Moderator: Luiz Vieira, Coordinator, Bretton Woods Project (UK)
Bella Bird, World Bank Group (WBG) – senior advisor to WBG West African Vice President.
Farwa Sial, Eurodad
Peter Kamalingin, Oxfam Pan-Africa director
Kwabena Nyarko Otoo, ITUC Africa
Luiz Vieira, opening remarks: The International Development Association (IDA) is part of the World Bank Group, and is one of the largest sources of development assistance for poor countries. As many of you will be aware, there has been an early launch of IDA20 replenishment process, following the Covid-19 pandemic and the outflow of IDA resources in response to it. This panel will focus on IDA20 with a focus on Africa.
The international system has failed to react to the Covid-19 pandemic – the Doing Business Report scandal and the Bank’s lack of support for a TRIPs waiver to the intellectual property rights on vaccines, once again raise questions about the policy prescriptions of the Bank. For example, we see that the World Bank’s development policy finance continues to contain highly contentious conditions. Equally, IDA itself is situated in highly unequal trade structure, which positions low-income countries at the base of global geopolitics.
So, with this in mind, I’d like to ask the panellists to share your vision for a utopian IDA20 – what would be the key components that would meet IDA’s objectives as you see them?
Bella Bird: Looking at IDA20, when you talk about the utopian vision, it’s sometimes hard to imagine that – in a context where the challenges are so great. In our Poverty and Shared Prosperity: Reversals of Fortune report which was published 12 months ago now – we saw that the combination of Covid-19, climate change and conflict were reversing hard won development gains. So, we’re facing bigger challenges to meet the twin goals of the Bank – to eliminate extreme poverty and promote shared prosperity.
We’re in a difficult year, and these factors have shaped our approach to IDA20.
The big challenges that we are seeing are addressed in the GRID (Green, Resilient and Inclusive Development) framework, which I think in my experience is the right way for IDA20 to try to meet the SDGs in Africa.
So some of the questions we are thinking about are: How can we use IDA to try to get vaccines rolled out in Africa? In terms of building back better – how can we help African economies get back on a path that not only accelerates growth, but focuses on the GRID approach? And, how do we build this into our operations? Take the example of the Sahel – where climate impacts are extreme and the adaptation challenges are huge.
When it comes to inclusion, our focus on poverty is very big in the Bank. We have our Gender Action Plan – understanding that empowering women and girls is key.
Preparedness for shocks is another key focus.
Farwa Sial: We need to start with very realistic view of what IDA can and cannot do.
IMF estimates of needs of IDA countries at $200 billion a year just to recover to recover from the pandemic; versus IDA resources, this is not enough.
There is also the issue of how this relatively small amount of ODA being conditioned, in order for countries to access it.
An ideal IDA vision first should serve as strengthening public services within countries, while not exacerbating climate change, and dealing with countries’ unsustainable debt. The Private Sector Window (PSW), which subsidises IFC/MIGA, should be replaced with public support.
Peter Kamalingin: We welcome the decision by IDA to front-load resources.
On a utopian IDA20, the most urgent aid is actually one that works towards ending the pandemic, and from where we sit the People’s Vaccine is the way to do that. A few rich countries are blocking progress on this, to enrich corporations.
In Africa, children have been out of school for 2 years, and because of this we are now seeing higher rates of childhood pregnancy.
To really respond, we need improvement on public services especially health and education, we all know that privatised options exclude people and increase inequality.
We have seen new analysis that 11 million girls in LICs may never return to school following the pandemic. We need robust investment in public health which is universal, high quality and free.
We also need to cut illicit financial flows and ensure that MNCs (multinational corporations) pay their fair share in tax. The Pandora Papers show this problem again.
For people who are energy poor, green transition sounds utopian indeed. So we need investment in clean energy systems to meet their needs.
Luiz Vieira: Bella, can I ask about the Bank’s position on the TRIPS waiver, given Peter’s mention of the People’s Vaccine?
Bella Bird: Can’t publicly say anything about position on the TRIPS waiver without checking on that. But we are very concerned about the low levels of vaccine available. We’ve made very clear that finance won’t be an issue. Can only say that we agree.
On financing needs, based on the data from the IMF – on that we agree. IDA can only be part of the picture; it’s a very important source, but we work with partners. We compressed IDA19 into 2 years and moved forward IDA20 and made the case for a large replenishment.
PSW is one of many windows in IDA; the vast majority of IDA support is signed with governments, and they are given various sizes of envelopes.
On education and health – the human capital costs of Covid are significant, and we need to absolutely look at that.
Peter Kamalingin: I think we are agreeing on a couple of things, but the policy prescriptions have a history. The policy prescriptions are part of a longer history of colonialism and extractivism, leading to structural adjustment programmes (SAPs).
There is a need to include care work in infrastructure planning and needs especially in WASH sector.
The Bank has to develop a competence to learn from the past mistakes, including the SAPs. Until we learn from them, we are bound to repeat those mistakes.
Farwa Sial: On PSW, it’s taking a whole of the WBG approach, so it intersects with a lot of themes, and has a lot of implications for what other types of support mean in the future. There are a number of issues:
1) Lack of additionality: Concept of development additionality currently is completely based on de-risking IFC/MIGA; on whole, PSW mobilised less finance than other instruments in the Bank, so it’s not even working well on its own terms.
2) Transparency: Unsolicited bids issue, where PSW projects don’t emerge through open bidding process.
3) Role of financial intermediaries (FIs): Using FIs, which are large financial actors, means a significant share of profits goes through them, but also creates a transparency issue. Geographical mapping of these providers shows that they are located are in Northern financial hubs, or secondary financial hubs in the South. Why not just channel funds through national development banks?
4) What sort of SMEs are being invested in? Idea of SME is not a natural phenomena is developing Cs… Privatisation by another name?
Luiz Vieira: What are the key things that have been done in IDA20 to learn from past mistakes? Do you agree with the critique that the Bank’s private sector-led approach has failed to deliver rights-based development? If not, why not?
Bella Bird: Climate change adaptation and mitigation is really central in IDA20 going forward. That requires action on the government side to undertake regulation to enable investments in a green economy.
Another key thing is crisis preparedness – how do we work with governments to prepare for disasters and mitigate the impacts? This is becoming a much more central part of our delivery, especially in Fragile and Conflict-affected States.
On the Jobs and Economic Transformation theme, we will continue to push forward with a number of actions on the government side; we will continue to push forward with reforms that enable private sector growth.
On overall analysis, I think we would have to unpack that analysis. We recognise that the private sector has a fundamental role, and we focus on the private being used to create an opportunity for people. The PSW is bringing in innovations – first local currency bond in Cambodia, for example.
Peter Kamalingin: I know that it would require more time, but I think if we want to be transformational, we have to look at the trajectory that we have been on in recent decades. I think that we have to have a departure – or we are heading in a direction that will be catastrophic.
Public health care for all cannot be delivered by the private sector. The neoliberal model is a problem, and a barrier to transformation.
The Bank has done so many things that are good, but it has also done harm. That includes promoting user fees for healthcare – and people have died needlessly from that.
And I am not seeing a significant acknowledgement of that from the Bank.
And our leaders are not blameless, as they have continued to take money from the Bank in exchange for these reforms.
Bella Bird: Don’t have time to take you on in an ideological debate. I have lived in Uganda for three years and know the challenges quite well. Can engage some other time – maybe over a cup of tea, when I am back there.
(NB: Bella Bird departed panel at this point for another engagement)
Farwa Sial: Unequal governance of the World Bank – which is dominated by Northern shareholders – has huge implications for how finance flows through the Bank. During SAPs, the funding became very market oriented. This has been more so in recent years. The is has implications for the Bank’s Human Capital work, which re-imagines human development outcomes in a marketized way.
Kwabena Nyarko Otoo: [rejoining after technical issues] My dream IDA would be one that spreads funds over a few key high-impact projects: The funds are too little, and if they are spread thinly they don’t fully address the challenges at hand. Issue of vaccination is important. Only 3.5% of continent is vaccinated; and rich countries are still holding them, even though they are about to expire.
On debt, the balance sheets of countries in Africa do not allow them to do the things they need to do to respond to the crisis. Need to deal decisively with the debt issue that is currently at hand.
The IDA 20 package should come as the result of a durable consultation. The consultations that we have seen are not enough.
But it is important to look back on some of the things that have been done and make changes; the policy context is just not working. This will be necessary to make the changes.
What changes are required?
MNCs are stronger than governments on the continent. That is why we cannot tax them. There is no way that we can develop with these governments, so the public sector needs to be strengthened, not undermined.
It’s important that we don’t assign to the markets what they are not known for doing: We need to fund education and healthcare, as many cannot afford to pay the fees required to access private services.
Luiz Vieira: How would you conceptualise the role of the private sector? And what about the role of the state?
Peter Kamalingin: There is no country anywhere that has developed without the state, so the fact that that is absent is suspect.
Bella is saying that the Bank works with the state, but because the state is weak it often represents the interests of corporations. Any conditionalities must emphasise the role of CSOs and people.
Farwa Sial: When we talk about the role of development and the private sector, we are talking about a very limited period from the 1990s to now. For Bank and Fund, they have to define their role, as commercial or developmental. They are leaning towards commercial.
There’s the principal of non-interference, where you have metrics associated with human development outcomes that are tied to funding, rather than conditionality.
Kwabena Otoo: At TUC we just proposed what govt Ghana should do to support the private sector. But need to make a distinction between multinational corporations and local/national SMEs.
The gold sector is a case in point – the Ghanaian government only collected 8% in taxes and royalties on foreign companies’ profits. Of what use is it to support these foreign companies that are already doing great, receive further incentives?
Luiz Vieira: It is interesting that WBG was unprepared to speak about its position on TRIPS. Generally, WTO issues are not flagged in IDA – there seems like a lack of being explicit about the position of IDA within wider global trade frameworks.
Any closing thoughts from our panellists?
Farwa Sial: There is a very strong case to end the PSW, at least during the Covid crisis, as this will not drive the end of the pandemic.
If SMEs are the focus, then financial intermediaries who are in global hubs should be out of this chain.
What is aid doing and how is it demonstrable? Here, I think there is a lot of onus on shareholders to ensure there is evidence on this.
Privatisation of services should not go on any further, especially at this global moment of crisis.
Peter Kamalingin: For the Bank to be transformative, there has to be willingness to a look at its processes, in terms of its interactions with the borrowing countries. Are they meaningful or tokenistic?
There has to be more of a shift away from ‘helping’ to assisting countries develop from the inside out. This is only possible if we address inequality in the unjust global system.
Kwabena Otoo: I think the internal questions that Peter mentioned are important. When they experience a scandal, they close the Doing Business Report (DBR) and move on. The DBR has caused suffering for millions of workers around the world.
There was a famous IMF resignation letter in 1989 – where an IMF staffer spent 150 pages detailing the Fund’s misdeeds around the world. What has really changed?
We need to be a little more pragmatic, because people’s lives are on the line. People are dying in the pandemic, and women are dying in labour.
We need to end the pandemic, address debt and strengthen the state. We need to end policies to hand over services to the public sector.
WEMOS IDA20 paper: https://www.wemos.nl/en/health-security-and-equity-should-be-a-public-priority/
Eurodad position paper: https://www.eurodad.org/eurodad_s_proposals_for_a_wb_ida20_replenishment_package_that_delivers_for_the_most_vulnerable
ITUC IDA20 recommendations: https://www.ituc-csi.org/ida-recommendations-en