World Bank President Ajay Banga has apologized for the harm experienced by children sexually abused at schools in Kenya supported by the bank’s private-sector arm.
In this edition, we analyze what the bank said and didn’t say last week — and take you through what could happen next.
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The first public acknowledgment of wrongdoing in the case seemed too little too late to some, and it comes after the media spotlight made the issue into one of the first big tests of Banga’s leadership.
Let’s take a step back: At the heart of the issue is the International Finance Corporation’s investments in Bridge International Academies, a for-profit chain of schools, where reports of sexual abuse emerged in 2020. An investigation by the bank’s internal watchdog found IFC failed on multiple counts, including staff turning a blind eye to reports of abuse and even interfering in the investigation.
In an email to bank staff last week, Banga said that “protocols were not followed and children were hurt. Put simply, mistakes were made.” He apologized and said there would be an independent investigation. His email came a day after the board approved IFC’s “management action plan” for addressing the harms after months of delays. What’s not in that plan is any direct compensation for the children, a key point of contention among board members. It’s a precedent that IFC doesn’t want to set.
While the plan of action seems set, a number of questions remain.
Read: World Bank’s Banga apologizes to kids sexually abused at Bridge schools
What about IFC head Makhtar Diop?
IFC's managing director hasn’t apologized. Diop sent an email to staff last week that was seen by Devex in which he called the case “deeply troubling” and required immediate action, and that IFC has zero tolerance for abuse. He said IFC has strengthened its stakeholder grievance response mechanisms, has begun recruiting more subject matter experts, increasing training and assessing its portfolio for further risks. It will also update its Sustainability Framework to embed child protection measures.
But he never said sorry — and that has rubbed some observers the wrong way.
ICYMI: Civil society groups lambaste IFC over response to sex abuse allegations
Related: IFC slammed by its own watchdog for ignoring child sex abuse allegations
How has Bridge responded?
After months of relative silence, refusing to give interviews and barely offering statements, Bridge has weighed in with a statement saying it "applauds" IFC's effort to recognize the importance of child safeguarding. The organization also takes zero responsibility for the abuse. Instead it claims that since its founding in 2008 it “has maintained rigorous safeguarding policies and practices, prevention strategies, monitoring, robust reporting mechanisms, thorough investigation protocols and stringent accountability measures. This has resulted in schools that are significantly safer for children in their communities.”
The company points out that some 16% of girls in Kenya have experienced some form of sexual violence before reaching the age of 18, according to a 2019 Violence Against Children report, and that Kenya needs help to overcome “long held gender biases and tragic acceptance of sexual exploitation of women and girls.” Bridge schools reach some 750,000 students, and the number of children allegedly abused is more than 20, according to the investigation.
The for-profit school company does make a vague reference to supporting IFC's remedy efforts in Kenya: "Bridge accepts the IFC’s invitation to contribute to its initiative of increasing survivor support across Kenya." What form this contribution will take is unclear.
IFC exited its direct investment in Bridge in 2022, though it still has an investment in a fund that supports the company. In recent years, the company has continued to operate although its business model has shifted from primarily owning and operating its own schools to working with governments through often large-scale contracts to support public schools. It is unclear if other investors have made requirements of the company in the wake of these allegations and investigations.
Is financial remedy really off the table?
Much of the behind-the-scenes wrangling over IFC's action plan hinged on whether or not IFC should offer cash to the children abused while attending Bridge schools.
Some board members pushed hard for this (the United States, Germany, and Norway in particular, Devex is told), while others resisted, arguing it could set a dangerous and expensive "cash for claims" precedent (the United Kingdom and France were vocal on this, apparently). The final plan approved last week makes no mention of direct payments to survivors, only communal support services and possibly cash allowance to cover the costs of attending those services.
But the U.S. statement published the day after the plan was signed says: “We believe IFC should keep all remedy options on the table while the consultations proceed.” IFC has to come back with an update in six months — so compensation could be back on the table after all.
ICYMI: IFC under pressure to offer compensation to alleged Bridge victims
Why doesn’t IFC (or other DFIs) want to pay for harm?
This is more complex than the idea that people would file claims just to get cash. IFC has told me that there are concerns about greater legal risks, increased costs, and that it would reduce competitiveness. Another reason I’ve heard is that if IFC starts providing compensation for wrongdoing, it will disincentivize its clients and borrowers from enforcing best practices and addressing problems that arise because they think IFC will be on the hook for it.
Advocates have accused IFC of hiding behind concerns about the costs or commercial impacts, and they pointed to the fact that there is precedent in the commercial banking sector for paying for remediation. For example, the Australia and New Zealand Banking Group Limited invested in a sugar plantation and refinery in Cambodia that displaced thousands of people. After a dispute was raised and the bank was found to have failed to do appropriate due diligence, it reached an agreement with farmers to compensate them.
Jennifer “DJ” Nordquist, a former U.S. executive director at the World Bank, also noted on LinkedIn that the bank compensates people who must move for hydro projects. “There is a precedent for compensating harms. And rape and death is kind of a biggie,” she writes.
Background reading: IFC policy for when projects cause harm lambasted as ‘letdown’
What about the other investors?
While the World Bank Group and IFC have taken the brunt of the pressure — and news headlines — other investors in the deal, including big names in business and philanthropy have stayed out of the spotlight. Sure, the World Bank uses public monies, but don’t some of these investors share in the responsibility to address the harm? The World Bank has asked others to join them in addressing the issues.
Will Bill Gates, Pierre Omidyar, or the Chan Zuckerberg Initiative, all of which provided funding to the company at some point, participate?
Tune in
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Listen up
Hala Hanna, executive director of Solve, an initiative of the Massachusetts Institute of Technology; Najada Kumbuli, head of investments at the Visa Foundation; and Nazanin Ash, CEO of Welcome.US feature in the latest episode of our podcast series focusing on coverage of the South by Southwest conference in Austin, Texas. They share how their organizations leverage innovation, technology and investment to support solutions for the Sustainable Development Goals that won’t come from traditional models.
Listen: How 3 organizations are leveraging technology for a more equitable future
+ Keep up with our coverage of SXSW 2024.
What we’re reading
The presidents of Ghana, Kenya, and Zambia on how to make global finance work better in Africa. [The Economist]
Kristalina Georgieva wins backing to run for a second term as IMF chief. [The Guardian]
The U.N. nuclear watchdog head urges development banks to fund new projects. [Financial Times]
Wall Street pushes back on New York’s latest sovereign debt bill. [Bloomberg]
Sophie Edwards contributed to this edition of Devex Invested.
About the author
Adva Saldinger@AdvaSal
Adva Saldinger is a Senior Reporter at Devex where she covers development finance, as well as U.S. foreign aid policy. Adva explores the role the private sector and private capital play in development and authors the weekly Devex Invested newsletter bringing the latest news on the role of business and finance in addressing global challenges. A journalist with more than 10 years of experience, she has worked at several newspapers in the U.S. and lived in both Ghana and South Africa.
