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How the World Bank Undermines Its Own Development Goals

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2013-03-18-karibapoverty.jpg The World Bank's International Development Association (IDA) is the most important source of development finance for the world's poorest countries. A new round of finance is supposed to support goals such as inclusive growth, gender equity, and climate resilience. With an ill-devised proposal to increase IDA support for large infrastructure projects, including new mega-dams on the Congo and Zambezi rivers, the World Bank risks undermining these noble goals.

Donor governments will meet this week to start negotiations for the 17th replenishment of the IDA fund. In a background paper, the World Bank proposes to make regional infrastructure projects (or, in Bank jargon, Regional Transformational Initiatives) a special focus of future IDA projects. The Bank claims that such projects could "catalyze very large-scale benefits to improve access to infrastructure services." It lists the Inga 3 Dam on the Congo River (with a total price tag of $10 billion), and two hydropower and transmission schemes on the Zambezi River (with a total price tag of $8-9 billion) as illustrative projects for this approach.

Mega-dams and other complex, centralized infrastructure projects have a bad track record in terms of addressing the water and energy needs of the poor and reducing poverty more generally. In a letter to donor governments, development and environmental groups warn that the new approach would undermine the official IDA goals of inclusive growth, gender equity, and climate resilience.

Inclusive Growth: The infrastructure projects proposed by IDA are not designed to meet the needs of the poor, but to export electricity for mining companies and urban centers particularly in richer countries, with the hope that some of the export revenues will trickle down to the poor. In the Democratic Republic of Congo, development banks have over the past 40 years invested billions of dollars in the Inga 1 and 2 dams and associated transmission lines, yet only 9 percent of the population has access to electricity. The situation is similar in Zambia and Zimbabwe, where the World Bank has funded the large Kariba Dam on the Zambezi River.

Large, complex projects such as the hydropower schemes on the Congo and Zambezi rivers do not boost local economies. They rely on imported technologies and know-how, and do not create a significant number of domestic jobs. In contrast, decentralized renewable energy projects such as solar, wind, micro hydropower and improved cooking stoves would be more effective at reaching the majority of the people in Africa and South Asia who are not connected to the electric grid. They would also create jobs in manufacturing and maintenance, and in the decentralized industries (in agro-processing and other sectors) that they serve.

Gender Equality: Centralized infrastructure projects often have massive negative impacts on local livelihoods, and women bear the brunt of these impacts. In the case of the Inga 1 and 2 and Kariba dams, displaced communities are still struggling to regain their standards of living after more than 40 years, and women are particularly affected by the loss of land and access to communal resources. If the benefits of regional mega-projects do trickle down, they typically reach workers in the formal economy, but not women who are least integrated in the cash economy. Women, in other words, are the first to suffer and the last to benefit from large, complex infrastructure projects. Again, decentralized renewable energy projects are more effective at reaching the homes of poor rural families and easing the burden on women, who typically spend many hours each day on gathering firewood and other domestic chores.

Climate Resilience: Reducing climate vulnerability requires flexible, decentralized and diversified energy and water infrastructure. In times of unpredictable rain fall, putting all eggs into the basket of large, centralized reservoirs increases the vulnerability to climate shocks. Already, Sub-Saharan Africa is the world's most hydro-dependent region. World Bank and IMF experts have recommended that this dependence be reduced in the interest of climate resilience.

According to IPCC research, the Zambezi exhibits the "worst" potential effects of climate change among major African river basins. In spite of this, the Mphanda Nkuwa and Batoka Gorge dams, which IDA proposes to fund, have not been evaluated for the risks associated with the reduced annual flows and more extreme floods and droughts that are expected under a changing climate. Such an approach increases the climate vulnerability of poor countries that can least afford it. Again, a mixture of decentralized and diversified renewable energy options would be more effective at strengthening the climate resilience of poor societies.

The World Bank admits that "without careful attention, the benefits of large scale, transformational investments can bypass local communities and the most vulnerable populations." As always it claims that this time will be different. It promises "paying close attention to environmental and social safeguards" and incorporating "livelihood development for riparian communities" into projects. Given the fate of similar promises in the past, this sounds like an effort of putting lipstick on the famous pig.

IDA governments should drop the proposed emphasis on Regional Transformational Initiatives under the replenished fund, and shift resources to decentralized infrastructure solutions that can directly address the needs of the poor. The World Bank cannot afford to waste public resources on approaches that have failed in the past, and campaign groups will be closely watching the IDA negotiations that begin in Paris this week.

Photo courtesy of Karin Retief