Memorandum submitted by CARE International
1. INTRODUCTION
1.1 CARE International UK (CIUK) greatly
welcomes the interest of the committee in this important issue.
It is clear that, in principle, DFID does have capacity to influence
the World Bank so that UK assistance delivered through this body
contributes to the attainment of the department's own objectives.
Nevertheless, we are concerned that the ways in which DFID has
attempted to exercise this influence to date are frequently insufficient
for the task, failing to appropriately reflect its priorities
or to take advantage of opportunities for effective action.
2. CARE'S EXPERIENCE
2.1 The evidence which we present here is
partly based on our experience as one of half a dozen UK NGOs
that have received funds from DFID since 2005 for work specifically
in Latin America within the framework of Partnership Programme
Agreements (PPA). CIUK has attempted, in large measure, to relate
that work to DFID's priorities as set out in the August 2004 Regional
Assistance Plan (RAP) for Latin America. The RAP was designed
in the context of a reorientation of DFID assistance to Latin
America whereby a major focus of the department's efforts and
the lion's share of its funds for the region would be channelled
through the World Bank and the Inter-American Development Bank
(IDB) based on the premise that:
as a modest sized bilateral donor, DFID can
only achieve sustainable and significant contributions to poverty
and inequality reduction if we use our bilateral resources to
enhance the effectiveness of key influential organisations in
the region, in particular the IDB and the World Bank.
2.2 Given this, since mid 2005 CIUK has
been promoting and supporting actions by CARE country offices
to influence these two international financial institutions (IFIs),
including a strong emphasis on questions of governance and accountability
which were highlighted in the RAP objectives.[61]
Our work has focused on project and/or sector level work in areas
including health, education, malnutrition, water and sanitation.
Progress has not been easy, but some modest successes have been
achieved and the basis laid for stronger and more effective relations
with both the World Bank and the IDB.
3. RESEARCH IN
LATIN AMERICA
3.1 We also draw heavily on the findings
of a group of researchers recently hired by CIUK to conduct research
on the implications of donor policies for civil society organisations
in Latin America, with particular attention to the policies and
practices of DFID, the World Bank and the IDB. Research was conducted
during June and July of this year in the four countries where
DFID has or recently had direct presence—Bolivia, Brazil,
Nicaragua and Peru; full findings will be published in a few weeks
time.
4. POVERTY FOCUS
4.1 A major concern which affects all of
DFID's work with the World Bank is whether and how the department
is able to ensure that its assistance channelled through this
institution is sufficiently focused on the reduction of poverty.
As CIUK commented to DFID's Latin America Department in the context
of a consultation earlier this year on the review of the RAP,
the current strategy relies on both the World Bank and the
IDB having a clear pro-poor focus which in the current context
is debatable.
4.2 The well known association of the World
Bank with the promotion of neo-liberal thinking has come in for
much criticism precisely because of its failures to put the poor
first. If, as predicted by the apologists for the so-called Washington
Consensus, this had led to reductions in poverty there would be
justification for this approach. However, despite the high level
of adherence to these policies in Latin America, as DFID noted
in the RAP: Latin America is relatively advanced compared to
other developing country regions... and attracts the most private
capital ($45 billion in 2002). However, this masks high, persistent,
and severe levels of poverty. In fact, as was noted in the
2004-05 Chronic Poverty Report by the DFID-funded Chronic Poverty
Research centre: neo-liberal economic reforms have contributed
to widening the inequality gap as resulting growth has been unequally
distributed. Brazil is a case in point: it is fast becoming
one of the world's largest economies and yet 24% of the population
continue to live in poverty on less than $2 a day and 10% in extreme
poverty on less than $1 a day (figures quoted in the RAP). In
this context, it is little wonder that the institutions most associated
with the imposition of these reforms in Latin America—including
the World Bank—are viewed very negatively by the majority
of Latin American civil society organisations (CSOs) engaged in
the fight against poverty and inequality.
4.3 Some more recent developments in the
World Bank cast further doubt on the degree to which it can be
said to have a pro-poor focus. One such development was the fusion
in 2006 of the infrastructure and sustainable development networks
under the leadership of the vice-president for infrastructure.
This has taken place in a context in which the Bank has reemphasised
loans for large infrastructure projects which, historically, have
tended to prioritise "national" concerns over the rights
of poor and vulnerable people in the project areas.
4.4 A second development is the adoption
by the private sector lending arm of the Bank, the International
Finance Corporation (IFC), of so-called base of the pyramid thinking
which postulates a central role for market-based approaches in
development.[62]
While it is understandable that the IFC would be attracted by
such thinking, there is much concern that these approaches, which
are also being explored by the IDB, are frequently inappropriate
for most poor people and may divert attention towards the middle
class and other non-poor sectors in developing countries.[63]
5. GOVERNANCE
AND ACCOUNTABILITY
5.1 As already noted in point two, this
area has been identified by DFID as one of its major priorities
for its work with and through the World Bank and the IDB in Latin
America. For that reason, we believe that it is important that
the committee consider it when reflecting on the question of whether
DFID's priorities in specific policy areas... can be pursued effectively
through World Bank funding.
5.2 The voices of the poor. An important
aspect of DFID's approach on governance is to stress the importance
of the poor being able to make their voices heard. For example,
DFID's Effective States Team, Policy and Research Division suggested
earlier this year that:
Poverty persists in large part because poor
and marginalised groups are voiceless, disempowered and unable
to hold others to account. The information and mechanisms to claim
their rights, to seek redress and to hold power holders to account
are often non existent, weak or stacked in favour of the more
powerful.[64]
5.2.1 The ability of the poor to demand
attention to their needs and rights is an area which has also
figured in World Bank thinking for several years. This has been
expressed especially clearly by the Bank through such documents
as the 2004 World Development Report "Making Services work
for Poor people" and the 2005 publication "Citizens,
Politicians and Providers: The Latin American Experience with
Service Delivery Reform" and is reflected in recent strategy
and policy documents including the LAC Regional Framework and
Strategy for Engaging Civil Society FY05-FY07 "Inclusive
Governance: Empowering the Poor and Promoting Accountability in
Latin America and the Caribbean Region" and the FY07-FY11
Country Partnership Strategy for Peru. One much repeated concept
in these documents and in Bank thinking is the "accountability
triangle" which places the ability of the poor to demand
quality services and access to their rights at the centre of the
governance agenda.
5.2.2 This coincidence of thinking between
DFID and the World Bank would seem to suggest that the department
should have no difficulty pursuing its policy in this area through
Bank funding. However, in practice, there are important gaps between
the development of this thinking in the Bank and its operationalisation.
This is especially true with regard to what are termed "long
run" accountability mechanisms (service providers through
governments to people) in part due to an assumption of community
capacity to demand accountability. That capacity often does not
really exist and the Bank is poorly placed to address this given
that its principal modus operandi is through lending to
national governments.
5.2.3 In this context, the option taken
by DFID in Latin America to scale back direct operations in favour
of funding via the IFIs has been counterproductive, as it has
meant that successful prior work on building community capacity
has been cut back, for example, the innovative program in Peru
on citizenship, profiled in Alliances Against Poverty: DFID's
Experience in Peru, 2000-05.[65]
Since 2005, DFID work with the Bank in Latin America does not
appear to have directed funds or attention to this important aspect
of governance and accountability. An external evaluation of implementation
of the RAP published earlier this year by the Overseas Development
Institute (ODI) fails to cite any examples of work in this area.
5.2.4 For these reasons, we believe that
if DFID is to pursue its governance and accountability agenda
through funding of World Bank activities it will be important
for it to emphasise the development and operationalisation of
measures to support demand-side accountability. We believe that
such a focus would constitute an appropriate reflection of DFID's
longstanding commitment to the promotion of social inclusion,
would appropriately strengthen the ability of the Bank to operationalise
existing commitments, and, most importantly, would contribute
strongly to overcoming the factors which underlie persistent poverty
and inequality.
5.3 Civil society participation
By this we refer both to the ability of civil
society to participate in the decision-making processes of their
countries as well as participation in decision-making by the World
Bank itself. As in relation to the ability of the poor to make
their voices heard, there is clear agreement between the Bank
and DFID on the importance of this issue. Nevertheless, it is
our experience and that of others that in practice the World Bank's
support for participation by civil society organisations (CSOs)
both in national decision-making and in relation to its own processes
is very limited.
5.3.1 Researchers hired by CIUK to conduct
research on the implications of donor policies for civil society
organisations in Latin America (see point 3), have reported that
opportunities for civil society engagement with the World Bank
and the IDB on their country strategies have either diminished
significantly in recent years or always been very limited:
In 2001, (in Peru) both institutions engaged
in relatively wide-reaching consultative exercises with diverse
groups of CSOs over their respective country strategy papers (but)
in 2007, neither institution conducted more than a cursory consultation.
... our research did not detect a similar diminution in IFI consultation
processes with CSOs over their country strategies in the other
three countries (where the impression is more that such processes
have always been minimal and deficient).
5.3.2 A partial exception to this was reported
by our researcher in Nicaragua where: donors and IFIs pressured
both the Aleman and Bolanos governments to ensure that civil society
was consulted over the elaboration of the country's poverty reduction
strategy in 1999 and the National Development Plan in 2002.
Nevertheless, the participatory processes themselves were quite
limited suggesting that the World Bank and others pushing
for this participation were very easily satisfied.
5.3.3 One frequent criticism from CSOs is
that in-country consultations tend to be too brief and conducted
too late in the development of strategies, policies and projects
for their views to be factored into policy and program decisions.
In addition, there is a frequent failure to provide information
on proposals in sufficient detail for CSOs to comment meaningfully
while mechanisms for reaching shared understandings and integrating
those into the positions taken by the IFIs in their negotiations
with governments are unclear or completely missing.
5.3.4 This lack of commitment by the Bank
and other donors to meaningful civil society participation is
also reflected by their failure to defend Peruvian NGOs in the
face of public hostility from the current government, including
the introduction of new legislation to control their activities:
In Peru, NGOs participating in a focus group
lamented (this) failure... (which they blamed) on donors' preoccupation
with working with government. Some donors are perceived to be
withdrawing support from NGOs or showing more reluctance to fund
them, in order to placate a new government whom they know is anti-NGO
but with whom they are keen to consolidate relations.
5.3.5 Under these circumstances, we believe
that DFID can and should use its relationship with the World Bank
to promote meaningful and wide civil society participation in
the formulation and implementation of development plans (both
local and national) including those formulated by the World Bank
itself. Indeed, in-so-far as those plans refer to actions which
will be funded by DFID it would be appropriate for the department
to require such participation.
6. DFID'S STRATEGY
OF WORKING
THROUGH THE
WORLD BANK
IN LATIN
AMERICA
6.1 Finally, we wish to present a longish
quote from the draft conclusions of our research which summarises
our findings and recommendations on relations between DFID and
the International Financial Institutions (IFIs) in Latin America;
fundamentally the World Bank and the IDB. We believe that it will
be useful for the committee members to read these reflections
on the lessons learned from the most concerted effort made so
far by DFID to work through the World Bank at a regional level.
6.2 Most of the Latin American CSOs interviewed
in this study reacted negatively to DFID's strategy of channelling
funds through the World Bank and the IDB—either because
of these institutions' association with a neo-liberal model perceived
to have aggravated poverty and inequality in Latin America, or
because of the perceived failure of these institutions to take
on board CSOs' proposals and opinions. Indeed our view is that
DFID has alienated some of the very organisations and movements
it helped to strengthen over the past decade as a result of its
decision to work so closely with the IFIs in the region. Before
continuing with this strategy for another four years, we recommend
that DFID reflects on the implications of its close partnership
with the World Bank and the IDB for its relations with other key
actors fighting poverty, inequality and social exclusion in the
region, and takes measures to avoid further distancing itself
from Latin American CSOs mistrustful of this strategy.
6.3 The RAP states that the purpose of DFID's
contributions to IDB and World Bank operations is to "strengthen
the focus on poverty, inequality and inclusion, facilitating greater
participation and engagement by a wider range of stakeholders."
But amongst the CSO (and some government) representatives we interviewed,
there is little faith in the ability of a small player like DFID
to change the institutional culture of these huge organisations.
After four years, most of the CSOs we consulted could see little
evidence of DFID's impact on World Bank and IDB policy and practice
at a country level in overall terms.
6.4 The exception to this rule appears to
be Nicaragua where both CSOs and World Bank and IDB staff themselves
acknowledge DFID's positive influence over these institutions.
In our opinion, the maintenance of a DFID bilateral programme
in Nicaragua has enabled DFID staff to develop constructive on-the-ground
relations with in-country World Bank and IDB staff leading to
concrete results and initiatives. Elsewhere the assessment is
much more negative. In Peru, for example, where there is no longer
any DFID presence, our research suggests that the space for civil
society engagement with these two institutions has actually contracted
since the RAP was approved in 2004.
6.5 In the light of the rather sceptical
assessment of DFID's progress in relation to the World Bank and
the IDB, we recommend that:
6.5.1 DFID's decision to continue with its
strategy of contributing funds to the World Bank and the IDB is
based on demonstrable evidence that it has managed to influence
these institutions in the direction specified in the RAP over
the past four years at a country level, or that at the very least
concrete opportunities have been identified to do so in the future.
6.5.2 DFID improves its transparency and
accountability to civil society by regularly communicating to
CSOs (both Latin American and British) its progress in helping
to strengthen the focus of the World Bank and the IDB on poverty,
inequality and inclusion in Latin America.
6.5.3 DFID disseminates more public information
on its website about the nature and activities of DFID-supported
Trust Funds in the IDB and World Bank, as such information is
only very partially available on either the IDB or World Bank
websites. At a Latin American country level, our study indicates
an almost total lack of awareness amongst the vast majority of
stakeholders interviewed as to the existence of these Trust Funds,
let alone the activities being funded through them.
61 On page 10 of the RAP, DFID states Our regional
programme will have three objectives, with the greatest effort
given to the first objective. That objective is stated as
Help the IDB and World Bank better enable poor people to
shape, participate in and benefit from ; (a) access to markets
and international trade (b) accountable and responsive public
sector management, and political systems. (Emphasis added). Back
62
See the 2007 IFC and World Resources Institute (WRI) report: The
Next 4 Billion: Market Size and Business Strategy at the Base
of the Pyramid. Back
63
See for example Aneel Karnani (2006) Fortune at the Bottom
of the Pyramid: A Mirage. University of Michigan Ross School of
Business Working Paper Series Working Paper No 1035. Back
64
Paragraph 13 of an informal paper distributed to UK NGOs this
year Governance and Transparency-some thoughts!. Back
65
It is only through CARE´s ongoing support to work on the
health sector in Peru, through the PPA funded Health Rights program,
that some of this work has continued to any significant degree.
Alliances Against Poverty is available on the DFID website
http://www.dfid.gov.uk/news/files/success-stories/south-america/peru-experience.asp Back
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