Concerns regarding IDA 17’s Proposed Focus on Regional Transformational Initiatives

By: 
Peter Bosshard
Date: 
Monday, March 18, 2013

Ms. Lael Brainard
Under Secretary of the Treasury for International Affairs
US Department of the Treasury
1500 Pennsylvania Ave NW
Washington, DC 20220

March 18, 2013

Concerns regarding IDA 17’s Proposed Focus on Regional Transformational Initiatives

Dear Ms. Brainard,

IDA proposes a new focus on Regional Transformational Initiatives as one of the special themes of the 17th replenishment. A background paper which IDA just released argues that such an approach could “catalyze very large-scale benefits to improve access to infrastructure services.” The new paper lists the Inga 3 Dam on the Congo River (with a price tag of $10 billion), and two hydropower and transmission schemes on the Zambezi River (with price tags of $5 billion and $3-4 billion, respectively) as illustrative projects for this approach.

Based on decades of experience, we believe that the complex regional projects that IDA proposes risk undermining important goals of IDA 17, including Inclusive Growth, Gender Equality, and Climate Resilience. Our concerns are elaborated below. We recommend that IDA members drop the special theme of Regional Transformational Initiatives, and that IDA shift its focus to infrastructure solutions that are more effective at addressing the energy needs of the poor and at fostering inclusive growth, gender equality and climate resilience.

Inclusive Growth

The energy needs of the majority of the poor in Sub-Saharan Africa and other IDA countries continue to be unmet. Yet the regional infrastructure projects proposed by IDA are not designed to meet these needs. They are rather being developed to export electricity for extractive industries and urban centers particularly in South Africa, with the hope that some of the export revenues will trickle down to the poor. In the Democratic Republic of Congo, multilateral development banks have over the past 40 years invested billions of dollars in the construction and rehabilitation of the Inga 1 and 2 dams and associated transmission lines, yet only 9 percent of the population has access to electricity. The situation is similar in Zambia and Zimbabwe, where the World Bank has funded the large Kariba Dam on the Zambezi River.

Large, complex projects such as the hydropower schemes on the Congo and Zambezi rivers have no major economic spill-over effects. They rely on imported technologies and management know-how, and do not create a significant number of domestic jobs. In contrast, decentralized renewable energy projects such as solar, wind, micro hydropower and improved cooking stoves would be more effective at reaching the 85 percent of the rural population in Sub-Saharan Africa who live more than 10 kilometers from the electric grid. Such projects would also create jobs in manufacturing and maintenance, and would boost the inclusive growth of local jobs in agro-processing and tourism that are typically bypassed by large, grid-based power projects.

Gender Equality

Centralized infrastructure projects such as large dams typically have massive negative impacts on local livelihoods, and women bear the brunt of these impacts. In the case of the Inga 1 and 2 and Kariba dams, displaced communities are still struggling to regain their previous livelihoods after more than 40 years, and women are particularly affected by the loss of land and access to communal resources. If the benefits of regional mega-projects do trickle down, they typically reach urban middle classes and workers in the formal economy, but not women who are least integrated in the cash economy. Women, in other words, are the first to suffer and the last to benefit from large, complex infrastructure projects.

Again, decentralized renewable energy options and improved cooking stoves are much more effective at reaching the homes of poor rural families and easing the burden on women, who typically spend many hours each day on gathering firewood and other domestic chores.

Climate Resilience

Climate resilience requires flexible, adaptive, decentralized and diversified portfolios of energy and water infrastructure. In times of unpredictable precipitation and streamflow, putting all eggs into the basket of large, centralized reservoirs increases the vulnerability of societies to climate shocks. Already, Sub-Saharan Africa is the world’s most hydro-dependent region, and institutions such as the IMF and World Bank ESMAP have recommended that this dependence be reduced in the interest of climate resilience.

According to the IPCC, the Zambezi exhibits the “worst” potential effects of climate change among 11 major African river basins. In spite of this, the Mphanda Nkuwa and Batoka Gorge dams, which IDA includes in its brief list of illustrative projects for Regional Transformational Initiatives, have not been evaluated for the risks associated with the reduced annual flows and more extreme flood and drought cycles that are expected under a changing climate. Such an approach clearly increases the climate vulnerability of countries that are already hit hard by climate change. Again, a portfolio of decentralized and diversified renewable energy options would be more effective at strengthening the climate resilience of poor societies.

Conclusion

In conclusion, we call on IDA deputies to drop the proposed special theme of Regional Transformational Initiatives under IDA 17, and recommend shifting IDA resources to decentralized infrastructure options that can directly address the needs of the poor and foster inclusive growth, gender equality and climate resilience.

Renewable energy technologies such as solar, wind and micro hydropower projects meet the goals of IDA 17 and have become cost-effective, particularly for the majority of the poor in Sub-Saharan Africa and South Asia who are not connected to the electric grid. Yet because they are so new, these technologies often face problems in accessing credit and hiring qualified personnel. Instead of supporting mega-projects with a very poor track record, IDA should support public guarantee schemes, technical assistance programs and a redesign of tax and other incentives that could remove these bottlenecks.

We call on the United States Government to support such a shift in the negotiations for IDA 17. We also support civil society calls for strengthened World Bank safeguards, which are vitally important for achieving greater inclusion, gender equality, and climate resilience, and can help lead to smarter, decentralized investments that better address the needs of the poor.

We have elaborated the topics covered in this letter in our recent report, Infrastructure for Whom? A copy of this report is enclosed. You will find more information on the climate risks of dam building on the Zambezi River in our new report, A Risky Climate for Southern African Hydro, which is available at http://bit.ly/SC14CZ.

Thank you for your attention. We will be happy to answer any questions you may have, and look forward to receiving your response.

Sincerely yours,
Peter Bosshard, PhD
Policy Director
International Rivers

Mark Rentschler, PhD
Director of Campaigns
Bank Information Center

Michelle Chan
Director, Economic Policy Programs
Friends of the Earth - US

Elaine Zuckerman
President
Gender Action

Nancy Alexander
Director, Economic Governance Program
Heinrich Boell Foundation - North America

Daphne Wysham
Co-Director, Sustainable Energy & Economy Network
Institute for Policy Studies

Douglas Norlen
Policy Director
Pacific Environment


cc. Ms. Karen Mathiasen
     Ms. Deborah Crane


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