IFC’s claimed immunity is fundamentally at odds with its anti-poverty mission

The IFC’s stated “mission is to fight poverty,” while doing “no harm” to people or the environment. The IFC developed its Sustainability Framework, which dictates the conditions of IFC involvement in projects and the obligations of both the borrower and of the IFC, to ensure that these projects promote positive development objectives while protecting local communities and the environment.

The Tata Mundra power plant project was supposed to provide affordable energy and improve the quality of life and standard of living of Gujarat’s poor. But the project has been, and remains, a failure. The project has failed to comply with the IFC’s Performance Standards and the other environmental and social conditions of the loan agreement, and it has pushed many of the surrounding communities further into poverty, made them sick, destroyed their means of supporting their families, and made their environment dirtier and more dangerous. It has also been a financial disaster, operating at a loss for its entire existence (the company announced last year it was trying to offload a majority of its shares for 1 rupee – less than 2 cents) and the company has sought to pass these costs off to consumers.

Not everything can go private

There’s a strong debate on the role of for-profit companies in some areas, particularly public services like education and health.

Kenyan civil society has raised serious concerns over the IFC’s role supporting Bridge International Academies, a chain of private schools with a troubling record. They’re not alone. Research into other for-profit school providersbacked by the IFC shows these schools don’t work for the poorest communities.

In the health sector, Oxfam found that the IFC’s billion-dollar “Health in Africa” initiative mostly went to expensive, high-end urban hospitals. This is even more troubling given that poor and rural communities are disproportionately made up of women and girls.

The Bank says it will expand the “cascade” approach to health and education, but we’re doubtful this will help increase access, equity and quality for such services. Instead of approaching this with a “private-first” ideology, the Bank should lay out the criteria for when it actually makes sense for the private sector to be involved.

How to raise the funds needed

So if the private sector isn’t appropriate for everything, where do resources come from, particularly for investments in human capital?

We’d like to see the Bank place even more emphasis on “domestic resource mobilization,” development-speak for how countries collect tax and other government revenue.