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Background

Notes of meeting between Minster Alan Duncan, the UK Department for International Development and Ci

25 November 2010 | Minutes

Date: 1 November 2010

Participants:

  • Officials: Alan Duncan (Minister), Melinda Bohannan, David Griffith-Jones (World Bank Team), Joseph Bonner (Private Office)
  • Civil Society Groups: Akanksha Marphatia (ActionAid), Ama Marston (Bretton Woods Project), Diarmaid McDonald (AIDS Consortium), Henrike Allendorf (Bretton Woods Project), Joanna Phillips (WWF), Kirsty Hughes (Oxfam), Paul Brannen (ChristianAid), Ruth Davis (Greenpeace)

Minister Alan Duncan opened the discussion:

  • Pointing to ring-fencing of the development budget, the focus of development policy on value for money, and the undertaking of a bilateral aid review as well as a multilateral aid review.

NGOs

  • Overarching concern regarding the need for World Bank reform which came out of G20 meetings in response to the financial crisis. There has also been a call by donors for the World Bank to develop a strategy which would keep it from continuosly expanding its mission and the areas in which it engages.

1. Climate change (fast start finance and World Bank role, long-term finance and governance of new fund and World Bank involvement in REDD)

NGOs raised the following points:

  • Fast start finance: Most of the UK’s short-term climate finance is channelled through the World Bank which amongst others issues causes concerns with regard to country ownership and developing countries’ participation. Currently we understand about $1 billon is yet to be disbursed. To what extend is this money channelled through the World Bank? Would the UK consider channelling some of its FSF through the Kyoto Protocol Adaptation Fund? Following the example of Spain, Germany and Sweden (who contributed 45, 10 and 10 million Euros respectively) a contribution to the AF by the UK would be very much welcomed by NGOs and developing countries. We think the Adaptation Fund should be supported because it gives developing countries a strong voice in the management of funds.
  • Creation of new climate fund has been agreed in Copenhagen. Yet questions of governance and details about principals shaping that fund are still lacking. We think it is important that Cancun takes decision on this and that the new fund is placed under the authority of the UN. We also think the World Bank should not play a significant role in this fund.
  • We expect the sunset clauses of the Climate Investment Funds at the World Bank to be upheld. Due to controversies around the Bank’s energy policy, we would not like to see the Bank governing this fund and too significantly involved in the shaping of it. In terms of the principles shaping the investment, we would like to see separate windows for adaptation and mitigation and at least 50% of the investment going to adaptation.
  • The EU’s position envisions a broader range of expertise and stakeholders feeding into the creation of the fund, whereas the US favours a strong role for the Bank. What is the UK’s position?
  • World Bank projects are pushing for more logging through REDD and the planting of forests as part of carbon off set schemes – but plantations are not the same as natural forests.
  • There are also significant concerns because the REDD funds at the UN have safeguards to protect indigenous people and address social and environmental issues. REDD funds at the World Bank don’t have these safeguards (FCPF and FIP).
  • Solution for the South should be decentralisation of energy investment.
  • Climate resilience needs to be recognised as a crucial part of aid programmes although funding must be additional. Joined up climate polices across FCO, DFID and DECC may be beneficial.
  • Need for a joint transformative programme to protect forests and balance climate change and carbon budgets.

Minister Alan Duncan responds:

  • The multilateral aid review is underway at the moment and the outcomes will influence the UK’s position.
  • There must be an interface between DFID and DECC and the Treasury on these issues. I don’t like coal power stations, but the energy they generate is driving economic development in developing countries. We need to come up with convincing solutions on renewables in poor countries and I don’t think we have them yet particularly at the scale we need them. The UK can produce nuclear energy which whether or not you like it, is low carbon. Can also use wind. Developing countries can’t afford these options.
  • Willing to consider demands and your evidence on low carbon development in low income countries and respond.
  • Willing to read and respond on input on climate finance.

2. Energy (energy strategy review and UK engagement)

NGOs:

  • Bank has a long history of high carbon infrastructure and the facts must be on the table when looking to this institution to play a role in climate change.
  • World Bank energy review is currently underway with a draft report awaited in February and the final report to be released in July 2011.
  • Two issues are crucial to be addressed: increase the access to energy for the poor and rebalance the investment portfolios to focus on renewable energy to use UK taxpayer’s money in sustainable and efficient ways.
  • Evidence shows that carbon intensive energy projects like coal plant Eskom in South Africa do not deliver energy to the poor in the region.
  • Due to its large portfolio on energy investment, the UK can shape a sustainable international energy policy.
  • NGOs are consulted on energy but do not influence the decision-making process.

Minister Alan Duncan replies:

  • Would like to step out of financing coal fire plants to generate energy, but does not currently see an alternative for developing countries in terms of costs.
  • Carbon efficient nuclear energy is often not option for developing countries.
  • Challenge: Economic growth needs electricity and coal power (or hydro power where that is available) is often the only or least cost option

3. Education (upcoming World Bank education strategy and revamping of the Fast Track Initiative)

NGOs:

  • How has DFID engaged in the consultations on the new World Bank strategy currently taking place? While consultations have been global, we are concerned that no draft strategy has been shared thus far, creating difficulties for substantially feeding back. There is also no clear direction from the Bank on how the feedback will be integrated into the new strategy.
  • There are concerns about scope, scale and balance. The external evaluation showed that money is not going to countries most in need and more than half of the Bank’s education portfolio was seen to be ineffective. There is a move away from financing primary education to out of school youth and tertiary education when more is required to get children, especially girls, successfully completing basic education.
  • That World Bank’s influence on allocation of money has contributed to “one-size-fits-all” approach including privatisation and practices of hiring untrained teachers. Unfortunately most of the evidence for these policies comes from small scale World Bank projects. Independent researchers question the impact of untrained teachers on the quality of learning and education.
  • Governments should have a larger say in what funding should be spent on, and should be able to draw on evidence from different sources.
  • The Education for All Fast Track Initiative is a promising, multi-lateral mechanism serving more and more as a potential ‘global fund’ for education. However the recent evaluation highlighted the need for the FTI to be independent from the World Bank’s conditionality. Countries have faced severe delays in accessing funds due to Bank’s fiduciary guidelines. FTI is exploring other donors channelling funds to countries, will DFID set a good example by doing this?
  • Well-educated teachers and diversity of teaching could make an important difference in dealing with fragile states, but this requires a different type of approach than what the Bank is proposing.

Minister Alan Duncan:

  • World Bank should have a focus on primary education. In terms of “one-size-fits-all”, there does not seem to be too much need for diverse approaches to primary education.
  • If there is only a limited amount of resources, hiring untrained teachers might be better than not having teachers.
  • DFID of course acknowledges cultural differences. The World Bank does not want to act as a cultural imperialist.

4. IDA replenishment

NGOs (general):

  • Allocation of additional money to IDA should depend on substantial institutional reforms, beside climate, energy, and education spending, reform is also needed in regard to loan conditionalities. One quarter of all loans are still conditioned on liberalisation and privatisation reforms instead of focussing on poverty. This impacts for example health results.

(health):

  • We are keen to see a result focus of the multilateral aid review. The results on health so far reveal that performance of health programmes is unsatisfactory – up to half are shown to be unsatisfactory in recent assessments. Only 6% of all programmes have a poverty focus. Monitoring and evaluation is weak.
  • The UK should use its ability to influence the effectiveness of health policy.
  • Monitoring, reporting and learning on, and from, health programmes should be improved substantially. Each project should follow a three step procedure: 1. Define poverty objectives, 2. Monitor and evaluate poverty performance, 3. Ensure effective learning.
  • World Bank has a track record of supporting private provision of health care though we welcome its recent support for removal of user fees in two countries. Evidence shows that removing user fees can create major improvements in health outcomes for the poorest, including rapid impact on maternal mortality and improving health care and access for the poorest women and girls. Even the smallest user-fees create barriers.

Minister Alan Duncan:

  • In December countries are meant to come forward with their IDA commitments. We have not decided in the UK if we will be able to do so ourselves given what’s happening with the comprehensive spending review and the multi-lateral aid review.
  • Will take concerns about insufficient poverty focus and quality and monitoring of performance into account in order to strengthen DFID value for money objective and the focus on poverty reduction, effectiveness and the Millennium Development Goals.
  • Overall it seems that in today’s discussion the take away message from NGOs is that the World Bank is being given a lot of tax payer money and that it is not sufficiently focussed on poverty and on monitoring its performance.

ACTION:

  • NGOs to follow-up with a single condensed submission that responds to:

a) examples of alternatives to carbon intensive energy generation in developing countries including on how scaleable these approaches are b) a two pager on alternatives of climate finance c)overall concerns on results and effectiveness at World Bank drawn out from lessons in education, health and other sectors.