Bright Simons: Is the World Bank saving or harming Ghana?

A point made with refreshing clarity by the World Bank’s President: “No amount of creative financial engineering will compensate for the fact that we just need more funding.” 

There is always much talk and jargon about “reform” of the “global development finance architecture” but it all boils down to convincing richer folks in the “Global North” to release more cash to relatively poorer folks in the “Global South”.

That convincing has had many ups and downs.

Whilst the World Bank has celebrated the replenishment of its grants and soft loans pot, the IDA, in 2021 as the biggest ever in history, and is looking forward to an even bigger inflow for the next replenishment cycle (which will be known as IDA21), development activists at the global level point to the massive gap between the $5 billion more per year the Bank committed to spend recently and the trillions of dollars experts say are needed to align needs in the developing world with the climate and resilience agenda ($4 trillion, says the UN).

For those of us whose activism mostly focuses on the country level, though, we sense a major gap in the global discourse: when the likes of the World Bank get more money, that doesn’t necessarily translate to bigger and better investments in developing countries.

Attempts to clear up the pipe and speed up “disbursements” of the money, on the other hand, can lead to a deterioration in the quality of development projects and compromise the impact on people’s lives.

To examine this idea carefully in Ghana, the prime focus of my policy activism, I have been painstakingly probing the outcomes of the World Bank’s investments there over the last two decades for a paper that has just been published by Paris-based Finance for Development Lab (FDL). 

I conclude that the results presented by the World Bank’s reports on these investments substantially deviate from the reality on the ground about 70% of the time.

This analysis excludes certain investments made through the IFC, the World Bank’s private sector arm, or the guarantees issued by the World Bank’s MIGA, even though there are other reasons to be concerned about the IFC’s growing penchant for prioritizing malls and luxurious apartment complexes over social enterprises. 

The “Disbursement” Bogey

In the early 2010s, the World Bank was struggling to disburse the funds it had allocated/committed to Ghana.

Today, the global Bank’s ~$4 billion Ghana portfolio has an average disbursement rate higher than 48%.

I have selected a few case studies discussed in the FDL paper mentioned above based on their stellar ratings by World Bank staff.

In GEDAP assessments, the World Bank touts progress in lowering ECG’s commercial losses and assures evaluators that progress on improving bill collections, especially for power consumed by government entities, is imminent.

An enhanced effort, the Energy Sector Recovery Program, launched in 2019, with an even higher focus on persistent ECG arrears accumulation and value chain debt.

Yet, 90%+ of the 25 startups listed as evidence of the success of the innovation program had ceased to operate within 3 years.

The same World Bank assessments used the growing presence of companies like QAI, Teletech, Comviva, Tech Mahindra, and ACS, to back claims that the BPO strategy had been wildly successful.

A few years later, the idea of decentralising the program to all provincial capitals was shelved and with that the concept of using them as e-government enablement platforms.

The World Bank and other development agencies ought to take a leaf from this playbook and invest in grassroots “community rating agencies” that can provide not just information, as classical rating agencies do, but also the necessary political pressure to right wrongs in project execution proactively, or even preemptively.

And for added bonus, such a model may even escape the neocolonialist baggage often associated with World Bank – IMF “conditionality”.