Is the World Bank's Inspection Panel due for a rethink?

WASHINGTON —  As the World Bank embarks on an ambitious “maximizing finance for development” strategy that involves an increasing role for the private sector, its board is reviewing its complaints mechanisms in a bid to more effectively promote accountability for the communities in which it works.

This year’s World Bank Annual Meetings are full of talk about how the giant multilateral can transform “billions to trillions” and “cascade” private sector funding into development projects.  This ultimately means using World Bank funding in new and clever ways to entice private and institutional investors into supporting schemes that have development impact — namely large infrastructure — and also target fragile and conflict-afflicted countries.

This has caused alarm among some civil society groups who fear greater private sector involvement will weaken environmental and social standards within projects and that local communities may suffer. Similarly, going deeper into fragile countries will also create more risks, they say, due to poor or nonexistent regulatory and governance capacity.

In a move that may help allay fears, the World Bank’s board of executive directors has initiated a review of the Inspection Panel — the independent complaints mechanism for people and communities adversely affected by bank-funded projects. Due to be completed by next spring, the review is designed to “ascertain the boundaries of the Inspection Panel,” identify potential “accountability gaps,” and also address specific questions around the panel’s mandate, eligibility criteria, and other issues, according to Otaviano Canuto, an executive director at the bank and chair of the Committee on Development Effectiveness, which is leading the review process.

It is important to reassess the panel at this time, Canuto said, since the bank’s new strategy of maximizing finance for development “will bring new challenges and will demand an adaptation and update of the accountability systems of operation of the World Bank,” he said. As a result, the board needs to ensure “that accountability gaps do not exist” within the panel.

“The time has come for us to take stock of the Inspection Panel’s toolkit and ask: does what it has today fit with these new functions?” he added.

Infrastructure fears

The international development community agrees that huge additional finance is needed in sustainable infrastructure — especially in water and sanitation, energy, transport, and information and communications technology — in order to reach the Sustainable Development Goals by 2030. The United Nations estimates $90 trillion is needed over the next 15 years. Sub-Saharan Africa alone needs more than $90 billion per year in infrastructure investment, but currently only receives around $42 billion, according to the bank.

However, infrastructure projects are the source of the majority of complaints received by the Inspection Panel and also the Compliance Advisor Ombudsman (CAO), which handles complaints for projects funded by the International Finance Corporation and the Multilateral Investment Guarantee Agency (MIGA).

The United Nations High Commissioner for Human Rights Zeid Ra’ad Al Hussein has written about this fact, which he puts down to private sector actors doing the projects. “In the macho world of mega-infrastructure, success is measured by size and speed, breeding the denial of human rights rather than due diligence.”  

One of Al Hussein’s suggestions is that development finance institutions put in place independent, easily accessible, and effective grievance mechanisms to ensure accountability and remedy for communities whose rights are violated by these projects.

Taking stock

Canuto agrees that the bank needs a strong accountability mechanism. He said the review of the Inspection Panel will help ascertain the strengths and limitations of the existing model and could result in its purview being extended. However, he was also realistic about what the panel can be expected to achieve.

“On the one hand, it’s always great to have an organ like the Inspection Panel as an entity … [which] functions as an echoing, investigative tool with respect to complaints,” he said, while acknowledging that “it would be naive and unfeasible to imagine it could become the marshal for everything that moves in the development world,” he said.

Blind spots and gaps

One of the key areas of investigation during the review will be what Canuto described as

“blind spots and gaps of definition” within the existing panel. For example, he said there is a need to clarify the time limit after which a complaint can be lodged for certain types of project. He also said there may be “accountability gaps” in relation to bank-administered trust funds.

The Inspection Panel’s role in monitoring the implementation of action plans also needs to be explored, Canuto said. Under the current system, the panel has powers to investigate bank-funded projects after receiving an eligible complaint from a community. Panel members go on fact-finding visits to project sites in order to ascertain whether the bank has followed its own operational policies and procedures, and whether harm was caused to the environment or communities affected by the project. The panel then reports its findings to the bank’s board of executive directors. Bank management is also required to respond to the findings and draw up an action plan for how they will respond.

Since it was launched in 1993, the panel has received 120 requests for inspection, of which 34 have been investigated.

The review will provide guidance on whether or not panel members should play a role in monitoring and evaluating whether bank staff are in fact implementing the management plan, which some say would create conflicts of interests.

Dispute resolution

Another issue under review will be whether the Inspection Panel should have its own dispute resolution function, Canuto said. The CAO makes good use of this function, he said, and other complaints mechanisms in other development finance institutions also offer mediation services, and so the consultation will consider whether it should be added to the Inspection Panel’s toolkit.

These, along with other issues, will be analyzed and discussed in a report that will be presented to the Committee on Development Effectiveness next spring, Canuto said, and any reforms will then be decided by the board.

Devex reporters Michael Igoe and Sophie Edwards will be on the ground at the World Bank annual meetings. Sign up for our daily morning briefings and follow us on Facebook and Twitter for everything you need to know from the annual meetings.