IFI governance

Background

Notes of meeting between UK Executive Director to World Bank and Civil Society Groups

2nd February 2011

7 March 2011 | Minutes

Participants:

UK NGOs:

Alison Doig (Christian Aid), Jazzmin Burgess (Unicef), Tim Jones (Jubilee Debt Campaign), Benito Mueller (Oxford Institute for Energy Studies), Petra Kjell (Progressio), Tim Gore (Oxfam), Peter Frankental (Amnesty), Ruth Davies (Greenpeace), Murray Worthy (WDM), Rica Garde (Save the Children), Christina Weller (CAFOD), Marcus Colchester (Forest Peoples Programme), Ama Marston (Bretton Woods Project), Tom Fry (Bretton Woods Project)

HMG: Susanna Moorehead (Executive Director to the World Bank for the UK), Melinda Bohannon (Dfid), Alice Kehoe (Dfid), Simon Ratcliffe (Dfid), Sheila Ahmed (Dfid), Liz Winton (DFID)  

1. Energy Strategy Review

NGOs raised the following points:

  • The main issue is the continued WB lending for fossil fuels, and the need for more lending for renewable energy and projects with a focus on energy access, for example decentralised, small scale energy provision. Dfid has shown evidence of taking a more progressive line on this issue with regards to renewables, but is still very unclear on fossil fuel lending. It seems to only emphasise that the issue should be ‘considered carefully’. How is Dfid approaching this issue with the WB?
  • There is still no clarity on Dfid line on fossil fuels. This was raised by NGOs soon after the government was formed nearly a year ago, but there is still no clear government position. How, without a clear position, can the government have influence in international negotiations on energy? 

HMG responded:

  • The strategy should be open to further comments in March, and be presented to the board in July. The final strategy will be released by the end of the year.
  • Said Dfid influences the WB in a range of briefings before CODE, in other consultations with Bank staff, but also with others who disagree on this issue. Reality is that many borrowers see this differently, and many want lending for fossil fuels, and the UK has to work with them. Dfid already submitted input into the strategy. ED’s office will be meeting with other EDs before the CODE briefing.

HMG responded:

  • The government is ‘very close’ to a position on fossil fuel lending, and there is a lot of work going on.

2. Climate Finance

NGOs raised the following points:

  • There is significant concern over the role of the World Bank in the Green Climate Fund (GCF) announced in Cancun, especially considering Robert Zoellick’s recent comments calling for countries to pledge funds as soon as possible. This seems to point to an already assumed prominent role for the WB.
  • There has been a large level of opposition to and outspoken campaigning against to the role of the WB in the GCF. There is lots to play for in the process of forming the transitional committee that will design the new GCF. What are the plans for the WB in seconding staff to the transitional committee?
  • Civil society participation in both the transitional committee and the GCF secretariat is important, and there is disappointment over the COP agreements language on the extent of civil society input. There should be active civil society observers, with full participatory rights, access to negotiations and decision making processes, and full transparency. In terms of experts on the committee and secretariat there seems to be no provision for gender, small scale agriculture and other important areas. The GCF will not be effective if these bodies are dominated by MDBs.

HMG responded:

  • As the fund is so new it is difficult to know exactly how it will look. NGOs should be aware that there are representatives on the board from borrowing countries who do not support the role of the WB in climate finance because they are concerned over additionality.  There are fears that funds will be diverted from poverty programmes, which is the WB’s core mandate.
  • The UK is 99% certain that they will have a seat on the transitional committee, and their nomination is from Dfid, in line with trend for developed countries to overwhelmingly send people who are senior expert in finance and development. The aim is to get money in the fund. Concerned that developing countries are nominating their climate negotiators, people with less seniority and less experience.
  • Dfid is supportive of the need to get civil society input, and also disappointed. Said that secondments need to be covered by the organisation seconding, in terms of salary etc. It is likely that only those with vested interest will be seconding. People from MDBs have been nominated for secondment. As far as they are aware UN agencies have not. Others need to put names forward.
  • The first meeting is in March, and hopefully a chair will be elected quickly. There may then be a call for inputs from externals, so NGOs should get ready for this.
  • Dfid wants a climate finance architecture that unifies and simplifies, and that finally defines the future role for multilaterals.

3. Private sector (IFC performance standards review, use of financial intermediaries, and WB private sector strategy)

NGOs raised the following points:

  • There is a blind spot in WB strategy in terms of lending to and development of small enterprises. IFC lending goes predominantly to medium sized firms. There is a worry this will be reflected as the WB feeds into the G20 private sector strategy.
  • 50% of IFC lending goes through financial intermediaries (FIs), and of this only 8% goes to LICs. There is very little accountability and reporting, and little evidence that safeguards are being applied properly.
  • UK is currently reviewing the Commonwealth Development Corporation (CDC), which invests heavily through FIs. The review is challenging the aid effectiveness of CDC lending. Will Dfid follow a similar approach in conversations over the IFC and its use of FIs?

HMG responded:

  • The IFC has a mandate to both make money, but also to be developmental in terms of doing riskier lending etc. The IFC is discussing how to incentivise staff to do more publically-backed financing to support small businesses in LICs, but this will always be balanced by the IFC’s dual mandate. The UK agrees that the footprint of the IFC needs to expand to LICs.
  • In terms of small enterprises there is a structural problem as it doesn’t quite fit into either IFC or WBs role. We are having conversations within the World Bank Group about the IFC’s future strategy so will raise this. Will look into this more to understand exactly what the extent of support to SMEs  the WBG  provides, as it is probably spread around various divisions and programmes.
  • On FIs said that Dfid is concerned in some respects, and is focussing on better reporting.

NGOs raised the following points:

  • In the current IFC performance standards review draft there is a distinct lack of adherence to the Ruggie framework on human rights and business, and general lack of integration of internationally agreed human rights standards. An earlier draft did include more on this front, but the most recent draft seems to have included FPIC while human rights has been taken out. If this is adopted it could have serious ramifications, as these standards will be seen as a benchmark across the private sector.
  • The latest draft of the palm oil strategy has significant weaknesses. There is little clarity on land rights, little information on how the WB and IFC will partner in implementation, little clarity on monitoring. There should also be civil society participation on monitoring. This strategy is extremely important as it will inform a wider WB agri-business strategy coming up soon. Very surprised it is not going before CODE.

HMG responded:

  • HMG is pleased to see a number of improvements including the adoption of free, prior and informed consent (FPIC), greater attention to gender-differentiated impacts and greater project-level information disclosure. We are reassured that IFC has stated that it has aligned itself with the work of the UN Secretary Generals’ Special Representative on Business and Human Rights, John Ruggie.
  • The IFC process is nearing completion, so need to act on this immediately. Made arrangements with Amnesty to discuss further. Also invited a written follow up from Forest Peoples Programme on palm oil.

4. Any-other-business

NGOs raised the following points:

  • There is negligible funding for social protection and safety nets in Bank work on global food security.
  • After secession South Sudan should not be left with debt. The WB needs to consider debt relief and the HPIC process with regards to South Sudan.

HMG responded:

  • Agrees on the importance of resolving the complex debt issue in Sudan, and says WB must ‘think outside the box’ on this issue. There is lots of work going on with this at the WB, and they are concerned.
  • NGOs should lobby borrowing governments on social protection funding provision, which they can then request when discussing loans and projects. It is much harder to lobby in Washington.

5. Follow ups and actions

  • ED said that she will be back before the Spring meetings, sometime around the 6th and 7th of April, and that she would be willing to meet NGOs
  • Before then, Bretton Woods Project will gather suggestions from UK NGOs on what should be on the Spring meetings agenda and communicate with ED.
  • There should be running engagement between ED, Dfid and NGOs on the WB role in climate, including design of the GCF and lessons learned from the CIFs. A specific meeting to be set up.
  • Forest Peoples Programme to submit letter to ED. Amnesty to discuss IFC performance standards review with Dfid and ED immediately.