15 September 2006
The upcoming annual meetings of the World Bank and International Monetary Fund in Singapore will have a direct bearing on the institution’s operations in sub-Saharan Africa. Topics particularly relevant to Africa include a one-year-on review of the Bank’s Africa Action Plan, the presentation of the Bank’s new Energy Investment Framework, and a discussion of the Bank’s Anti-Corruption and Governance Strategy. In addition, the governors of the IMF are expected to discuss proposed adjustments to the voting shares of member countries, with potential implications for Africa’s voice on the Fund’s Board of Directors.
The upcoming annual meetings of the World Bank and IMF will be held in Singapore on the 19th and 20th of September, and the outcome is expected to impact the Bank’s future operations in Africa. Some relevant topics concerning Africa are discussed below.
The Africa Action Plan
The Board of Directors is expected to review progress under the Bank’s Africa Action Plan, a broad strategy launched in September 2005 to address poverty and increase private sector investment on the continent. The Action Plan lays out key objectives and commitments for Bank operations in sub-Saharan Africa, focusing primarily on large-scale infrastructure development and regional trade initiatives to attract foreign investment. If made public, a review of the Plan’s implementation over the past year would help civil society organizations and member country governments assess the extent to which the Bank has met its commitments.
Critics of the Action Plan have objected to its emphasis on infrastructure over social services; the Plan envisions a massive scaling-up of financing for regional transportation and energy initiatives by the end of this decade, but foresees a far less significant increase in funding for health and education. Despite its emphasis on infrastructure, the Action Plan does not discuss how the inevitable social and environmental impacts of large-scale transportation and energy projects would be mitigated or how the challenge of maintenance would be met.
One of the most glaring gaps in the Action Plan is its failure to address environmental issues and climate change. Although the Bank itself has recently highlighted the disproportionate threat that climate change poses to the world’s poor, and particularly to natural-resource dependent populations in Africa, its Action Plan for Africa does not suggest that the Bank considers the environment a priority for Africa’s development. The Action Plan also provides little indication that the Bank will dedicate the funding necessary to minimize the impacts of global warming on the poor.
The scenarios presented in the Africa Action Plan are based heavily on expected increases in financing from G-8 countries. However, the G-8 have so far failed to fulfill the promises of more aid to Africa made at the 2005 Gleneagles Summit, raising questions about the future implementation of the Bank’s Africa Action Plan.
Clean Energy Investment Framework
Although not on the official discussion agenda for the meeting of the World Bank’s Development Committee, the Clean Energy Investment Framework is likely to be one of the principal topics addressed during the upcoming World Bank Annual Meetings. The Framework, which has met with mixed reactions because of its continued support for fossil fuel-based energy sources, includes an action plan to improve energy access in sub-Saharan Africa, where less than a quarter of households have access to electricity. Reinforcing the priorities laid out in the Africa Action Plan, the Bank’s energy strategy for Africa hinges on large-scale, regional initiatives implemented through extended “power pool” projects and the construction of major thermal power plants and hydroelectric dams. While increasing household electricity access to 47 percent by 2030 would require a doubling of annual energy financing for Africa from $2 billion to $4 billion, the Bank acknowledges that it is constrained by limits on IDA lending and would be unable to devote additional resources to implement the strategy. The Bank suggests that African governments will instead need to mobilize concessional financing through other donors, as well as through attracting private sector investment in the energy sector.
Private sector involvement in utilities, however, remains a controversial issue in developing countries. The privatization of state-owned companies and tariff increases often reduce rather than increase access to and affordability of electricity as government subsidies are eliminated and prices rise. Despite widespread reservations about the efficacy and accessibility of private sector power provision, the Energy Action Plan asserts that “working to remove barriers to private sector participation will continue to be an important part of the strategy.”
Civil society organizations have also criticized the Energy Framework for not proposing the massive shift in investment from conventional to renewable energy technologies which would be required to combat climate change and reduce poverty. They argue that because of its continued focus on large-scale, conventional fossil-fuel energy sources and promotion of unproven technologies (such as carbon capture), the Bank will fail to capture the benefits that renewable energy could provide for both the poor and the environment. Renewable energy sources often create more jobs, have fewer social and environmental impacts and are better suited to reach off-grid, rural populations, than are conventional technologies.
Anti-Corruption Strategy
The Bank’s Governance and Anti-Corruption Strategy will also be one of the focal points of the annual meetings, where it will be presented to the Development Committee. While not specific to Africa, the Governance and Anti-Corruption Strategy is especially relevant to countries on the continent, given the significant influence that the Bank wields there, and the emphasis that World Bank President Wolfowitz has placed on the need for African governments to curb corruption in order to attract private sector investment. Under Wolfowitz, the Bank has also suspended lending for projects in Kenya and delayed debt relief to the Republic of Congo following allegations of corruption.
Civil society is not alone in criticizing the seemingly subjective approach Wolfowitz has taken to the issue. The Development Committee asked the Bank to develop a clear framework for stamping out corruption at this year’s Spring Meetings in April. The framework will be presented to the Development Committee at the upcoming IMF/World Bank Annual Meetings in September.
Although it is widely agreed that corruption is detrimental to development, opinions differ about how best to address it and whether the World Bank is the appropriate institution to spearhead an anti-corruption campaign, considering its own lack of transparency and its past and present support to unaccountable governments. Many critics fear that the Bank is using the governance agenda as a vehicle through which to expand its influence - and conditionality to other areas of public policy.
The Bank has been heavily criticized for developing the far-reaching strategy largely behind closed doors. Civil society groups and private sector representatives alike have complained that the public consultation period was inadequate and rushed, and that a viable accountability mechanism must be driven by the public.
Many civil society representatives feel the strategy is too broad - that the Bank is taking on too large a role, rather than focusing on a more limited number of concrete steps it could take to enhance the transparency and accountability of its own operations and increase public scrutiny over project selection and implementation. Critics also argue that the strategy emphasizes a top-down approach that neglects the role of the public and civil society as the primary leaders and agents of change in governance or anti-corruption efforts.
It is still not clear whether the paper presented in Singapore will be a final document or open to change in the months following. The Bank has indicated its willingness to continue discussions about the strategy post-Singapore, but it is our understanding that these discussions will likely focus on how to operationalize/implement the strategy, rather than re-open debates about the approach.
China and Africa
The location of the Bank’s Annual Meetings this year in Singapore serves as a reminder of the increasing role that Asia, and particularly China, is playing in investment in Africa. While China’s growing presence extends to a variety of sectors, Chinese investments in the extraction of mineral and petroleum resources and in the energy sector have drawn considerable attention in recent months. Because of the its apparent indifference to human rights violations and corruption, China’s search for fossil fuels in Africa to feed into its rapidly expanding, energy-dependent industrial economy has generated serious concern about the potential impacts on governance in Africa. China’s track record in turbulent countries highlights these concerns, such as in oil-rich Sudan where China has supported and sold arms to the government during the ongoing conflict in Darfur.
Chad’s recent decision to revoke its recognition of Taiwan in favor of reestablishing diplomatic ties with China serves as another reminder of the political significance of Chinese presence on the continent. Some observers suggest that oil played a major factor in China’s courting of Chad, and that Chinese investment in Chad’s oil would give the Chadian government more leverage in its dealings with the World Bank. Although it agreed to the Bank’s terms in 2000, in order to access funding for the Chad-Cameroon oil pipeline, Chad has repeatedly objected to the governance conditions placed on the use of its oil revenues by the World Bank.
In recent years, the Bank has frequently held out the prospect of Chinese financing as a justification for its own, preemptive involvement in various high-impact projects. The Bank often claims that if it didn’t support a project, someone else would and would do more harm. However, the Bank has neither the mandate nor the means to prevent all bad projects from taking place or to make all potentially harmful investments slightly less damaging. Given its finite resources and the opportunity costs of activities it undertakes, the Bank should select projects on the basis of their likelihood to make a positive contribution to poverty reduction.
As the World Bank’s Annual Meetings approach, it is important to question what increased Asian investment in Africa may mean for people and the environment, and for the changing role of the World Bank on the continent.
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