Editor's Note: As an institution charged with fighting global poverty, the World Bank has found itself on the firing line of late. Critics cite a persistent lack of transparency and failure to include local insights in decision-making that affects the poor directly, among other grievances. But supporters note a number of reforms over the past two decades, including a current review of the Bank's information disclosure policy, and a series of "safeguards" on sensitive issues such as environmental impacts and effects on indigenous peoples.
What are the main challenges to the Bank's accountability and effectiveness today? What should it do about them?
With a detailed description of the Bank's challenges of democratic accountability, its constraints, and recommendations for the future, HBS professor Alnoor Ebrahim testified before the Committee on Financial Services of the U.S. House of Representatives on September 10, 2009.
"The challenges of accountability at the level of board governance are the most daunting because the very foundations of governance—vote allocation proportionate to economy, representation by finance ministries, absence of parliamentary scrutiny, and the relative voicelessness of the poorest and most affected actors—are at odds with fundamental premises of democratic decision-making and accountability," Ebrahim told the committee.
As author of NGOs and Organizational Change: Discourse, Reporting, and Learning (Cambridge University Press, 2003), co-editor of Global Accountabilities: Participation, Pluralism and Public Ethics (Cambridge University Press, 2007), and a recent op-ed in the Financial Times, "The World Bank Must Fix its Business Model," Ebrahim has focused his research and teaching on the challenges of accountability, performance, and organizational learning facing nonprofit and civil society organizations. With Steve Herz, he wrote the HBS working paper "Accountability in Complex Organizations: World Bank Responses to Civil Society" [PDF].
An abridged version of Ebrahim's testimony follows. (The entire testimony is available as a PDF).
Chairman Frank, Ranking Member Bachus, and members of the Committee: Thank you for inviting me to testify before you. My name is Alnoor Ebrahim, and I am an Associate Professor at Harvard Business School and a Principal of the Hauser Center For Nonprofit Organizations at Harvard University. I have worked as a consultant to the World Bank as well as to a number of international non-governmental organizations.
My testimony focuses on reform and accountability efforts undertaken at the World Bank over the past fifteen years, particularly those in which civil society organizations have played a significant role. It is based on research that involved interviews at various levels in the World Bank including mid-level managers, vice-presidents, and members of its executive board, as well as interviews with global civil society organizations (CSOs) that have engaged the institution on issues of accountability and reform.
The World Bank is one of the most visible institutions of global governance and, compared to others—such as the International Monetary Fund, the World Trade Organization, various United Nations agencies, and other multilateral development banks, to name just a few—one of the most frequently targeted by civil society organizations. In comparison to its peer institutions, the World Bank has been relatively responsive to calls for greater accountability.
This report examines accountability mechanisms at three basic levels in the institution: (1) project, (2) policy, and (3) board governance. There have been numerous improvements in accountability at the project and policy levels since the early 1990s, particularly through the establishment and enforcement of social and environmental safeguards and complaint and response mechanisms. But there remain major shortfalls. In addition, there has been very little change in staff incentives for better accountability to project-affected communities, or in improving board accountability through greater transparency in decision making, more representative vote allocation, or better parliamentary scrutiny.
Before elaborating, I would like to emphasize one key point that is easy to lose sight of in discussions about accountability and reform, and which runs through the analysis: the World Bank is a public institution with the mission of fighting global poverty. Hence, the legitimacy of any reform efforts relies on strengthening and enforcing this public purpose.
In this spirit, there are four main recommendations that emerge from the research, which are developed further in the final section of this testimony. For the World Bank to enhance democratic participatory processes that can achieve successful development outcomes, it should:
- Establish mandatory minimum standards for public participation, supported by improved staff incentives and performance appraisals.
- Systematically incorporate public participation in decision-making at each stage of its project/policy cycles.
- Improve the transparency of its governance and operations, particularly for project-affected people.
- Expand and protect political space for democratic and participatory decision-making in national political processes.
A number of notable successes have been achieved over the past fifteen years in improving the accountability of the World Bank to those who are affected by its operations. Improvements have mostly occurred at the project and policy levels, where sustained pressure from civil society and some governments has been instrumental in the establishment of social and environmental safeguards, greater transparency and consultation requirements, and the creation of the Inspection Panel for purposes of evaluation and redress.
Taken as a whole, however, these successes have been decidedly limited. In particular, persistent problems in the timing, scope, content, and quality of consultation processes have often limited their capacity to deliver public accountability. Many of these shortcomings can be attributed to the Bank's inability or unwillingness to fully integrate accountability to affected peoples into incentive structures for staff. In addition, there has been little improvement in terms of the accountability of the World Bank Board to affected citizens. These shortfalls of democratic accountability may be the most difficult to address because of their deep roots in power relations of the global political economy. Yet, reforms of Bank governance are among the most crucial for its legitimacy and effectiveness. The Bank's sister institution, the International Monetary Fund, is currently in the midst of an uncomfortable debate on governance reform, galvanized by a number of high-level internal reports including one from the IMF's own evaluation office, and another from a panel of eminent persons (IMF 2008; 2009). A new report from civil society organizations around the world was delivered to the IMF's managing director in the first week of September, 2009 (Lombardi, 2009).
Long-term governance reforms are central to the Bank's legitimacy as a global public institution. At the same time, there are numerous shorter-term actions the World Bank can take to greatly improve its accountability to the poor. Four key recommendations are provided here, with a more comprehensive set available in Herz and Ebrahim (2005):
1. Establish mandatory minimum standards for public participation, supported by improved staff incentives and performance appraisals. There is an overriding contradiction at the center of the Bank's approach to public participation. On the one hand, Bank literature and policy statements are replete with testimonials to the importance of participation and empowerment to achieving good development outcomes. However, on the other hand, the Bank has no required procedures for developing policy, and no clear minimum standards for soliciting or incorporating public inputs in its lending operations. As a result, public participation is usually ad hoc and discretionary, and the Bank generally only formalizes or requires it when forced to do so under external pressure. The Bank should develop two sets of mandatory process-based participation standards.
- A fixed administrative procedure for developing and revising Bank operational policies and strategies (i.e., policy level participation)
- A set of minimum requirements for public involvement in different types of lending operations (i.e., project level participation)
The participation policies/standards should include, for example:
- A predictable basis for including all parties that have a right or an interest at stake in the decision, or who may bear risks; and for establishing the range of issues under consideration. This includes identifying the specific interests and accessibility needs of various stakeholders, especially marginalized groups, and planning the outreach necessary for their inclusion;
- A process or set of ground rules for determining how decisions will move forward;
- Adequate notice and comment periods;
- A basis for building the capacities of less powerful participants;
- Procedures for public reporting and evaluation that might include: a list of stakeholders involved and how they were identified; details of the participatory process and schedule; discussion of main issues raised and how the process addressed them; an annex prepared by representatives of civil society on their views of the process and how those views have been addressed;
- Participatory procedures for background research and analysis, including for assessing and distributing costs, benefits, and risks from the proposed policy or project in a just and equitable way and
- Accountability mechanisms, including penalties or sanctions for failure to comply with the standards, coupled with guarantees of access to dispute resolution or other appeals mechanisms.
In order for a policy on public participation to have teeth, it must also be tied to the performance reviews of staff. The Bank is filled with dedicated and motivated professionals, but few have the incentives to engage project-affected communities under the current lending pressures. To ensure that best practice becomes routine practice, the Bank should revise its internal incentives for staff to improve participation through increased budgetary support, time allowances, capacity building, and performance appraisals that reward quality participation. Staff performance appraisals that reward public participation will make the Bank more effective at fighting poverty.
Many bank staff object that such standards (particularly the second set) would be unworkable in practice, and could only result in "tick the box" requirements that would not enhance the quality of participation. Performance-based standards could indeed be unnecessarily restrictive if they were to specify strict and uniform outputs without regard to country context (e.g., number and diversity of participants, length of engagement). A workable option would be process-based standards that require a commitment to continuous improvement through mechanisms of transparent review, stakeholder involvement, and organizational learning, but do not set rigid output requirements. There is a wealth of Bank literature on how to implement high-quality, participatory decision-making throughout the Bank's operations, and many Bank staff, at their own discretion, strive to follow best practice. As a result, there is an ample basis for crafting effective participation policies within the parameters of existing Bank practice.
2. Systematically incorporate public participation in decision-making at each stage of its project/policy cycles. The Bank's existing project/policy cycle provides a structure for improving participation in Bank operations. Many of the constraints noted above can be addressed as follows:
- All stages of the project/policy cycle should be transparent and enable access to information for public deliberation before key decisions are made;
- The capacity constraints of citizens and CSOs should be identified, so that efforts can be made to improve capacities and accessibility at all stages of decision-making (including, for example, considerations of language, timing, location, negotiation skills, etc.). This is particularly important for politically marginalized groups such as women, rural populations, and indigenous peoples;
- The Bank should provide adequate budgetary resources for participation and capacity building through all stages of decision-making. Where direct capacity building by the Bank risks cooptation, resources should be made available to third parties for building the capacities of participants;
- The Issue Framing and Agenda Setting stage should be preceded by a comprehensive stakeholder analysis, and prioritization based on a rights-and-risks approach, with special attention to marginalized groups;
- The Identification and Preparation and Appraisal stages should be based on participatory identification of options and risks, comprehensive and public analyses of alternatives (including no-project options), assessment of distributional impacts and trade-offs, and openness to public scrutiny and challenge;
- The Negotiation and Approval stage should involve public disclosure not only of board minutes and voting records, but also materials that can help citizens understand board decisions, such as board committee minutes and reports, meeting summaries, and draft documents used for deliberation. The Bank should also encourage debate on the project or policy reform in national legislatures prior to board discussion;
- The Implementation, Supervision, and Completion stage should use participatory monitoring and evaluation and
- The Evaluation, Adaptation, and Learning stage should involve participatory design and implementation, should include benchmarks for determining whether engagements are meaningful, and should feed into a centralized system for informing future operations.
3. Improve the transparency of governance and operations, particularly for project-affected people. Transparency is, in many ways, the basis for participatory decision-making. Transparency enables people to participate meaningfully in public decision-making by providing them with the information they need to understand, evaluate, and influence the actions of decision-makers. Some basic criteria, from international best practices, for assessing the Bank's current review of its information disclosure policy include the following:
- A guiding principle of maximum disclosure, in which all information is subject to disclosure unless there is an overriding public interest in keeping it secret;
- Broad definitions of the scope of information subject to disclosure;
- An obligation to publish proactively key documents and categories of information, even in the absence of a specific request;
- Clear, accessible mechanisms for the public to exercise of the right to information, including an independent mechanism through which denials of information requests can be appealed;
- Specific and narrow exceptions to the presumption of disclosure that can be overridden by a determination that disclosure will not cause substantial harm, or that the public interests would be served by release;
- Practical steps to promote greater access to information.
Meeting such best practices would require the World Bank to:
- Improve the transparency of its own governance structure and decision-making;
- Expand the range of draft and final documents, as well as other key decision documents, that are required to be disclosed proactively;
- Specify strict timelines for the disclosure of information, and in a timeframe that enables public deliberation before key decisions are made;
- Require that any refusals be justified by a written, substantive explanation of the reasons for the denial;
- Establish an independent appeals mechanism to review denials of requests for information;
- Subject all exceptions to disclosure to substantial harm and public interest tests;
- Limit the discretion of borrowers to determine whether a document should be released.
Many of these issues, and others, are addressed in the model policy on information disclosure proposed by the Global Transparency Initiative (2009).
4. Expand and protect political space for democratic and participatory decision-making in national political processes. The potential for democratic, participatory decision-making processes is much higher at the national and sub-national levels than in global public institutions, such as the World Bank. As a result, while it is essential for the Bank to increase participation in its own governance and operations, it is equally important for it to respect and support local democratic institutions and processes. This implies:
- Promoting better oversight by national parliaments, who frequently have little information on what the Bank is doing in their countries. The World Bank's founding articles of agreement prohibit it from involvement in the political affairs of a state. But that doesn't mean it can't promote better parliamentary oversight. One option may be for the Bank's executive board refrain from approving key documents and projects (such as Poverty Reduction Strategies) until they have been reviewed by the relevant national parliaments.
- In countries in which democratic spaces are limited, the Bank should facilitate the use of more inclusive and democratic domestic decision-making processes. While the Bank is (and should be) constrained in the extent to which it can involve itself in domestic politics, there are a number of avenues for it to expand political space for affected people by: (a) minimizing conflicts between Bank operations and domestic democratic processes; (b) working with parliamentarians and a broad range of public agencies, and encouraging parliamentary review of loans (see above); (c) identifying opportunities for expanding political space by, at a minimum, providing an assurance that decision-making will be transparent and participatory, particularly for those that are marginalized in the domestic political process and (d) assessing the political risks faced by those who participate in its consultation processes, and taking steps to ensure that they will not be punished as a consequence.
The future holds numerous challenges and opportunities for citizens and civil society associations in enhancing the accountability of the World Bank, particularly to people who are most affected by its interventions. Potentially the greatest advances could be achieved by enhancing public participation across the project cycle and increasing staff performance incentives for greater citizen engagement. It is crucial to better understand the incentive and promotion structures for staff and then seek closer alignment of those arrangements with greater participation of affected people in project cycles and policy reviews.
It is equally crucial to explore new modes of governance, not only at the board level but also at the level of national parliaments. Some civil society actors are already usefully working with parliamentarians both to oversee the institution and to become more attentive to how Bank projects affect their citizens. The World Bank is, after all, an intergovernmental organization, and reform of the institution will be limited unless the member governments are made sufficiently responsive to their own citizens and civil societies.