Tuesday, May 11, 2010

World Bank ... what David Shaman has to say!

Dear Colleagues

A lot of people write about the performance of the World Bank in not very complimentary ways ... and David Shaman has now joined in with a blog called "The World Bank Unveiled" at: http://theworldbankunveiled.wordpress.com/

He should know something of what he talks about ... he was on the staff of the World Bank for some 12 years. But there is something that people should find a little bothersome ... there are a whole lot of former World Bank staff who are quite eloquent about the shortcoming of the World Bank after they have left the World Bank's employ, but nothing seems to get said by the staff while they are still working with the Bank.

I did my first consulting assignment with the World Bank in 1978 and I learned something of the internal culture of the Bank on that first assignment ... notably that internal dissent about how things get done and what should be changed is not tolerated! I don't think this has changed much!

David Shaman wrote
In 2002, the richest countries of the world pledged to devote 0.7% of their GDP to aid poor countries with development and poverty reduction. But by 2008, their aid levels amounted to only 0.28% collectively. Aid from the U.S. was only 0.16%. In part, this reflected a priority to fund the war on terrorism more than the war on global poverty, though some in the development field suggest poverty is a key driver of terrorism. It also represented a failure by the World Bank to effectively lobby those rich countries to live up to their pledges.

I believe there were three basic reasons why the Bank was not an effective advocate during the 2000s:
  • Significant research has suggested Bank lending has not been fully effective. If donor countries are skeptical about the Bank’s lending effectiveness, it undermines appeals by the institution to donors for more aid.
  • Borrower countries find the Bank’s lending “conditions” stringent, draconian and often creating unnecessary hardships on their populations. As a result, borrowers have increasingly shied away from the Bank and turned to private capital financing for their development needs.
  • Shareholders - donor and borrower members - and stakeholders such as NGOs, community-based organizations and private citizens accuse the Bank of having a culture of secrecy, an aversion to transparency and a lack of accountability. As a result, they hesitate to trust the Bank.
In April 2009, the G-20 met in London and pledged to infuse $1.1 trillion in capital to the Fund and Bank. Nevertheless, the concerns noted above have not been addressed and questions remain as to whether the Bank will be any more effective in using the aid provided from the G-20 or future aid than it had before the global economic downturn.

This is the second of a series of blogs on the World Bank and transparency, accountability and reform issues. I invite you to share your own opinions with a wide community of international development practitioners and interested readers. To read further, please visit The World Bank Unveiled blog at: http://theworldbankunveiled.wordpress.com/


David Shaman

David Shaman worked at the World Bank for 12 years. He was the architect and manager of B-SPAN, the World Bank’s webcasting station for development. He is the author of The World Bank Unveiled: Inside the Revolutionary Struggle for Transparency. For information about the book, please visit www.worldbankunveiled.com.
Phrases like "Significant research has suggested Bank lending has not been fully effective" is Bank speak for Bank lending has been a disaster ... something that should have been obvious to anyone engaged in management oversight of Bank projects at any time over the past 30 plus years. I did my share of supervision missions over the years, and it was amazing how so much could go so wrong with Bank projects.

I am, of course, a professional accountant by training ... and this gave me an unfair advantage. For some reason nearly everyone associated with money and World Bank projects were not accountants ... and not surprisingly a lot of money disappeared and without any accounting of any substance, the money could not be traced. But it was worse ... so many of the projects were designed in ways that would never work even if nothing went wrong. Simply put ... the World Bank is a huge bureaucracy ... staffed by people with impressive intellects and education, and diverse cultural backgrounds ... and hardly anyone in the mix who has ever actually had experience where it is was critical to do things right to "make payroll"!

Dambisa Moyo in her book "Dead Aid" alerts the reader to the disastrous results of 60 years of lending into Africa ... a trillion dollars and nothing to show for it. The World Bank is part of the problem ... but not the only part. There was good reason for the Breton Wood initiative after World War II ... but the World Bank has been off-track and pushing in the wrong direction, it seems to me, for a very long time.

Obviously the Community Analytics (CA) initiative is a very different approach from anything the World Bank has embraced. Being different from the World Bank does not make something right ... but it is a start!

Peter Burgess

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