The Urgency of World Bank Reform on the Good Governance Stage

Published first on 13 September 2012 by the Bank Information Center
© 2012 Bank Information Center

Over the last decade the World Bank has taken a bold lead among international development institutions in championing the anti-corruption cause. The rhetoric of World Bank leaders, starting with President James Wolfensohn in the late 1990s, in support of good governance has been at a high level – in tone, in consistency and in substance. No doubt, President Jim Yong Kim will continue along this course, perhaps making it an important part of his address to a World Bank annual meeting, which convenes in Tokyo next month.

But, there is something of an “Alice in Wonderland” quality to the idea that an international aid agency can provide money to a corrupt foreign government for the express purpose of reducing corruption and then expect the objective to be attained. Corrupt governments have zero incentive to reform their ways when provided with huge amounts of foreign cash. More likely, they will just steal the cash.

The fundamental flaw in the anti-corruption approaches of the major multilateral development banks that deal with the poorest countries — the World Bank, the Asian Development Bank, the Inter-American Development Bank, and the African Development Bank—is that they can only lend or make grants to governments or to wholly controlled governmental entities.

Many World Bank staff are dedicated to the Bank’s mission, and earnestly strive to design projects and programs that circumvent corruption. But this is especially difficult in the governance area where specific government agencies, under the close supervision of powerful central government politicians, are in greatest need of being cleaned up.

The intensely close relationship between the development banks and their client governments, who are represented on the boards of directors of these banks, greatly complicates the ability of these institutions to be on-the-ground anti-corruption leaders. This is a tragedy because it means that vital resources are not helping the world’s poor to the degree that they should be helped.

As I argue in my new book, Waging War on Corruption – Inside the Movement Fighting the Abuse of Power, this is an area where a dramatic and substantive rise in cooperation and partnership between the multilateral aid agencies and civil society is essential. This alone is the path to making the good governance programs of the aid agencies meet meaningful objectives.

I served as one of the World Bank’s external relations chiefs in the 1980s when the institution faced massive and eventually successful civil society-driven environmental campaigns. The Bank then – and I believe to a degree still today – did not adequately understand or trust civil society. While Bank presidents routinely meet with civil society leaders, its resident representatives and project officers do not have the kinds of day-to-day in-country relationships with civil society that are essential for building trust. This needs to change.

I have heard too many informal reports from friends across the Transparency International network about concerns with the World Bank and other agencies to know that the Bank urgently needs to redouble its efforts to become a real and trusting partner of civil society. Why is this so important?

Because in one country after another, civil society is enjoying mounting success in building mass public campaigns that seek to speak truth to power. Through social media, the publics in many countries are taking to the streets and town squares to protest illegitimate governments. The internet is daily reporting on abuse of office by powerful public sector officials and the bribe-payers and the bribe-takers, as a result, have ever fewer places to hide. Rightly or wrongly, the widespread perception in many countries is that the World Bank is on the side of the elite, close to powerful politicians and, quite simply, on the wrong side of history.

The Bank and all aid agencies need to be seen as standing with the ordinary people of aid recipient countries – the people that these agencies were created to serve.

To build credibility and, crucially, to ensure that aid funds are well spent, the World Bank should lead the way with a major program in every country in which it lends that sees civil society monitor project implementation and independently validate the disbursement of funds. Sub-contracting of aid cash by recipient governments should be subject to integrity pacts that have independent monitoring as their prime component.

A small pilot program involving the Partnership for Transparency Fund in Asia is deploying civil society to independently monitor some World Bank programs. This could well be a vital test of an important model. I believe that this kind of monitoring is necessary, but we need full-scale monitoring of projects as the cash goes into countries and not only after it has been spent.

It will not be easy for the Bank to gain the trust of civil society in many countries, or to convince recipient governments that all contracting has to be subject to independent monitoring. But at stake is not only the effectiveness of the World Bank’s good governance programs, but its very reputation and that of its new leader. The challenge to President Kim is to recognize that in this world of the 24/7 news cycle, hyper-internet-connectivity and massive information flows to almost all citizens in almost all countries, the Bank must be seen as serving the people at large. To do so it must change its ways – civil society can assist it.