Access for the poor? World Bank's infrastructure approach under increased scrutiny

Access for the poor? World Bank's infrastructure approach under
increased scrutiny

Bretton Woods Project

(also many good links on the page: http://www.brettonwoodsproject.org/art-570795)

3 July 2012

As the G20 and the World Bank continue their push for increased
investment in large-scale public-private led infrastructure projects,
further scrutiny of the Bank�s track record puts its strategy in
question.

The declaration from the G20 summit in Mexico in late June reconfirmed
the group�s support for investment in infrastructure as "critical for
sustained economic growth, poverty reduction, and job creation", and
welcomed the "strong progress" on the implementation of the
recommendations of the report of the G20-commissioned High Level Panel
on Infrastructure (HLP) and the multilateral development banks� (MDBs)
Infrastructure action plan (see Update 79, 77). Furthermore, the G20
stressed that, while public financing of infrastructure projects
"remains essential", it "should be complemented by private sector
investment".

The G20 "welcome" the Business 20's (a G20 related event aimed at
providing recommendations from the private sector) Green Growth Action
Alliance, a new public-private partnership (PPP) initiative launched
in June to address the "shortfall in green infrastructure investment".
According to Nancy Alexander of the German political foundation
Heinrich Boell this "would dramatically scale up the use of public
money to offset the risks of private investment". A June report by
Boell and NGO WWF, focusing on energy infrastructure in Africa, states
that "often, PPPs leave the issue of universal access to poorly funded
governments and under-financed utilities to solve."

NGO International Rivers questioned the approach of the G20 and the
Bank in its May report Infrastructure for whom? While the report
acknowledged the importance of infrastructure for prosperity, it noted
that large, centralised infrastructure, especially large hydropower
dams, more often benefit energy-intensive industries than the poor.
Furthermore, the report said that the focus on "increased public
support for private infrastructure projects" is contrary to the Bank�s
own findings. A 2003 Bank assessment found that "the poor are often
the last to benefit from increased access" and "tend to be overlooked"
by private operators (see Update 36). Furthermore, the Bank�s updated
infrastructure strategy (see Update 79) concluded that the results of
"expected �trickle-down effects� ... have been slow."

The International Rivers report calls for infrastructure projects that
are decentralised, participatory, transparent, accountable, carried
out under "the strictest social and environmental safeguards" and
addressing the basics needs of the poor directly, rather than relying
on a trickle-down approach. They should also be devised "to strengthen
climate resilience rather than increasing climate vulnerability."
While the report agrees that private enterprises "have a big potential
to supply equipment" that address the needs of the poor, as investors
they "play a minor role in developing infrastructure projects for poor
consumers". Instead, the report suggests that new funding mechanisms
for innovative, small projects should be considered.

"Exemplary" projects questioned
The G20 strategy is further criticised in a second June report by
Boell and the US-based Ford Foundation, including criticism of the
"exemplary projects", as defined by the HLP and the MDBs. This
identification is based on six criteria, including "regional
integration" and "private sector potential", but none that explicitly
refers to issues around poverty alleviation or environmental
sustainability. The report finds that centralised solutions are
overemphasised, noting that "a 'bigger is better' approach does not
imply sustainability". It also argues that some of the "exemplary"
projects "have enormous carbon footprints". This runs counter to the
Bank's new focus on 'green growth' (see Update 81), where it argues
that "getting infrastructure 'right' is at the heart of green growth
[and] is critical because infrastructure choices have long-lived and
difficult-to-reverse impacts on the carbon, land, and water intensity
of future patterns of development." Furthermore, the report argues
that the projects have an "over-emphasis on PPPs".

One of the 11 "exemplary projects" identified by the HLP is the
"Ethiopia-Kenya interconnector", a power transmission system devised
to transfer hydropower electricity from Ethiopia to Kenya and link to
the broader East African region. The Bank support for this project has
led NGOs to assert that it is effectively funding the highly
criticised Ethiopian Gibe III Dam, a project the Bank has declined to
fund directly due to its violation of Bank policy (see Update 71).

In May, a letter to then Bank president Robert Zoellick from nine
NGOs, including Friends of Lake Turkana in Kenya and the US-based
Oakland Institute, called for the Bank to "not fund a transmission
line that would source its power from the Gibe III Dam or from any
other project that massively violates its safeguard policies." The
letter also notes that East Africa is already "over-dependent on
hydropower generation", leading to increased risk under climate change
and that "the project's impacts on the region's climate resilience
need to be assessed". In a June reply to the letter, the Bank�s
director of sustainable development for Africa, Jamal Saghir,
confirmed that the project "will draw power from Ethiopia�s national
grid, to which ... Gibe III could initially contribute up to 20 per
cent". Ikal Angelei of Friends of Lake Turkana urged the Bank to
consider projects that would help people in the region, rather than
enable a dam that could destroy Lake Turkana: "People depend on the
lake. We need development projects that will benefit us, not kill us."

Another "exemplary" project is the highly controversial Grand Inga Dam
in the Democratic Republic of Congo (see Update 70, 67, 56), "with the
objective of gradually developing its potential, and providing the
necessary transmission links to ensure that the power produced can
benefit both DRC and the surrounding region through power export." The
dam is estimated to have a generation potential of "almost double that
of the world's largest hydro-project", leading the HLP to draw the
conclusion that it "offers the most cost-effective source of power
currently available to Sub-Saharan Africa". However, according to
Interntational Rivers billions of dollars of aid money have already
been spent on dams and transmission projects on the Congo River, yet
94 per cent of the population still has no access to electricity.
Zachary Hurwitz of the NGO said: "The G20 leaders should prioritise
investments that directly address poor peoples' needs rather than
using taxpayer money to pay for huge, high-risk projects whose private
sector returns rarely trickle down."

The impacts of the Bank's role in hydro projects have long been
criticised, with some cases yet to be rectified, such as its
involvement in the Chixoy hydroelectric dam in Guatemala (see Update
54, 47, 43). In December 2011 three organisations, including Rights
Action and the Global Initiative for Economic, Social and Cultural
Rights, filed a petition before the Inter-American Commission on Human
Rights in a renewed attempt to hold the Bank and the Inter-American
Development Bank accountable for human rights violations that occurred
during the construction of the dam in the 1980s, claiming that no
reparations or compensation have been provided. The Inter-American
Court of Human Rights held a hearing in late June to further assess
the case.

In March, the Bank approved a $132 million loan for yet another
controversial hydro project, Cameroon's Lom Pangar Dam. NGOs, such as
the US-based Bank Information Centre (BIC) and International Rivers,
argue that the dam will have significant environmental and social
impacts and make the country even more vulnerable to drought and
climate change, due to its already high dependency on hydro power.
According to BIC, the dam "appears to respond to the energy demands of
the expanding aluminium sector rather than the energy needs of the
majority of the country's population lacking access to electricity."
Furthermore, the benefits of Laos' largest hydroelectric dam, the Bank
and Asian Development Bank funded Nam Theun 2 (see Update 63, 59, 56,
45), have been questioned, with a relocated villager claiming that
they "are now living near the dam but ... have no electricity, no
clean water". However, the Bank has refuted this claim, arguing that
"every household in those [resettlement] villages has an electricity
connection and improved water supply."
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