The World Bank has attracted criticism across the spectrum of its operations. In this poll, we highlight a selection of the concerns campaigning groups have highlighted. Which area(s) do you feel are the ripest for reform by a new World Bank president? This is not intended to be a comprehensive agenda – suggest other important issues in the comment section at the bottom!
What are the issues at stake?
There is a distinct lack of trust in the Bank’s environmental record (see below), as well as its efforts to promote carbon markets as the solution to climate change. There is also scepticism about how successful the Bank has been at housing existing climate finance mechanisms – especially the Climate Investment Funds. A large campaign has been developed to demand the Bank not be in any way involved in managing finance for climate change adaptation and mitigation that has been promised through the UN Framework Convention on Climate Change (UNFCCC).
The development impact of extractive industry projects has been questioned amid environmental devastation and the impact of local populations. In 2001, then Bank president Wolfensohn commissioned the Extractive Industry Review (EIR), which in 2004 tabled harsh criticism of the Bank. However, the Bank never accepted its recommendations in full, failing to revise its transparency, participation of project-affected people and funding priorities in the sector. After a long hiatus, the Bank started investing in large dams again in the last decade, despite the conclusions of the World Commission on Dams (WCD), which the Bank sponsored.
High-income countries still hold over 60 per cent of the vote at the Bank, and select the leadership team, including the President. Developing countries have long pressed for an overhaul of the institution so that the countries affected by the Bank be given a leading role in running the institution. Meanwhile civil society groups have campaigned for far greater accountability of the Bank to the people affected by its operations.
Many civil society organisations have long asked the World Bank to accept that it has human rights obligations, though this was left out of a recent IFC performance standards review. This would imply a duty to respect and protect human rights and to set up a system for effective remedy for people whose rights have been violated by Bank-funded projects or programmes.
The World Bank attracted great controversy by pushing health user fees in the 1990s, effectively pushing many poor people out of public health systems. The Bank still receives very critical reviews of its work in this area, not least because it is seen to push privatisation of health care and health insurance. Most health advocates want a focus on improving public health systems to deliver health care free at the point of delivery.
The Bank’s forays into gender issues have been fraught, with many criticism of the economic focus of the Bank’s work. While the 2012 World Development Report was a landmark for its discussion of gender and development, its details have been questioned and it still eschews a rights-based approach. NGOs want the Bank to accept that gender is not an issue of smart economics but an issue of women’s rights, and incorporate this rights-based approach into all Bank lending and policy advice.
One of the hottest controversies in development now is cross-border acquisition of agricultural land. Foreign investors have been accused of “land grabs”, and the Bank has been accused of both funding such grabs as well as setting up the investment framework that facilitates them. NGOs want the World Bank and its International Finance Corporation (IFC) to stop promoting large scale land acquisitions. They believe they should rather support governments and institutions that can provide credit and assistance to family farming and sustainable forms of agriculture, as well as to firms that provide services and markets for small farmers.
The International Finance Corporation’s Doing Business indicators have been extremely controversial, with internal evaluations finding them not up to the task. Of particular concern were the indicators that seemed to reward countries that reduce employment protection and have lower social security contributions, as well as those that have lower taxes. Labour unions have long complained, and some rich and large emerging markets are now joining the campaign against the IFC’s flagship report. The unions want the indicators to be compatible with core labour standards, employment protection goals and enhanced social security systems, while others want them scrapped altogether.
The International Finance Corporation has also engendered controversy over its investments in companies that operate out of tax havens and secrecy jurisdictions. Development practitioners now emphasise the role of domestic revenue mobilisation in generating sustainable fiscal policy and investment in developing countries, but campaigners argue that the IFC does not sufficiently recognise this concern, and relies on weak Organisation for Economic Cooperation and Development (OECD) standards of tax compliance. They want the IFC to end investment in companies that operate in certain jurisdictions in order to minimise the tax or royalties paid to developing countries where they operate.
In the most recent financial year, almost half of IFC investments were routed through financial intermediaries, raising concerns about monitoring and evaluation, particularly on development impact, as well as the susceptibility of such investments to corruption. Because of these concerns many question the whole strategy of investing through intermediaries, particularly non-transparent private equity funds and hedge funds.