News roundup – do DFIs engage with local communities?
Here is our monthly roundup of news and events on aid and development transparency:
DFIs weak on disclosure of ESG risks and transparency of community engagement
The transparency practices of development finance institutions (DFIs) rarely match up to their policies on the disclosure of environmental, social and governance (ESG) risks and accountability, according to research just released by our DFI Transparency Initiative. Our key findings include:
- DFIs do not systematically provide assurance that community disclosure has taken place for their projects.
- DFIs do not directly communicate to affected communities that options for recourse such as independent accountability mechanisms (IAMs) are available, and they do not require their clients to do this. In general, however, they do provide details of IAMs on their websites.
- Global disclosure of project information is mixed – there is greater transparency among multilateral development banks, and for projects categorised as high risk. Many bilateral DFIs do not disclose any meaningful environmental or social information at the project level.
You can watch our recent webinar, featuring a discussion of our findings and next steps, here.
Why does the transparency of ESG and community engagement matter to DFIs? – an interview with Peter Woicke
As part of our research into DFI transparency, We wanted to explore why more transparent and better risk management and accountability is in the best interest of DFIs themselves. Peter Woicke, former CEO of the International Finance Corporation (IFC) and former Managing Director of the World Bank, sat down with our CEO, Gary Forster, to discuss the issue.
“Put simply, it is in the DFIs own interests, as well as those of their investees, that ESG risks and community engagement are managed proficiently and transparently to protect their investments and the communities in which they take place.”
The right to access information: Transparency is a two-way process
In a guest blog, Fran Witt (Economic Justice and Climate Change Consultant) and Fidanka Bacheva-McGrath (Bankwatch) provide a CSO perspective on the transparency and accountability challenges for public development banks (PDBs). They argue that PDBs have much work to do in order to meet their commitments to the rights of project-affected communities.
Do DFIs engage with local communities? – an interview with Rayyan Hassan
We have been investigating the extent to which DFIs provide assurance that they have undertaken community engagement activities in the areas where they invest, and why this matters. Rayyan Hassan, Executive Director of the NGO Forum on the Asian Development Bank and our CEO, Gary Forster, discussed the issue.
“DFIs run the risk of community resistance challenging the implementation of the project cycle if communication and transparency have not been ensured early in the project.”
Index method review: public consultation open from 8th March
Last year we initiated a methodology review process for our Aid Transparency Index, with the aim of updating the assessment approach to ensure we adapt to new developments and continue to raise the bar for aid transparency. Following research, online surveys and consultation meetings, we have developed a proposal for changes to the approach. We would appreciate any comment on our consultation paper, which we will publish on 8th March.
Seeking women’s economic empowerment consultants in Kenya, Nigeria and Bangladesh
We are currently looking for consultants based in Nigeria, Kenya and Bangladesh to support research and advocacy work for our Women’s Economic Empowerment programme. The consultants should be experienced researchers with good knowledge of women’s economic empowerment and financial inclusion. Full terms of reference are available on our website, and the closing date for applications is 15th March.
And here’s a selection of news stories we’ve been reading over the last few weeks:
Development Initiatives has released its latest analysis of aid before and during the COVID crisis – using the latest OECD (2019) and IATI (2020) data. Key findings include:
- Official Development Assistance (ODA) has largely flatlined since 2016, with slight growth in 2019 to US$154.5 billion – but 2020 shows a marked decline in ODA from bilateral donors.
- Comparing 2020 to 2019, ODA commitments from bilateral donors fell by 26%, while ODA commitments from International Financial Institutions (IFIs) increased by 189%. This increase from IFIs will be unsustainable beyond the short term without substantial new contributions from bilateral donors.
- ODA grants are shrinking in significance, while ODA loans have continued to grow – a trend that accelerated dramatically in 2020.
- Humanitarian ODA saw the largest increase in 2019 by US$5 billion – but 2020 saw a sharp refocusing on health, social protection and other social sectors, particularly from IFIs.
Transparency International has released the latest Corruption Perceptions Index which shows that most countries have made little to no progress in tackling corruption in almost a decade, and more than two-thirds of countries score below 50. The index, which ranks 180 countries and territories by their perceived levels of public sector corruption according to experts and businesspeople, uses a scale of zero to 100, where zero is highly corrupt and 100 is very clean. The research highlights that corruption undermines the global health response to COVID-19; analysis reveals that countries that perform well on the index invest more in health care, are better able to provide universal coverage and are less likely to violate democratic norms or the rule of law when responding to a crisis.
The Center for Global Development (CGD) has examined China’s updated white paper on development and highlights three key shifts in its development cooperation approach. These include broadening the model of development cooperation,and increased volume, more grants, and emphasis on global public goods. The blog also points to “encouraging commitments on aid effectiveness and transparency”. The white paper offers limited additional statistics on the breakdown of China’s US$41.6 billion aid budget between 2013-2018. But it states that China will “develop a modern statistical information system for foreign assistance” to enhance supervision and evaluation, and it promises to develop “impartial and independent project evaluations”.
The OECD has launched its Guidance to the Blended Finance Principles, to help donors and development agencies to design and implement effective and transparent blended finance programmes. In a new blog, Act Church of Sweden comments on the document, offers three simple guidelines to complement it, and points to the good practice example of Sida’s guarantee instrument.
A new Eurodad report brings together and analyses all agreements and commitments made to date by Development Assistance Committee (DAC) members on the topic of ODA and private sector instruments (PSIs) and their implications, warning that PSIs are undermining aid budgets. The analysis finds:
- The amount of ODA reported as PSIs is increasing (from 1.7%in 2018 to 2.2% in 2019.
- The vast majority of PSI ODA goes to middle-income countries.
- The UK and France reported substantially higher amounts of PSIs compared to other DAC members.
- Between 2018 and 2019 the number of DAC members reporting the type of additionality (a key rationale for channelling aid through PSIs ) increased from six to ten, but a third of PSI ODA (US$1.5 billion) in 2019 was left unreported in terms of which type of additionality it was bringing.
OCHA has released the State of Open Humanitarian Data 2021 report, which aims to increase awareness of the data that is available to inform humanitarian operations around the world and to highlight what is missing, as measured through OCHA’s Humanitarian Data Exchange platform. It highlights a year of record demand for data in the humanitarian sector coupled with persistent data gaps. The report estimates that at the start of 2021, 51% of relevant, complete crisis data is available across 27 humanitarian operations. This increases to 75% when combined with the data that is relevant but incomplete. Chad and Mali share the highest degree of data completeness at 70%; Ukraine and Zimbabwe share the lowest at 26%.
CGD has published new analysis of the proposed UK aid cuts, which shows the decrease would reduce UK aid by £4.5 billion, or 30% relative to 2019. CGD finds that, given existing commitments, bilateral aid will likely need to fall by more than half, while aid to the 46 least developed countries could fall £1.2 billion, and humanitarian by nearly £1 billion. CGD also offers an alternative approach for UK MPs to consider when voting on the cuts.
Meanwhile, the UK government has denied a freedom of information request about £2.9 billion cuts to the aid budget made in July 2020, because of “commercial interest” and because the information would be provided in the future. The request was made by Bond, the UK network for NGOS. As reported last month, Publish What You Fund is one of the NGOs calling for greater transparency from the Foreign, Commonwealth and Development Office regarding its cuts.
IATI is hosting its first virtual community exchange on 13th April 2021. The online event will offer networking, peer learning and knowledge-sharing for IATI’s community from across governments, civil society, the private sector, academia and others.
A study commissioned by the U4 Donor Group calls for a rethink on how donor agencies tackle corruption with the focus not on what is being funded but how.
CoST Infrastructure Transparency Initiative has produced a guidance note on improving infrastructure transparency, participation, and accountability during a crisis – designed for decision-makers who need to work quickly during the pandemic recovery process.