Holding new forms of development finance to account: an action plan for multilateral development banks
New forms of development financing pose a challenge to the accountability of Multilateral Development Banks (MDBs). Multilateral organisations comprise 41 percent of official development assistance and the MDBs are essential vehicles for states to channel development finance. They are recognised for their expertise in mobilising resources, specialised knowledge in infrastructure and financial services, as a means for collective action in development matters, and in delivering of global public goods. Combined, the African, Asian, Inter-American Development Bank, the World Bank Group and the European Bank for Reconstruction and Development committed USD$102 billion for development in 2017. Given their resources and expertise it is imperative that the banks’ finance development is environmentally and socially sustainable, including for project beneficiaries in and around the project site. It is therefore critical that they have strong accountability mechanisms that can be used to hold the banks to global environmental and social standards, which are embodied in their operational policies and procedures.
The need for accountability mechanisms is well recognised by the MDBs. The banks have all established accountability mechanisms that provide recourse for people affected by bank financed development projects. Indeed, they have come a long way in improving their accountability mechanisms to make them more effective over the last two decades. The similar operations of the accountability mechanisms represent a new consensus for how to hold the banks to account including being: transparent, independent, and responsive to affected people through consultation (mediation) and monitoring to ensure bank compliance when found to contribute to environmental and social harm. The outlier is the original World Bank Inspection Panel, which is currently reviewing its ‘toolkit’ in light of this convergence.