Tuesday, December 13, 2011

Commentary: Helping the Poor by Helping the Rich?

Helping the Poor by Helping the Rich?
Huffington Post & International Rivers
December 13, 2011
www.internationalrivers.org/en/node/7057 and http://huff.to/uLMYVz

Most of the world's poorest people lack access to basic services such as
clean water and electricity. The World Bank and the Group of 20 are now
proposing a new strategy to scale up infrastructure investment in
developing countries. They pay lip service to the needs of the poor, and
promote subsidies for large private projects such as the proposed Inga
Dam on the Congo River. A new report from Christian Aid demonstrates
that a more promising approach to reducing poverty and protecting the
climate is possible.

More than one billion people neither have access to clean water nor
modern energy. The situation is particularly precarious in sub-Saharan
Africa, where 70 percent of the population – and a much higher
percentage of rural people - have no access to electricity and clean
water supply. Over the past 50 years, centralized water and power
projects have largely bypassed these population groups.

Over the past two months, the powerful Group of 20, the World Bank and
other development banks have produced three reports on how to tackle the
infrastructure needs of the poor. (Unlike in the past, they have not
consulted civil society - let alone poor people - on this challenge. The
G20 simply outsourced the task to a high-level panel of experts,
primarily from the private sector.) The three reports all make similar

The banks propose to focus support on big, complex projects such as
large dams, transmission lines and transport networks that can modernize
and transform whole regions. The World Bank for example announces that
it will concentrate on "fewer, but more transformational projects." The
Green Climate Fund plans to support transformational projects with
billions of dollars, and the Bank clearly tries to position itself as a
recipient of such support. Yet the new infrastructure strategies do not
aim to transform the global economy into a low-carbon enterprise, but
rather define "transformation" as increasing access to markets and
accelerating growth.

The second pillar of the new strategy is to strengthen support for
private infrastructure investments. The authors propose to expand the
use of public guarantees for private investments, to make public funds
"directly available to the private sector," and to soften the
regulations that may discourage private enterprises from investing. The
World Bank for example announces that it will "align" its own safeguard
policies and work on "reforming labor and land regulation" in Africa.
And even though the strategy papers acknowledge that 10-30 percent of
project values are lost to corruption and mismanagement, they all
propose to make procurement rules, which aim to cut down on corrupt
practices, more flexible.

The new documents only pay lip service to poverty reduction,
environmental protection, and climate change. The G20 report for example
includes a list of six criteria, according to which development banks
should prioritize future infrastructure projects. The criteria list
factors such as regional integration and attractiveness for private
investors, but don't mention poverty or the environment. As my colleague
Doug Norlen at Pacific Environment has observed, the report contains 184
mentions of the word "private," but only seven references to "poor" or
"poverty." If the new approach proposed by the World Bank and the G20
promotes transformation, it is the transformation of aid into corporate

One project that is used again and again to illustrate the new approach:
the Inga Dam on the Congo River. This example is telling. Its first
stage - the Inga 1 and 2 dams - have turned into an expensive white
elephant that hardly provides any benefits to the poor. Even the
rehabilitation that the World Bank is currently funding has turned into
a bottomless pit of mismanagement. The future stages of the Inga scheme
foresee the construction of hydropower dams with a capacity of 3,500 or
even 40,000 megawatts. In a country where only 6 percent of the
population have access to electricity, their outputs are primarily
destined to serve the needs of mining companies and urban centers in far
away places such as South Africa, the Middle East, and Europe.

The new World Bank report, astoundingly, claims that "large
infrastructure projects have often been successful in making project
affected people the beneficiaries of the project displacing them." Yet
in the case of the Inga 1 and 2 dams, just like in many other such
projects, the affected communities still fight to get compensated for
their lands decades after their displacement.

Luckily, there is a better way. As the International Energy Agency
found, 70 percent of rural areas in Africa are best served not by big,
centralized projects, but by mini-grids or off-grid solutions. Africa
has a huge potential of renewable energy sources such as wind, micro
hydro, solar and geothermal power. This potential has so far been hardly
tapped, and its exploitation is rapidly becoming cheaper.

Based on this potential, a new report by the British charity Christian
Aid documents, Africa has "a big opportunity to leapfrog and transition
to a low-carbon path and at the same time still expand access to energy
services." The Green Climate Fund, Christian Aid argues, should include
a "leapfrog fund" that can support access to clean energy and
sustainable development at the same time. While the World Bank and the
G20 propose a failed model of top-down development and corporate
welfare, the Christian Aid report shows that technologies exist that can
be scaled up, reduce energy poverty and protect the climate at the same

Peter Bosshard is the policy director of International Rivers. He blogs
at www.internationalrivers.org/en/blog/peter-bosshard and tweets

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