NGOs warns Bank on private sector focus

The World Bank’s commitment to halve extreme poverty by 2020 has been welcomed by leading non-government organizations, although one of the most influential charities gave a lukewarm reception to the bank’s focus on the private sector.

Winnie Byanyima, the executive director of Oxfam International, said she had reservations about how the Bank intended to achieve the objective, given its focus on mobilizing and enabling the private sector.

Byanyima said Oxfam acknowledged the broader role of corporate actors in development, but said that she remained unconvinced that the private sector could deliver basic services to those in extreme poverty.

“We are absolutely sure that the private sector has not proved anywhere that it is able to reach the poorest people, especially in the areas of healthcare delivery and education,” Byanyima said.

“These people who are hard to reach are not people who can be served by a profit-seeking organization. Tell me which private sector can serve a town where people still move on donkeys? That’s how bad it is in conflict countries.”

The NGO itself works with the private sector, including in developing micro-insurance projects to mitigate the effects of drought on smallholder farmers. “We are not driven ideologically. We work with corporates to develop solutions... but we know from our evidence that we have gathered, that there’s a limit,” she said.

There are other mechanisms for raising resources, including innovative taxation models, targeting tax havens and illicit financial flows, she said. “The thinking here for us is that there is a role for the private sector, but that it’s become such a buzzword, it seems as if we are giving a pass to governments because of the recession, and not thinking seriously about how to raise the necessary resources to fight poverty.”

Byanyima said the Bank also needed to sharpen its focus on improving the quality of the private sector’s interactions with developing countries.

“Unless governments in very poor countries are supported to establish the regulatory frameworks and citizens are empowered to take advantage of those regulatory frameworks, the private sector will do what it always does — seek profit at the expense of the weak and the vulnerable,” she said.

Sargon Nissan, at the Bretton Woods Project, a monitoring association of NGOs, agreed, saying: “Most worrying, given the Bank’s chequered record of private sector engagement, is the lack of clarity over how it will ensure development outcomes are achieved and not compromised by public subsidy for private profit, with little benefit for those it should be supporting.”

Other NGOs have also taken aim at the narrow focus on poverty. ActionAid’s Sameer Dossani said that by focusing on the definition of poverty at $1.25 per day, “whatever target [the Bank] sets will be unambitious”.

“In countries like India, people’s income is slowly increasing but other indicators – such as those related to nutrition – remain flat,” she said. “At the same time the income of the richest 1% is skyrocketing, creating an ever bigger divide between rich and poor. If the World Bank [is] serious about ending poverty it needs to prioritize ending inequality through fair tax policies, increased spending on health care and education, and the creation of more and better jobs.”