarify?
  • Also concerns about PPCR and whether it has the right level of flexibility to be effective in conflict afflicted states.

Officials made the following points:

  • Action: will follow up on specific questions
  • Early days with climate funds – lesson learning is very important.

d. Private sector support

  • This will be the other main item on the agenda for the Washington ED meeting – NGOs want to talk about the overall approach.

e. Mining & taxation (Sierra Leone)

NGOs made the following points:
The 2009 Mining and Minerals Act was a positive step in setting clear obligations on mining companies including on tax/royalties payments (both DFID and Bank provided technical assistance to draft this act). Partners are concerned about the World Bank position in relation to recent contracts signed with two UK companies – which undermine the terms of the MMA and risk leaving it dead in the water. Partners are calling for an urgent review of these contracts. Officials made the following points

  • Has been a hot issue – have a shared starting point of need for transparency in how revenues are managed. Secretary of State was in Sierra Leone this summer – the issue was brought to his attention.
  • DFID, World Bank and other donors are reviewing the situation and plan to discuss with the government of Sierra Leone.
  • Action: will gather further intelligence and revert.
  • Update: the head of DFID Sierra Leone met with Christian Aid in Freetown on Monday 27 September to discuss the issue.