World Bank, Development Delusion and Other Interesting Articles

Just read a great and informative article about the World Bank entitled “The World Banks Development Delusion”. The article briefly explores the history of the Bank and argues the need for change in the funding approach used by the World Bank, in its attempts to facilitate development and reduce poverty. The article made the following interesting points:

  • History shows that most of the countries that have come under the sway of the World Bank – and its sister institution, the IMF – have experienced declining development outcomes over the past 30 years or so.
  • Developing countries need much more control over decisions that affect them. Power in the World Bank is presently apportioned according to members’ shares, just like in a corporation. Major decisions require 85% of the vote, and the United States, which holds about 16% of the shares (and controls the presidency), wields de facto veto power. The same is true of the IMF. Developing countries together hold less than 50% of the vote, which is shocking given that the institution supposedly exists to promote their welfare. • Development aid should be delinked from corporate bonds. This would take Wall Street’s interests out of the equation, eliminate the pressure to siphon wealth from debtors, and allow the bank to evaluate its performance on the basis of poverty reduction outcomes instead of loan volume, as is the current practice. (http://www.thoughtleader.co.za/jasonhickel/2012/09/28/the-world-bank-and-the-development-delusion/)

The article also reminded me about the poem The Development Set. Yes, I know I always mention this but it’s only because it’s so true and I have yet to see any real evidence of development finance institutions trying to steer away from being tarred by the same brush that tarred “The Development Set”.

Should you wish to find out more on unsustainable aid, read the article on the World Bank and its development delusions and or read the poem The Development Set, check out the links below:

The need for Sustainable Aid

Aid, Development and the Development Set

The World Banks Development Delusion

Infrastructure Development and Funding

Infrastructure vs Appropriate/ Effective/ Sustainable Infrastrucutre ?

The Three Gorges Dam in China

“There can be no prosperity without infrastructure, but infrastructure projects don’t necessarily benefit the poor. Past energy, water and transport strategies have neglected the poorest population groups, and taken a heavy toll on affected people and the environment. Will the new infrastructure strategies of the World Bank and the Group of 20 address the needs of the poor, or will they entrench the power of privileged groups?” (IRN, 2012)

Infrastructure is perceived as being a key driver behind economic growth, development and job creation. It is argued that the development of infrastructure projects, particularly large infrastructure projects and dams, will act as a catalyst to:

  • Open up areas that are not currently developed to development
  • Enable service provision to those who lack basic services
  • Create jobs
  • Facilitate economic development.

With this in mind many governments, development finance institutions and business development agencies are backing the Group of 20, the World Bank and other multilateral development banks (MDBs) new strategies for infrastructure development. “In November 2011, the Group of 20, the World Bank proposed to focus public support on strategic regional infrastructure projects such as large dams and transport corridors, and to make them attractive for private investment through public guarantees and other incentives (International Rivers Network, 2012). The group argue that centralized infrastructure projects which include private participation in public sector projects will lower the costs of services and service provision particularly in rural areas.  In so doing the public sector will be able to meet its infrastructure and service provision mandates with private sector seen to be assisting in this basic service delivery while also ensuring that the private sector is able to ensure economic development and growth. In other words a win-win solution to the world’s (sustainable) development problems that makes both the public and private sector look good.

It is however interesting to note that despite many such “win-win” public private large-scale and mega infrastructure projects being implemented we are still quite far from either sustainable service delivery or sustainable development. This is primarily because in most instances it is the private sector that benefits to the detriment of the public sector and local communities that are associated and usually impacted by such large infrastructure projects.

The development landscape is littered with failed and costly infrastructure projects that have promised but not always delivered services, growth and (sustainable) development. This is reiterated by the MDG and other development targets which are consistently not being met despite funding being directed specifically at meeting the targets. Especially considering the fact that “Economic infrastructure – essentially, transport, energy, information and communications technology, water, sanitation and irrigation – is specifically identified in the MDGs”(UN Habitat 2011).

Some interesting points related to development projects not realizing the proposed development impact;

  • The World Bank Group (2011) has also stated that its bias towards “infrastructure investments that promote growth, with expected ‘trickle-down effects have yielded very little “trickle down”.
  • Evidence available indicates that the poor are often the last to benefit from increased access (from road infrastructure). In most countries, the rural poor tend to be overlooked because private operators are reluctant to serve low-income clients given that these markets are not financially viable on a freestanding basis. (World Bank Group, 2009)
  • Despite the issues surrounding the Bujagali Dam the Ugandan government began building the Bujagali dam on the River Nile in 2007. The project had previously been delayed for over ten years for many reasons, including exorbitant project costs and its predicted economic and environmental impacts. Impacts associated with the dam included the destruction of the Bujagali Falls on the Nile, livelihoods impacts to about 6,800 people. In addition the dam will affect the performance of other dams on the river Nile, and increase Uganda’s carbon footprint. (FOEI, 2009). The project is financed by the World Bank the African Development Bank and the European Investment Bank (EIB) and it has been suggested that both the banks and the Ugandan government have overlooked and even ignored their own safeguard policies. (IRN, 2002).
  • Dams have made an important and significant contribution to human development, and the benefits derived from them have been considerable. In too many cases, an unacceptable and often unnecessary price has been paid to secure those benefits, especially in social and environmental terms, by people displaced, by communities downstream, by taxpayers and by the natural environment.” (World Commission on Dams, 2000)
  • The President of the Pakistan Network for Rivers, Dams and People (PNRDP), said in a statement that “it had been proved that the project executing agencies lacked capacity to deliver in terms of time and cost and had failed in resettling hundreds of thousands of people displaced due to these projects”.

 So why the continued focus/ bias on large infrastructure projects? especially as there is more and more evidence that smaller contextualized infrastructure solutions are more sustainable, cost-effective and appropriate. It should also be noted that the need for infrastructure, development and service provision that is sustainable, cost-effective and appropriate is made even more pressing by the climate change, environmental degradation and economic crises that we are currently experiencing.

The above graphic clearly highlights and contrasts the development impact of a large infrastructure solution for energy provision against a cheaper smaller infrastructure solution for energy provision. It is evident that smaller context specific infrastructure provision is not only cheaper but more appropriate and less environmentally damaging.

References and further reading etc:

Three Gorges Dam

Three Gorges Dam Disaster

Friends of the Earth International

International Rivers Network

News of Africa Article

Pakistan Network for Rivers, Dams and People

World Bank Group, Directions in Hydropower, 2009

World Bank Group, Transformation Through Infrastructure: World Bank Group Infrastructure Strategy Update, FY12-15, November 2011.

International Rivers, Infrastructure for Whom? A Critique of the Infrastructure Strategies of the Group of 20 and the World Bank, May 2012.

http://wbln0018.worldbank.org/IPN/ipnweb.nsf/(webnews)/0D7F7939F52C824985256BDB00687310 .