World Bank controversial Program-for-Results (PforR) proposal raises alarm bells

In March 2011, the World Bank launched a controversial proposal that would allow projects within so-called programmatic loans to borrower countries to go ahead without application of the Bank’s specific safeguard policies. Civil society organisations and indigenous peoples have raised major concerns about this initiative, which they fear in its current form would reduce the accountability of World Bank finance and could trigger a worldwide race to the bottom in social and environmental standards among multilateral and regional development banks. Despite recent written assurances from the Bank that information disclosure, risk assessment and safeguard approaches will not be weakened by PforR, critics point out that the existing PforR proposals do not contain adequate social and environmental protections and would allow countries to side-step safeguards and develop projects without adequate public scrutiny.

NGOs and indigenous peoples’ organisations, including FPP, are calling on the Bank to slow the whole process down and ensure that any PforR proposals are the subject of meaningful consultations and tied to the Bank’s wider safeguard policy review which will be ongoing in 2012.[1]

Despite this, the Bank seems to be determined to have the results-based lending instrument approved before the end of 2011. At the time of going to press, the PforR proposal is expected to come before the Board in December 2011.

Need for meaningful prior consultations

Civil society organisations and indigenous peoples are seriously concerned that the development of the new PforR lending instrument has not allowed sufficient feedback from citizens, indigenous peoples’ organisations and NGOs. Global consultations held so far on the PforR have mostly involved government agencies with only limited numbers of civil society participants. Where civil society organisations have been involved, they raised serious questions about safeguard and accountability issues, yet is unclear how the Bank will act on these concerns.

P4R must be assessed as part of the WB Safeguard Review

The World Bank is currently undertaking a further review of its safeguard systems that will comprehensively deal with eight different safeguard policies and with another additional Bank lending instruments, including OP4.00 on piloting the use of ‘country systems’. This latter instrument allows the Bank and borrower countries to use existing national laws and policies to provide social and environmental safeguards where they have been assessed as equivalent to the Bank’s standards. The problem is that the Bank has still not properly tested country systems and serious ambiguities remain over ways to determine and verify ‘equivalence’ between country and Bank norms and procedures.

NGOs emphasise that PforR should not be further developed until these basic questions are addressed. They emphasise that the entire PforR package needs to be carefully assessed as part of the current Bank review of it safeguard policies in order to make sure that the proposal takes on board lessons from past Bank evaluations and is subjected to thorough scrutiny by citizens, indigenous peoples and development specialists.

Need to maintain specific policies, including protections for indigenous peoples  

Indigenous organisations and social justice NGOs like FPP highlight that decades of development experience show how specific safeguard policies for indigenous peoples are essential for improving development effectiveness and ensuring accountability to affected communities. Focused and persistent indigenous peoples’ advocacy over the past three decades have brought the World Bank to the point where it accepts, and protects in its safeguard policies, the principle that indigenous peoples must demonstrate freely developed support for any development intervention that will impact on them and their lands and livelihoods. There is no answer to the questions of where such a principle will be left and how the right of indigenous peoples to free, prior and informed consent (FPIC) will be respected if PforR is approved as it is currently proposed. These questions again point to the need to subject PforR to careful examination under the wider Bank review of safeguards.[2]

Learning lessons from the past

Finally, whatever route the Bank takes to its safeguards and P4R it is essential that standards are not diluted and that public accountability to affected communities and citizens is strengthened. To achieve greater accountability and deliver effective sustainable development, the World Bank needs to ensure any reforms build on lesson learned in its past and existing operations. Two recent important reviews relevant to the Bank’s consideration about how safeguards should be applied in the future have recently been released: the Bank Group-wide evaluation conducted by the Independent Evaluation Group (IEG),released in 2010 (Safeguards and Sustainability Policies in a Changing World: An Independent Evaluation of World Bank Group Experience, 2010), and subsequently an internal and much-awaited review of the implementation of the World Bank’s OP4.10 on Indigenous Peoples released in August 2011 (OPCS Working Paper, Implementation of the World Bank’s Indigenous Peoples Policy: A Learning Review (FY 2006-2008), August 2011).

Both of these documents detail areas in which the implementation of the currently existing safeguard standards is struggling to meet the demands for which the safeguards were designed. Key weaknesses point to continuing pressures within the World Bank Group to get financing out of the door, evident in faulty risk classification of projects, particularly the under-classification of projects that should be Category A and defective treatment of Category B projects. PforR tries to exclude Category A, where risks are severe and potentially irreversible, although it continues to allow some Category A activities where they are considered integral to the rest of the program. PforR includes Category B where there is moderate risk identified. Given the reliance on the categories given to a particular project or activity in managing the risks, prior problems with this category process must be addressed, not only for PforR but in all Bank policies and lending instruments across the board. The Learning Review of the indigenous peoples’ policy likewise identifies significant problems with triggering the policy, determining levels of support for a given intervention and failures to adequately address land and resource rights in projects where such rights are impacted.

Strengthening the systems available in country to address social and environmental risks is a laudable goal, but in the near to medium term, and especially in key sensitive areas like the rights of indigenous peoples, PforR does not offer adequate assurances that the public funds disbursed through the Bank would be used to achieve sustained and equitable development in borrower countries. For these reasons, Forest Peoples Programme considers that any Bank decision on PforR policy must be delayed to allow the proposal to be developed to respond to existing concerns expressed by NGOs and by indigenous peoples.

[1] NGO sign on letter (2011) Comments on proposed OP 9.00: Program for Results Lending Letter signed by 21 NGOs, October 2011: http://www.forestpeoples.org/topics/safeguard-accountablility-issues/publication/2011/fpp-letter-uk-executive-director-world-bank

[2] See also the formal submission to the World Bank from indigenous peoples and support organizations, raising serious issues related to the on-going WB safeguard review and the proposed P4R lending instrument. Available at: http://www.forestpeoples.org/sites/fpp/files/publication/2011/10/indigenous-peoples-letter-2011-october.pdf