Since experts, civil society organizations and advocates have been pushing for a move away from fossil fuel-based projects for decades, what confidence should we have that another set of such recommendations would have any more effect this time around?
On the one hand, one might say: not much. The 'pressure to lend' that has been in place since at least Robert McNamara's term as World Bank president has caused staff and board to measure job performance by the quantity of funding moved to the borrowers. This has meant that modest renewable energy and efficiency investments of appropriate scale are rarely viable in the race to place loans in amounts of hundreds of millions of dollars.27 In speeches, papers and personal communications, staff at all levels of the MDBs have long revealed a fixation with the need to lend money 'at the speed of business' and to become as efficient in making loans as the private sector in order to compete - to win a share of the loan business of developing countries. For example, new World Bank President Robert Zoellick's first public speech emphasized how the Bank 'would be simplifying the procedures and cutting interest rates... We aim to be faster, better and cheaper.'28 But they have it exactly wrong. Instead, this chapter argues:
• Where there is competition for making these loans, then the MDBs are not needed. Why should public money be provided where the private sector is active?
• Their role is to promote development and poverty reduction. That is not the primary purpose of the private-sector banks. They also operate in countries that are not yet attractive to foreign direct investment. So they are in a different business from the private sector institutions.
• The private banks want the imprimatur of the MDBs, the seal of approval - so in that sense the MDBs are still indispensable. But this will only be true if they really do help projects to succeed in human development and environmental terms.
• The only way for the MDBs to add real value to the private-sector business is to undertake thorough assessment of social and environmental impacts, to understand how to put development front and centre and to provide for social and human capital needs; this often takes attention and time.
So if they insist on giving up their main value added, the MDBs will be putting themselves out of business - especially since they are now required, as a result of public pressure, to assess social and environmental impacts before making decisions. Thus, they can never be the fastest out of the blocks. This fundamental misreading of their role may be beyond repair, and if so they will be slowly rendered irrelevant in a race with the private sector that they can't win. But if they focus on their role as public-sector funders, the following recommendations, which are neither original nor new, may yet be heeded.
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