Helping the Poor by Helping the Rich?

Most of the world's poorest people lack access to basic services such as clean water and electricity. The World Bank and the Group of 20 are now proposing a new strategy to scale up infrastructure investment in developing countries. They pay lip service to the needs of the poor, and promote subsidies for large private projects such as the proposed Inga Dam on the Congo River. A new report from Christian Aid demonstrates that a more promising approach to reducing poverty and protecting the climate is possible.

More than one billion people neither have access to clean water nor modern energy. The situation is particularly precarious in sub-Saharan Africa, where 70 percent of the population -- and a much higher percentage of rural people -- have no access to electricity. Over the past 50 years, centralized water and power projects have largely bypassed these population groups.

Over the past two months, the powerful Group of 20, the World Bank and other development banks have produced three reports on how to tackle the infrastructure needs of the poor. (Unlike in the past, they have not consulted civil society -- let alone poor people -- on this challenge. The G20 simply outsourced the task to a high-level panel of experts, primarily from the private sector.) The three reports all make similar suggestions:

The banks propose to focus support on big, complex projects such as large dams, transmission lines and transport networks that can modernize and transform whole regions. The World Bank, for example, announces that it will concentrate on "fewer, but more transformational projects." The Green Climate Fund plans to support transformational projects with billions of dollars, and the Bank clearly tries to position itself as a recipient of such support. Yet the new infrastructure strategies do not aim to transform the global economy into a low-carbon enterprise, but rather define "transformation" as increasing access to markets and accelerating growth.

The second pillar of the new strategy is to strengthen support for private infrastructure investments. The authors propose to expand the use of public guarantees for private investments, to make public funds "directly available to the private sector," and to soften the regulations that may discourage private enterprises from investing. The World Bank, for example, announces that it will "align" its own safeguard policies and work on "reforming labor and land regulation" in Africa. And even though the strategy papers acknowledge that 10-30 percent of project values are lost to corruption and mismanagement, they all propose to make procurement rules, which aim to cut down on corrupt practices, more flexible.

The new documents only pay lip service to poverty reduction, environmental protection, and climate change. The G20 report for example includes a list of six criteria, according to which development banks should prioritize future infrastructure projects. The criteria list factors such as regional integration and attractiveness for private investors, but don't mention poverty or the environment. As my colleague Doug Norlen at Pacific Environment has observed, the report contains 184 mentions of the word "private," but only seven references to "poor" or "poverty." If the new approach proposed by the World Bank and the G20 promotes transformation, it is the transformation of aid into corporate welfare.

One project that is used again and again to illustrate the new approach: the Inga Dam on the Congo River. This example is telling. Its first stage -- the Inga 1 and 2 dams -- have turned into an expensive white elephant that hardly provides any benefits to the poor. Even the rehabilitation that the World Bank is currently funding has turned into a bottomless pit of mismanagement. The future stages of the Inga scheme foresee the construction of hydropower dams with a capacity of 3,500 or even 40,000 megawatts. In a country where only six percent of the population have access to electricity, their outputs are primarily destined to serve the needs of mining companies and urban centers in far away places such as South Africa, the Middle East, and Europe.

The new World Bank report, astoundingly, claims that "large infrastructure projects have often been successful in making project affected people the beneficiaries of the project displacing them." Yet in the case of the Inga 1 and 2 dams, just like in many other such projects, the affected communities still fight to get compensated for their lands decades after their displacement.

Luckily, there is a better way. As the International Energy Agency found, 70 percent of rural areas in Africa are best served not by big, centralized projects, but by mini-grids or off-grid solutions. Africa has a huge potential of renewable energy sources such as wind, micro hydro, solar and geothermal power. This potential has so far been hardly tapped, and its exploitation is rapidly becoming cheaper.

Based on this potential, a new report by the British charity Christian Aid documents, Africa has "a big opportunity to leapfrog and transition to a low-carbon path and at the same time still expand access to energy services." The Green Climate Fund, Christian Aid argues, should include a "leapfrog fund" that can support access to clean energy and sustainable development at the same time. While the World Bank and the G20 propose a failed model of top-down development and corporate welfare, the Christian Aid report shows that technologies exist that can be scaled up, reduce energy poverty and protect the climate at the same time.