During a side event of its annual meeting in October last year in Washington DC, the World Bank quietly made an announcement that seemed tacitly to acknowledge that some of its private sector investments have gone awry. It turns out the Bank has been piloting a new Anticipated Impact Measurement and Monitoring (AIMM) system to oversee the activities of the International Finance Corporation (IFC), the private investment arm of the World Bank. The official purpose of the IFC is “to create opportunity for people to escape poverty and improve their lives by catalyzing the means for inclusive and sustainable growth.”

While it is welcome that the Bank is finally waking up to the lapses of its subsidiary, for many victims of the IFC’s misguided investments, the move is far too little, far too late. Through poor judgement, poor oversight, and negligence this powerful arm of the World Bank too often appears to be doing more harm than good.

We in South Africa have seen this first-hand. The IFC invested US$50
million ostensibly to support Lonmin, a British mining company with its flagship operation in Marikana, North West province. Part of the money was meant for a “large-scale community development program.”

As part of the deal and to comply with its own commitments, Lonmin was to build 5,500 houses for its workers by 2011. Only three materialized. A year later, housing was a contributing factor in the mineworker protest which, after police intervened, ultimately left 44 people dead and a community shattered.

The IFC also invested $107m in a company called Net1 UEPS in April 2016. Net1 is the parent company of Cash Paymaster Services (CPS) which, according to the Constitutional Court, was unlawfully contracted by the South African government to distribute social grants. The same company was found by Black Sash, a South African human rights organization, to have behaved unethically by abusing its access to the personal information of social grant recipients to profit from the program. By making the investment after these details were known, the IFC implicated itself in these predatory practices.

And it’s not just in South Africa where the IFC has made questionable decisions. Across the developing world it has invested in efforts that seek to privatize education systems rather than strengthening the public service and profiteered from land grabs elsewhere in Africa. Like in Guinea where the Societe AngloGold Ashanti de Guinee (SAG), a subsidiary of South African gold-mining giant AngloGold Ashanti, involuntary resettled hundreds of households. Despite the company’s claims that consent was given, serious allegations of villagers being intimidated into giving up their land emerged.

One of the backers for the project was a South African bank, Nedbank, which received $140 million for “cross-border lending across Africa, including capital-intensive projects.” Through this financial relationship, from which the IFC benefited in the form of interest from the loans, SAG was able to undertake the operation.

But the challenges to the IFC are beginning to mount. Consumer watchdog SumOfUs.org is calling for the IFC to divest from a destructive gold mine in Mina la India, Nicaragua, operated by Condor Gold. The local community fiercely opposed the project, saying the mine would damage their ground water supply, displace hundreds of people and destroy livelihoods. Earlier this year the intimidation escalated when those who protested the project were sued by Condor Gold. Fortunately, the pressure from the community and its supporters led to the charges being dropped. But IFC remains the second biggest investor in the project which is a potential violation of its own environmental and social performance standards.

As far back as seven years ago concerns were being raised, even inside the World Bank. A 2011 review by the bank’s own internal watchdog, the Independent Evaluation Group, found that the majority of the investments it studied did not always adhere to the IFC’s own development mission.

By 2016 very little had changed, affirmed by an Oxfam briefing note that states “beyond the steps already taken, the IFC needs to do much more to improve accountability and ensure that World Bank Groups’ funds are not flowing to harmful projects.”

Some will argue that development is a long and messy business, so these kinds of things are inevitable. This view of development is cover for an approach that doesn’t address what can be life or death concerns. At worst, it is premised on a notion that some lives have less value. At best, it’s short-sighted and dangerous. We cannot accept the horrific consequences of the IFC’s failures as inevitable.

The Evaluation Group’s findings at least showed that the Bank was willing to scrutinize IFC investments and that there is some oversight mechanism. But there doesn’t appear to be any sanction or change in behavior. Will the new AIMM system be any different?

The IFC urgently needs to get its house in order and act according to its true mission and mandate. One way of doing this would be to put a moratorium on all investments being opposed by affected communities, until it can ensure that these do no harm and meet the IFC’s own performance standards. And if this can’t be done, its current investment model should be scrapped altogether. There has been enough harm done already, with the price paid by those whose lives the IFC claims to be improving.