IFI governance


Big infrastructure, small participation

World Bank and G20 push new plans

13 September 2011

The World Bank, in conjunction with the G20, is prioritising massive, cross-border infrastructure with private sector involvement, but has failed to involve any local communities.

At a summit in Seoul in November 2010, G20 leaders agreed an ambitious work plan for the G20 development working group, a body of officials preparing plans for G20 development ministers’ meetings. With infrastructure as one of the main themes, the Bank was asked to lead the creation of an Infrastructure Action Plan, which would be reviewed by a High-Level Panel on Infrastructure appointed by and reporting to the G20. The Bank defines infrastructure as transport, water and sanitation, energy, and information and communication technologies (ICT). By September this year the Bank, in conjunction with other multilateral development banks (MDBs), had produced both a draft and a final version of the action plan, but neither have been publicly released, nor been considered by the World Bank’s board.

According to Bank documents the action plan covers six areas:

exclusive procedures that do not take the views and real needs of the grassroots into account
  • a global infrastructure needs assessment;
  • “a diagnostic on obstacles (internal and external) to scaling up PPPs [public private partnerships] in developing countries”;
  • identification of regional projects, especially in Africa;
  • assisting low-income countries to embark on PPP projects;
  • “a statement of good practices to integrate environmental safeguards into infrastructure development in an effective and cost efficient manner”; and
  • transparency around procurement and construction costs.

The G20 development working group met in early July in South Africa and considered the draft action plan. The meeting’s leaked outcome document spells out the group’s expectations for how the draft plan will be finalised, asking the Bank to “continu[e] the work towards simplification and greater harmonisation of their procurement rules and practices, including mutual recognition of procedures which could reduce the cost of lending, speed up project implementation and give room for more collaboration with other investors, especially for PPPs.” The final version of the plan was submitted to the High-Level Panel in early September but is not publicly available.

A late June briefing by Nancy Alexander of the German political foundation Heinrich Boell questions the G20 and the Bank’s focus on PPPs: “Promoting public-private partnerships in infrastructure should not be a goal in and of itself, but rather a means to achieve positive development outcomes in poor countries. … PPP deals should not be structured so that governments and multinational enterprises are the junior and senior partners, respectively, with the government being the rule-taker not the rule-maker. Moreover, public money should not be used to guarantee the profitability of private investors in low-income countries to the extent envisioned by the G20.”

Martin Tsounkeu of the Cameroonian NGO Africa Development Interchange Network noted examples of past Bank failures in road projects in Central Africa. He notes: “The idea of the G20 and World Bank collaborating on big cross-border infrastructure projects in Africa may theoretically carry hope for better prospects in growth and development for the continent. But practically, there are great fears that we still got into the same traditional mistakes that stem from poor need assessment due to exclusive procedures that do not take the views and real needs of the grassroots into account.”

Despite repeated requests from civil society organisations, the infrastructure plan has not been made available for discussion with external stakeholders. In February, French civil society organisations were told by the French president Nicolas Sarkozy that there would be no problem with sharing drafts of G20 working group papers. Later, French officials backtracked, saying that the papers would have to be requested from the bodies preparing them. When the Bank was approached for the infrastructure plan, it replied that it was “not in a position to respond positively” and suggested that people can “direct questions to the chair of the High-Level Panel for Infrastructure Investment, Mr. Tidjane Thiam”. The panel is an unaccountable expert’s body of 17 “high profile individuals” mostly from the private sector, set up by the G20 and coordinated by the insurance company Prudential, of which Thiam is the chief executive.

New strategy being prepared

Mindful of the G20 infrastructure push, the Bank also plans to update its infrastructure strategy. A June concept note, calls for the Bank to “continue to support the core business of infrastructure to meet basic access needs, with an enhanced focus on transformational infrastructure, mobilisation of private capital and other sources of financing.” According to the 2011 IEG annual report (see Update 77), infrastructure already accounts for over one-third of the World Bank Group’s entire portfolio, and 46 per cent of commitments in fiscal year 2011 (see Update 77).

Through the strategy update, the Bank wants to position itself as the major beneficiary of any new push to finance infrastructure. In the concept note, the Bank openly states it will consider how to capture climate finance (see Update 77). In relation to G20 resources, it asks: “How can the [World Bank Group] use its convening power and the G20 momentum to garner support from the international community around new and/or targeted earmarked resources for project preparation?”

The concept note calls for internet consultations in June and July this year, but the website for the strategy update has only a short presentation and links to the concept note and a brochure, with no further information or method of taking input. A footnote in the concept note says: “Since the main pillars of the existing infrastructure strategy remain largely valid, this update will be vetted through a more limited form of external consultations in line with CODE guidance to senior management.”

Failure in water, ICT

Infrastructure projects across all sectors are proving controversial, with energy lending the most contested (see Update 77). In Ghana, while the new water and sanitation micro-utility in semi-urban areas is provoking dissent (see Update 77), confusion reigned over potential Bank backing for private participation in the public water supply. In late August, the ministry of finance advertised for a Bank-funded consultant to handle negotiations of a PPP for water supply. The PPP contract would replace the failed, Bank-backed contract between the government and a Dutch-Ghanaian joint venture involving water multinational Vitens, which pulled out in June.

However, a spokesperson of the water resources ministry said he was unaware of the consultancy and that the ministry still planned to set up a new state-owned enterprise for water distribution. Rudolf Amenga-Etego of Accra-based Grassroots Africa said: “we just managed to get rid of a failing PPP contract with a water multinational, opening space for public provision, and now the World Bank is trying desperately to foist another water multinational onto the Ghanaian people. We need a democratic and accountable procedure to design the systems, financial and technical, that would enable Ghana to achieve full observance of the right to water. This must be be accountable strictly to the people of Ghana and not to the World Bank.”

Meanwhile, an August evaluation by the Independent Evaluation Group (IEG), the Bank’s arms-length evaluation body, questions the Bank’s role in ICT infrastructure projects. While “overall, the evidence points to an effective World Bank Group contribution to reforms in the sector”, in terms of ICT access, “the record of … projects directly aimed at extending ICT coverage to underserved areas is poor.” The report highlights that 40 per cent of ICT operations failed to achieve their results, with the failure rate reaching 50 per cent for investment loans.