Notes of meeting between Stewart James, Alternate UK Executive Director to the World Bank, and NGOs
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Attending:
DFID – Stewart James, Richard Teuten, Siobhan Clifford.
NGOs – Jesse Griffiths, chair (Bretton Woods Project), Petra Kjell (Bretton Woods Project), Tom Fry (Bretton Woods Project), Tim Jones (Jubilee Debt Campaign), Conrad Feather (Forest Peoples Programme), Ruchi Tripathi (ActionAid), Anna Marriott (Oxfam), Christina Weller (CAFOD), Kate Dooley (Save the Children), Jessica Duncan (UK Food Group).
1. Agriculture and Land
NGOs made the following points:
- How are the trials for the principles for Responsible Agricultural Investment (RAI) going? Stressed that it is vital that before investment principles are agreed tenure rights should first clarified through the Voluntary Guidelines on Governance of Land Tenure and Natural Resources (VG), as decided at the Committee on World Food Security (CFS). It is important that this process and timing is supported. There is general agreement amongst NGOs that the inclusive nature of the CFS, as the international and intergovernmental forum for discussion and policy cohesion around global food security policy, makes it the most appropriate forum for the development of principles for responsible agriculture investment.
- The Bank is currently pushing soil carbon. Although there are advantages to carbon sequestration in soil, the Bank’s model relies on producing credits to sell on carbon markets, which is a very risky approach with unproven developmental benefits.
- What is the UK’s position on the current Ugandan land grab case at the CAO.
- This case raises wider issues about the IFCs use of financial intermediaries (FI), and how performance standards apply to them. This case, combined with the CAO review of FI lending, gives an opportunity to start reassessing the shift in IFC financing to FIs.
DFID made the following points:
- Stewart James does not have direct knowledge of the RAI process, but underlines that sustainable agriculture is a major priority for the Bank for the next three years, and the Bank is expanding its investments in agriculture, with employment creation a focus and efforts to pin point key points along the supply chain where the WB could focus. If you look at the numbers investments are increasing. The IFC is also working on new financial instruments to link farmers to markets, and there is also an increasing research focus.
- Stewart James says it is important that the VG and RAI process feeds into the safeguards review process. Will follow this up with the safeguards review team.
- John Beddington, the Chief Scientific Advisor to the UK government, will be travelling to Washington to meet Bank staff and discuss the Foresight report on the future of food and farming. Rachel Kyte, Bank’s Vice President of Sustainable Development, will be there. Stewart James will bring up these points with her, including soil carbon, and report back. Also proposes that NGOs should seek a meeting with Kyte when she next comes through London.
- On the performance standards review process, says it was a real battle, and some stakeholders wanted no or few restrictions on lending to FIs and private firms. We now need case studies to illustrate how this works. But these case studies need to be representative. It may be a case of we got burned, and have to change actions, but it is too early for assessment yet. However, NGOs should be aware that there are shareholders whose primary concern on performance standards is whether or not they hold back lending to business, especially SMEs rather than seeing these standards as delivering development outcomes , as the UK does.
- The UK’s focus is on looking at the DOTs system, and at different results frameworks in order to assess this, and come to a decision on value for money.
2. Doing Business
NGOs made the following points:
- There are significant blind spots in the Doing Business (DB) indicators, especially around livelihoods, gender, and small farmers. There is a conference in December to assess the indicators, but there is a serious lack of these topics on the agenda.
- Does it make sense to keep the indicators but stop the rankings?
DFID made the following points:
- On the board this is a very topical issue, a “political football”. Some shareholders are trying to scrap DB completely. A lot of countries feel it is a set of indicators that capture developed country metrics of development, and that every year the process is handled appallingly, with very little forewarning to governments. This is coming to a head this year. UK is broadly in support of DB, but has to be open to changing it, where change makes sense. The team in London will look at the methodology, and see how it could be changed. It comes to the board in a few weeks, so by the time of the conference this will have played out, so should be interesting.
- Don’t think it should be a case of scrapping the rankings, more that we should try to take the heat out of them. At the moment the rankings do not conform with growth, and we need a dialogue about this.
3. Safeguards
NGOs made the following points:
- The approach paper for the safeguards review is expected by autumn. What does the UK hope to see happen now? The timing with the P4R process means it makes sense to align the two. Also, the Inspection Panel can receive complaints on P4R, but it is not entirely clear how this will work. Needs to be clarified. Also, there is concern that safeguard specialist positions at the Bank are being downgraded, with new and non-specialist middle managers with little capacity being asked to oversee projects.
DFID made the following points:
- Richard Teuten says there is no UK position yet but the important thing is to marry actively avoiding an overly bureaucratic approach, and avoiding harm. Need a fresh look to see if the balance is right.
- Stewart James says that Rachel Kyte’s view on this is that the Bank needs to reflect other developments that will have an impact on things that need to develop first. For example, we’ve had the performance standards review, Durban, but still have energy strategy, Rio, and the environment strategy. The safeguards have to be up to date with these. Will really get going after Rio. Richard Teuten and Stewart James note that African Development Bank are also doing their safeguards review, where they are consolidating social and environmental safeguards. Kyte has also said it is very important to get the consultation right.
- P4R is a reality now, so agrees that P4R should be included in the review. However, P4R will assess countries own systems, and not sure how this aspect will be included in the safeguards review. NGOs replied that the instrument will be for sectoral reform, which could have a variety of impacts. The principles aren’t detailed enough, there is disclosure on programme but not on project level
- Said that UK want the pilot to be a success, and so will be monitoring it very closely, and will try to avoid sensitive choices for projects. Stewart James notes that the board will be monitoring the pilot very closely, especially the US given the interest demonstrated by Congress and will pay particular attention to developmental impacts.
4. Review of Debt Sustainability Framework (DSF)
NGOs made the following points:
- The review of the DSF is welcome, especially as HIPC comes to an end. However, the current review documents don’t have enough clarity on private external debt. The review recognises its importance, but does not have detail on how it will be taken into account in assessments. The main difficulty is that data does not exist, but the IMF and World Bank make no indication they will help to find out private external debt levels in low income countries.
- The review seems to indicate that current stress-tests for debt are working adequately, and that they will not need to be reformed. But, closer inspection reveals that the review also states that in 12% of country cases, debts have ended up higher than the most extreme stress tests. There needs to be more caution in debt analyses.
- The end of HIPC opens opportunities for new approaches to lending. The Bank should consider new approaches that are currently being considered at other bodies which link debt repayments to growth/GDP, thus allowing countries to treat their debt sustainably.
DFID made the following points:
- A strong theme of the review is the need for better data, and the UK will put emphasis on the board to improve quality of statistics through trained staff. Also concerned about tail-end risks, and how analysis of this can be improved. However, unclear who is willing to pay for extra staff.
- On third point, this approach shifts pressure and risks from borrower to lender. Broader international developments in sovereign debt markets provide a difficult backdrop against which to make this argument.
5. Appointment of new World Bank president
NGOs made the following points:
- The board should honour commitments to an open, merit-based appointment and transparent selection process. The COGAM paper on selection is weak and gives too much scope to the board in choosing specific details of how the process is decided. The process is currently being monitored at worldbankpresident.org.
DFID made the following points:
- Want the current process to be respected and followed properly. No one is sure when Zoellick will step down, but that most don’t expect him to run for another term. Next steps really depend on his intentions.
- With the IMF leadership process the emerging economies didn’t stand together and back one candidate. Not yet clear whether they’re likely to do that this time either. But they will be very keen on making the process work properly.
Other Board updates
- Bank is preparing for worsened economic crisis, and looking at impacts on borrowing countries. Considering new forms of counter-cyclical lending instruments to support borrowers, including short-term, non-concessional loans. These will also allow quicker turnover of payments and loans for the Bank, a more efficient financing model. IDA is currently reprogramming for priorities in downturn, and will focus on this at the spring meetings. IFC looking at bank deleveraging and what interventions they can make to support this. Bank is also considering lessons on social protection from the 2008 crisis.
- The energy strategy continues to divide shareholders on key points.
- The environment strategy went to CODE two weeks ago, and there are significant gains on GHG accounting, and mainstreaming environmental standards. NGOs should engage in the consultation process when it comes to Europe.
- IDA 17 will have a greater focus on engaging with clients, there are four working groups set up, and sustainability will be a major focus. There will also be a focus on how clients graduate from IDA to IBRD, and a focus on fragile states. NGOs made point that IDA 16 was less open process, and 17 should be more open. DFID took the point.
- There will be lots of research on green growth ahead of Rio.
- Bank is readying to do increased work in Middle East and North Africa.
