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With big cuts to US bilateral and multilateral assistance looming, the House Committee on Financial Services convened a hearing to investigate accountability and results at the World Bank. Scott Morris, CGD’s director of the US Development Policy initiative (DPI), was joined by the International Consortium of Investigative Journalists’ Sasha Chavkin, CalTech’s Jean Ensminger, and BIC’s Elana Berger. With the latter three witnesses focusing on project-level failures at the bank, you might have expected the hearing to be driven by finger pointing, but it was a generally thoughtful conversation with everyone on the panel agreeing that it is in the United States’ interest to continue engagement with the World Bank.
Senior Fellow, Director of the US Development Policy Initiative
The US is a leader in driving accountability: There was agreement that US leadership in driving accountability at the bank is critical. While Scott emphasized how the United States has effectively leveraged its leadership to shape policy in areas like anti-corruption reform, bank safeguards and procurement rules, and key aspects of program evaluation, the other witnesses spoke to specific examples of US leadership. After project-level failures in Uganda, Berger explained how US engagement played a critical role in leading the bank to produce a comprehensive outcomes document that extends to bank activities more broadly, and in pressing to remediate harms.
Balancing bank engagement with national security: The more “lively” aspects of the hearing surrounded members’ concerns on bank engagement with certain regimes or in more difficult environments, and the impact on US security. While witnesses acknowledged that striking this balance continues to be an underlying challenge for the bank, Morris argued that engagement in these environments is often important, particularly where the US has troops on the ground or if the US still has economic interest. There is often value in the bank being involved in these areas, especially if it allows the US to be influential from a distance. The US in some instances has also been good in pushing the bank to pull back in the face of clear problems of governance.
The bank remains a model of effectiveness…The Quality of Official Development Assistance (QuODA) received a shout-out from Congressman Denny Heck (D-WA), and various committee members acknowledged Scott’s comments that the bank is consistently ranked on this assessment and others as one of the most effective development institutions on cost efficiency, project outcomes, and policy influence. With respect to projects that failed to achieve intended outcomes, the bank’s strength in addressing these failures comes from its mandate to press for transparency, and in its ability to make connections between its projects and failings more effectively than other sources of financing.
…but a need for reform persists: Several bank projects still fall victim to fraud and corruption. Berger supported the need for social and environmental safeguard specialist to be involved throughout project cycles. Congressman Roger Williams (R-TX) cited remarks by CGD non-resident fellow Martin Ravallion at a previous hearing on the “pressure to lend” at the bank and its effect on development outcomes. The panel echoed this observation, but Scott also explained that the bank has taken significant steps in incorporating learning into project design, leading to a more outcomes oriented institution than in the past. He offered practical recommendations for how the bank can “do better” on achieving outcomes, including a greater reliance on results-based mechanisms like the Program for Results, randomized audits of bank projects, and adopting new technologies to improve project accountability and performance. He also urged the Committee to take an active role in oversight and continued US influence at the bank. Check it out below:
Missed the testimony? Watch the full hearing here and read Scott’s testimony.
Not only is the Trump administration supporting a $7.5 billion capital increase for the IBRD (and at that, one that is 50 percent larger than the capital increase supported by the Obama administration in 2010), it has also signed on to a policy framework for the new money that makes a good deal of sense.
Last year the World Bank adopted a new “cascade” approach that intended to maximise finance for development by prioritising private solutions wherever possible. In what world would this “cascade” algorithm make sense? Without a good answer to that question, the cascade risks looking like ideology rather than sound development finance advice.