Role of NGOs in Multilateral Development Bank Grievance Mechanisms: Asian Development Bank Accountability Mechanism
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1 Role of NGOs in Multilateral Development Bank Grievance Mechanisms: Asian Development Bank Accountability Mechanism The Role of NGOs in Governance Conference at Lancaster University, United Kingdom 21 September
2 Outline 1. Non-governmental organizations (NGOs) 2. Multilateral development banks (MDBs) and their accountability mechanisms 3. NGO role in creation or revision of MDB accountability mechanisms 4. ADB Accountability Mechanism 2
3 NGOs Definition: non-government, non-state, not for profit not monolithic Types: include community-based organizations, water user associations, farmer organizations and people's movements Role: stakeholders and partner in MDB's development agenda, together with borrowing/donor countries and private sector Activities: include project implementation and advocacy 3
4 MDBs and their accountability mechanisms Phenomenon in creation of MDB accountability mechanism over the past 10 years World Bank International Bank for Reconstruction and Development and International Development Association - World Bank Inspection Panel, 1993 Inter-American Development Bank's (IDB) Independent Investigation Mechanism, 1994 draft consultation and compliance review policy with proposed enhancements to its mechanism of February 2005 and comments from public consultations posted in July 2005 draft policy presently under review 4
5 MDBs and their accountability mechanisms ADB Inspection Function, 1995; replaced by ADB Accountability Mechanism, 2003 International Finance Corporation (IFC) and Multilateral Investment Agency (MIGA), Compliance Advisor/Ombudsman Office, 1999 European Bank for Reconstruction and Development's (EBRD) Independent Recourse Mechanism, 2003 African Development Bank's Independent Review Mechanism, 2004 Other development institutions also have accountability mechanisms or these are under discussion 5
6 MDBs and their accountability mechanisms MDB accountability mechanism: an avenue for citizens to file claims against the institution to address their grievances in the institution's operations an internal governance tool to enhance institutional development effectiveness and improve project quality for the first time, project affectees can file complaints with the institution on projects for material harm suffered or likely to be suffered a right of access at the international level 6
7 NGO role in creation or revision of MDB accountability mechanisms 1980s and early 1990s: Calls by civil society groups concerns on poorly designed and environmentally damaging projects, for example, Sardar Sarovar Project in India no involvement of people in decision-making process when MDBs lend countries billions of dollars on projects impacting billions of people disclosure of information on bank projects and development projects prevent and mitigate adverse projects and promote beneficiary participation through formulation of environmental and social policies, including involuntary resettlement 7
8 NGO role in creation or revision of MDB accountability mechanisms MDB responses World Bank established Morse Commission to independently review the Sardar Sarovar Project Morse Commission report, 1992 failure by the World Bank to implement its policies and loan agreements World Bank and ADB conducted introspective checks on their lending activities and portfolio management World Bank's Wapenhans Report, 1992 number of recently evaluated projects rated unsatisfactory doubled from 1981 to 1992 ADB's Report of the Task Force on Improving Project Quality, 1994 project administration given less importance than project processing 8
9 NGO role in creation or revision of MDB accountability mechanisms 1980s to early 1990s: Washington-based NGOs were primary NGOs with some national NGOs Late 1990s to present: Wider set of NGOs involved in creating or revising MDB accountability mechanisms ADB: includes Bank Information Center (BIC), USA; Mekong Watch; Oxfam Australia; NGO Forum on ADB; and Both Ends EBRD: includes CEE Bankwatch IDB: includes Center for Human Rights and the Environment, Argentina; Funsalud, Mexico; and Friends of the Earth, Brazil NGO involvement in creating or revising accountability mechanisms at MDBs and other institutions catalytic also donors' demand that MDBs strengthen or establish accountability systems, G-7 Finance Ministers and Central Bank Governors Report, 2001 a little to a lot technological innovation, inclusiveness of review process by MDBs 9
10 ADB Accountability Mechanism Review process on the Mechanism, 2003 significant increase in NGO and civil society participation reasons for review - previous system was lengthy, confusing & complex; & concerns on independence, credibility & effectiveness intensive: Internal: working group, steering committee, staff, Board of Directors External: government, private sector, & civil society including NGOs 1½ years from start of review to policy approval by Board of Directors more than 100 NGOs participated: gave inputs and comments on issues paper, 2 drafts of the working paper, and working paper comments by 10 NGOs: commended the "more extensive, transparent, and participatory "review process and recommended it be made the "minimum standard for future Bank consultations on policy development and reviews" (letter from 10 NGOs to ADB President, 2002) 10
11 ADB Accountability Mechanism Significant new features in the Mechanism, in response to civil society's inputs problem-solving in addition to compliance review: need for the institution to address the problem on the ground as compliance is a separate issue extension of time in filing claims: from 95% loan disbursement rule to issuance of project completion report, 2 years after the project is physically completed monitoring of outcomes: e.g. on Board decision on the remedial actions recommended by the panel 11
12 ADB Accountability Mechanism Principles of the Mechanism Mechanism has 2 separate, but related, phases Consultation Phase Focus: address problem by consensus-based methods; not identify blame Implemented by: Special Project Facilitator (SPF), independent of operations departments Compliance Review Phase Focus: investigate ADB s conduct to determine violation of its operational policies & procedures, and make recommendations on remedial actions Implemented by: Compliance Review Panel (CRP), independent of Management 12
13 F l o w c h a r t Start of the Consultation Phase Step 1: Filing of the Complaint Step 2: Registration and Acknowledgement of the Complaint Step 3: Determination of Eligibility of the Complaint Step 4: Review and Assessment of the Complaint Step 5: Decision by the Complainant to Carry on with the Consultation Process Step 6: Comments on the Special Project Facilitator (SPF) s Findings by the Operations Department and the Complainant; and Recommendation by the SPF Step 7: Implementation of the Course of Action in the Consultation Process Step 8: Termination of the Consultation Process Monitoring of Implementation of Agreements from the Consultation Process If complaint is found ineligible, the complainant can file a request for compliance review If the complainant finds the consultation process not purposeful, the complainant may file a request for compliance review If the complainant finds the consultation process purposeful but has serious concerns on compliance issues, the complainant may file a request for compliance review ADB Accountability Mechanism Start of the Compliance Review Phase Step 1: Filing of the Request Step 2: Registration and Acknowledgement of the Request Step 3: Determination of the Eligibility of the Request Step 4: Board Authorization of the Compliance Review Step 5: Conducting the Compliance Review Step 6: Compliance Review Panel (CRP) s Draft Report Step 7: Management s Response and Requester s Response to CRP s Draft Report Step 8: CRP s Final Report Step 9: Board s Decision Monitoring of Implementation of Remedial Actions Approved by the Board
14 ADB Accountability Mechanism Claims received under the Mechanism Melamchi Water Supply Project, Nepal 2. Southern Transport Development Project, Sri Lanka 3. Sixth Road Project, Philippines Community Empowerment for Rural Development Project, Indonesia Chashma Right Bank Irrigation Project (Stage III), Pakistan 2. Khulna-Jessore Drainage Rehabilitation Project, Bangladesh 3. Rural Electrification, Distribution & Transmission Project, Nepal 4. National Highway Development Sector Investment Program, Pakistan 5. Assam Power Sector Development Project, India 6. Greater Mekong Subregion: Mekong Tourism Development Project, Viet Nam Urban & Environmental Improvement Project, Nepal 2. GMS: Phnom Penh to Ho Chi Minh City Highway Project 14
15 ADB Accountability Mechanism Role played by NGOs: 1. consult with SPF and CRP to discuss possible claims Claims can be filed by (i) a group of 2 or more people or a local representative of affected people; and (ii) in exceptional cases, a nonlocal representative. 2. give inputs on draft operating procedures of SPF and CRP 3. act as conduits between affected people and the Mechanism 4. agents for the Mechanism disseminate information to grassroots NGOs and local communities 5. review draft information brochures on the Mechanism prepared by CRP for readability and accuracy to target audience 6. carry out their own studies of problem projects 7. share their findings on these studies with the Mechanism 8. nominate SPF and CRP members 9. monitor progress and results of claims Sometimes NGOs disengage 15
16 ADB Accountability Mechanism Some NGOs working on the Mechanism International: BIC, USA; Mekong Watch; Friends of the Earth-Japan; Japan Center for a Sustainable Environment and Society; Oxfam Australia; NGO Forum on ADB; Center for International Environmental Law, USA National/Local: Water & Energy Users' Federation-Nepal; Yayasan Cakrawala Hijau Indonesia, Yayasan Duta Awam, Lembaga Kajian Keislaman & Kemasiarakatan in Indonesia; Joint Organization of the Affected Communities on Colombo-Matara Highway in Sri Lanka; Green Movement of Sri Lanka; Praxis, Bangladesh 16
17 ADB Accountability Mechanism For NGOs, an MDB Accountability Mechanism is an important public accountability process - ensure better governance in bank lending activities - bring project back into compliance with bank's policies & procedures Progress made: - "a foot in the door" (Fox, 2004) - right for claimants to comment on draft panel report, together with Management - influence decision-making Concerns still remain: including legal redress, right to suspend loans, staff sanctions - limitation of MDB accountability mechanisms: "internal governance tools" (Suzuki and Nanwani, 2005) 17
18 ADB Accountability Mechanism Steps taken by NGOs: develop materials prepare toolkits on MDBs, e.g., Unpacking the ADB: A Guide to understanding ADB issue civil society guide to policy reviews by international financial institutions publish citizen guide on MDB accountability mechanisms, e.g., Gender Justice - A Citizen's Guide to Gender Accountability at International Financial Institutions provide testimonies on problem projects before national hearings, e.g., US Senate Committee on Foreign Relations discuss accountability issues - at MDB annual meetings; NGO annual meetings; blogs; NGO websites campaign and lobby , people's tribunals, protests 18
19 References: 1. Comments on the ADB Review of the Inspection Function: Second Draft of Working Paper of July 31, 2002 by 10 NGOs in letter to ADB President of 29 August 2002 at 2. Jonathan Fox, Can multilateral institutions be made publicly accountable? Center for Global International & Regional Studies, May 2004, Number 3, page 12 at 3. Eisuke Suzuki and Suresh Nanwani, Responsibility of International Organizations: The Accountability Mechanisms of Multilateral Development Banks, Michigan Journal of International Law, Vol. 27, No. 1 (Fall 2005), page 181 at umich.edu/mjil/27.1/suzukinanwani.pdf 4. Unpacking the ADB: A Guide to Understanding the Asian Development Bank by BIC, USA and NGO Forum on ADB (July 2006) at 5. Gender Justice - A Citizen's Guide to Gender Accountability at International Financial Institutions published by the Center for International Environmental Law, Gender Action, and The Henrich Böll Foundation North America (July 2007) at 6. ADB Consultation Phase: 7. ADB Compliance Review Phase: Thank you. The views expressed are the personal views of the presenter and do not necessarily reflect those of the Asian Development Bank. Suresh Nanwani, Associate Secretary, Compliance Review Panel snanwani@adb.org 4 September 2007 Copyright 2007 Compliance Review Panel for Asian Development Bank 19
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