Comments on the World Bank’s Country Systems Approach

27 January 2005

by Bruce Jenkins, Bank Information Center
January 26, 2005

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We appreciate the opportunity to comment on the Bank’s “Issues in Using Country Systems in Bank Operations.” We anticipate that BIC and other civil society organizations will provide further comments as we learn more about the Bank’s country systems approach. The comments below are limited to the social and environmental safeguard policy dimensions of the Bank’s proposals.

General Comments

• The goal of increased country ownership of development programs and projects is a widely shared objective. We support this goal, but emphasize that country ownership should not be narrowly defined as the purview of one or two government ministries, but should be understood as involving a broad range of national stakeholders. Civil society organizations in potential pilot countries should be actively involved in pilot selection, assessment of safeguard equivalency, and design of country systems pilots.
• In our view, a key benchmark for determining success of pursuing a country systems approach in the safeguards area will be actual strengthening of a borrowing country’s safeguard systems, as sought by stakeholders in that country. The Bank’s approach needs to place greater emphasis on this dimension of the pilot program, and seek broader engagement processes to ensure this outcome.
• In earlier Bank statements regarding the piloting of country systems, it was emphasized that high-impact, Category A-level projects would not be included in the program. This “no A’s” pledge is not repeated in the issues paper and should be restored as part of the pilot program. We question whether many borrower countries provide the level of safeguard protections in high risk projects to indigenous peoples and involuntarily displaced persons that are provided for in current Bank policies.
• We are surprised that there have been no targeted consultations with indigenous peoples representatives on this very sensitive proposed shift in Bank safeguards. We find this particularly troubling given that the country systems objectives and principles do not contain recent critical commitments made by the Bank to indigenous communities, as reflected in the draft OP 4.10. Namely, there is no mention of the principles of “free, prior informed consultation” and “broad community support” (as contained in draft OP 4.10, para. 1). Further, we do not understand why the Bank has dropped the fundamental principle of “establishing legally recognized rights for lands and territories that Indigenous Peoples traditionally owned, or customarily used or occupied” (draft OP 4.10, para. 17) in the country systems OP. The Bank is subjecting itself to significant risk by backtracking on these and other critical principles in the country systems approach.
• The Bank appears to be on a fast-track in adopting this framework despite serious instances of safeguard policy weakening. We recommend that the Bank take a more iterative approach and not move to formal approval until further clarification and engagement with stakeholders. More time is required on this sensitive proposal.
• Given the sensitive nature of these proposals, the Bank should simultaneously disclose the next draft of the country systems OP/BP when it sends it to the Board for discussion so that stakeholders will have an idea what has or has not been modified before further Board action.

Assessing Equivalence

• Improvements in place prior to approval: Equivalency assessments should be judged on a country’s existing capacity and track record, not on future commitments (or “capacity going forward”), especially in areas as sensitive as safeguards. If Bank analyses find that a country’s systems do not meet the Bank’s objectives/principles, then pilots should not be launched until improvements are actually in place. It is our understanding that Bank projects need to be in compliance with Bank policies at the time of Board consideration. Further, OED evaluations have noted the Bank should make investment decisions on the “quality of sectoral and core governance as it exits and as it has historically been, rather than as the Bank hopes governance will one day be” (OED 2003 “Factoring in Governance,” pp. 13f.). The Bank should delete language that would allow equivalency to be assessed on the basis of “agreed improvements.”
• Assessment based on performance, not on written policies: The assessment of a country’s institutional track record in implementing its safeguard policy framework is as critical as the adoption of policies and regulations. The Bank must ensure that this track record analysis is performed and disclosed early for each proposed pilot to allow engagement by communities with direct experience with the pilot country’s track record.
• No self assessment: The Bank should clarify in the draft BP, para. 2, that the Bank is responsible for assessing equivalence, not pilot country governments or third parties.
• Consistency of assessments: The Bank has indicated that a set of indicators or criteria will be developed to help guide staff on judging equivalency. These indicators/criteria should be disclosed to improve transparency and consistency across countries and projects.

Disclosure issues and Bank staff responsibilities

• Confusion on disclosure: Several disclosure issues need to be clarified:
  • The draft OP para. 5 states that the analysis of equivalence will be disclosed prior to project appraisal. The draft BP para. 4 however states that the PAD (including an annex) will contain most of the findings and frameworks concerning use of country systems. The PAD however is not even disclosed before project approval, never mind appraisal. In the paragraph on documentation the draft BP does not state through which instrument the Bank will disclose the equivalency assessment prior to appraisal. This should be clarified.
  • BP para. 4 refers to including “a description of the main elements of the framework that has been or will be applied in the project…” in the PAD. The entire framework should be disclosed, not just a description of main elements.
  • Issues paper refers to a “Country Safeguard Assessment” but this tool is not mentioned in the draft OP/BP. If this is to be a key analytical tool in the country systems approach, it should be affirmatively mentioned and disclosed early in the project cycle.
• Lack of clarity on roles and responsibilities: The draft BP para. 1 contains some roles and responsibilities of Bank staff, but it is incomplete. On disclosure issues, the Bank should clarify which staff ensures that the equivalency assessment is disclosed prior to appraisal and who ensures “that relevant environmental and social safeguard documents…are disclosed to key stakeholders before project appraisal in an accessible place and understandable form and language” (OP para. 5)? These and other Bank responsibilities need to be clarified, as timely availability of such documentation is currently a prerequisite for Bank appraisal of a large portion of Bank projects.
• Expand early notification: The draft BP para. 3 contains information on early notification and disclosure of pilots. It should be expanded to include a provision that all country system pilots will be clearly flagged in the Monthly Operational Summary (MOS). Further, the Bank’s web pages on Country Systems should clearly list what pilots are being proposed or are underway. Civil society organizations will need clearer early notification of what pilots are forthcoming besides mention in the CAS or PID.

Comments on Annex A (abbreviated restatement of the Bank’s safeguard policies)

The Center for International Environmental Law has undertaken a detailed analysis of the Bank’s proposed, simplified safeguard policy framework for judging equivalency. The analysis indicates numerous examples of significant weakening of the Bank’s safeguard policies. We urge the Bank to address the points brought forward in CIEL’s analysis.

Below are a few comments on some of the significant areas that require redress in the Bank’s proposed simplification of its safeguard framework for use in country systems pilots.

Environmental Assessment

• Restore preference of prevention of adverse impacts over mitigation and compensation.
• Restore requirements for sectoral, strategic or regional EAs for sector wide, regional, financial intermediary, or on-lending operations.
• Restore statement that Bank does not finance projects that contravene a country’s international environmental agreements
• Operational Principle 6 contains far weaker participation requirements than those in OP 4.01:
  • “Early consultation” should be changed to “as early as possible”
  • Include specific mention of project affected groups, not just “stakeholders”
  • Include requirement for consulting project-affected groups and NGOs throughout project implementation
  • Include specificity on need for consulting affected groups in high risk projects (Category A type projects) before draft EA report is prepared
• Operational Principle 10 on disclosure is far weaker than OP 4.01:
  • Include provision that “for meaningful consultations” disclosure must be in a “timely manner prior to consultation”
  • Provide requirements on what information is to be provided to affected persons prior to consultations to make them meaningful
  • Disclosing EA “before appraisal” is not specific enough: for high risk projects, specified information on the project needs to be provided long before an EA is completed. OP 4.01 requires consultation and disclosure before EA terms of reference are finalized. The Bank must include provisions for earlier consultation and disclosure.

Indigenous Peoples

• Restore requirement that “the borrower … engage[s] in a process of free, prior and informed consultation” with indigenous communities and that “broad community support of the project by affected Indigenous Peoples” is necessary, as in draft OP 4.10.
• Restore provisions for establishing legal recognition of the customary or traditional land tenure systems used by project-affected people as recognized by OD 4.20 and the draft OP4.10
• Restore the explicit requirement for an Indigenous Peoples Plan, as in draft OP 4.10. The IPP should not be equated to a mitigation plan.
• Restore statement that the “development process fully respects the dignity, human rights, economies, and cultures of Indigenous Peoples” as an objective, as in draft OP 4.10
• Restore requirement for a social assessment involving social science expertise; consultation and participation of indigenous peoples; and disclosure, as in draft OP 4.10
• Specify that the Bank has a responsibility to determine whether indigenous peoples safeguards apply to given ethnic group. The history of exclusion of indigenous peoples by national governments—in donor and borrower countries—cannot be ignored in the interest of simplifying Bank operations.

Involuntary Resettlement

• Include principle of free, prior, and informed consent (or at least consultation) for projects that involve likely physical or economic dislocation
• Restore preference for improving livelihoods before restoring them.
• Include requirement that resettlement activities must be done as sustainable development programs.
• Restore broader consultation parameters (in OP 4.12, people consulted on more than just eligibility and grievance procedures; they have opportunities for consultation and participation in planning, implementing, and monitoring whole resettlement program)
• Remove “as appropriate” limitation on consultation. Consultation should be required in all instances of displacement.
• Restore provisions that potentially displaced persons are to be provided timely and relevant information.
• Restore provision that grievance mechanisms must be appropriate and accessible.
• Restore provision that borrower inform potentially displaced persons at an early stage and take their views into account in project design.
• Clarify that displacement or restriction of access may not occur before necessary measures are in place.

Accountability and Inspection Panel

• The Bank and the Inspection Panel have not clarified how the Panel will be able to adequately assess management’s determination of equivalence between Bank policies and a country’s systems without reviewing and making qualitative judgments on the strength and implementation of a national government’s systems, something that is beyond the Panel’s mandate. The Panel appears to be limited in adequately reviewing the soundness of the equivalency determination.
• In the event of a claim to the panel involving a country systems pilot, the Panel should not be restricted solely to the draft OP/BP for pilots as these are too vague and do not provide adequate definitions for making determinations. The Panel should be able to refer back to full OPs/BPs to provide interpretation.
• As part of the equivalency assessment, there should be a determination is potentially project affected peoples have equivalent access to redress at national, state, local level as is provided by the Panel.

Selection of Pilots and Evaluation

• National civil society groups should be involved in helping select pilots and commenting on a country’s safeguard systems and track record.
• Independent evaluation is required for such an ambitious pilot initiative. Evaluation should not be performed by the task managers and Bank departments responsible for promoting the country systems approach. At a minimum, OED should be tasked with providing an assessment at the end of the two year pilot phase.

Additional Resources

• Letter from Indian NGOs to World Bank President and India Country Director rejecting World Bank’s use of Country Systems, December 14, 2004
• Press Release: A Race to the Bottom: NGO’s reject World Bank Proposal on Using Country Systems in Bank Operations and walk out in protest of consultation, by various Indian NGOs, December 14, 2004
• Country Systems Approach to World Bank Social and Environmental Safeguards: Concerns and Challenges, Bank Information Center and the Center for International Environmental Law, December 1, 2004
• BIC letter to World Bank Board outlines concern that first safeguard pilot project will weaken role of Inspection Panel, June 7, 2004.