How World Bank lost then gained favour in S. Sudan

Monday October 4 2010

An on-going road construction in Southern Sudan. The relationship between the World Bank and Southern Sudan has been on a roller coaster for many years. File Photo

An on-going road construction in Southern Sudan. The relationship between the World Bank and Southern Sudan has been on a roller coaster for many years. File Photo 

By Badru Mulumba

In 2006, Jan Pronk, then the special representative to the UN Secretary-General wrote of life in Southern Sudan as desolate.

This was made worse by the decision to channel aid through multidonor trust funds led by the World Bank.

“We had advised against this, knowing that the Bank’s procedures are quite cumbersome... the bank applies the same procedures in case of reconstruction as for development programmes.”

Pronk’s words were prescient. Both the people and the donors railed at the Bank as problems piled up and aid money sat in its vaults undisbursed.

It was not only the officials and the population who were furious. Donors, too, joined the chorus.
After the peace agreement, donors agreed to fund the reconstruction of Southern Sudan by pooling money into the Multi-Donor Trust Fund for Southern Sudan. Some 15 donors contribute to the fund.
In its appraisal of the bank, the Joint Donor Office, which brings together representation from major donors, was particularly scathing.

It estimated that by the end of 2009, the World Bank had in five years spent only $181 million of about $524 million committed to the Multi-Donor Trust Fund (MDTF).


In the wake of such scathing attacks, top officials had no choice but to respond. In 2009, country director for Sudan and Ethiopia Ken Ohashi defended the Bank’s focus, such as construction of schools and medical facilities and water projects, which he said were vital for the long term future of the country.

In the end, Mr Ohashi admitted that the bank could have thought more about larger infrastructural projects. Building permanent roads, for instance, could have improved transportation.
“We were too ambitious. We thought we would build schools in all 10 states of Southern Sudan. Ten schools per state, not knowing that getting together logistics was hard. Second, insecurity meant that contractors could not go there. Nobody could have foreseen the problems. We could have done an assessment but there wasn’t time to do that,” the head of the Joint Donor Office Michael Elmquist said.

The turnaround came last year. In March 2009, for the first time, donors held a meeting in Juba concerning sustainable management for donor funding.

The meeting led to a “series of reallocations” that saw some $181 million withdrawn from the MDTF.
While donors reallocated some money previously under the MDTF, the World Bank, too, scaled up disbursement of the money granted under the MDTF.

Accelerated disbursements have apparently polished the Bank’s image, but it has been a hard slog to get it to this point.

In February 2009, the financial crisis threatened to unravel the Government of Southern Sudan.
In the middle of the crisis, the World Bank manager for Southern Sudan, Laurence Clarke, reached out to the United Nations Office for Humanitarian Affairs.

The result was an exchange that would culminate in a meeting, late into the night, by the donors and diplomats. The agenda was how to save the Government of Southern Sudan from collapse.

Clarke had come to the Bank in 2008 when the Bank faced its own image crisis. At his first press conference, Clarke was apologetic on behalf of the Bank, giving the impression that he had been sent with one directive: Clean up the mess.

On one hand, he had to cool the anger of the government and the population. On the other, he had to keep the donors who finance the fund at bay. Donors had been calling for the money to be divested from the World Bank-managed fund.

In fact, the past year has witnessed a rise in bilateral donors going it alone.

With the crisis, Clarke seized the initiative that allowed the officials to see the Bank as its major ally. He also opened up a key line of conversation with donors.
The result was the relaxing of some of the bank rules regarding the MDTF. A stipulation that for the bank to finance a project, the Government of Southern Sudan had to come up with counterpart funding was dropped.

In fact, and little known to many here, that stipulation was a proposal from the late John Garang.
Asked if they learned any lessons from such a 2:1 policy — perhaps the only known time when the bank requires the local partner to provide two-thirds of the money for every project — a resident said: “It was the founding President John Garang who insisted that Southern Sudan would provide counterpart funding to show ownership.”

She added: “Subsequently, this was changed to 1:1, but we still have something to say about that, too.”

For a number of projects this was completely dropped, as GOSS couldn’t come up with the money following the financial crisis. In fact, donors directed that the MDTF write off some of the counterpart funding the GOSS had not been able to provide for previous projects.

“We donors committed $600 million a year to the programme,” Elmquist says of the donor decisions last year.

“We immediately waived government payment of their part in the MDTF. For the first time government didn’t have to pay the counterpart funding. We said, ‘You owe us $58 million; forget it’. Two, we allocated $25 million for road works for the first year and $15 million next year. The reason road maintaince was chosen is that it is a fast-moving project.

"Third, we allocated $40 million to the reintegration programme, $30 million to improve the procurement of drugs. It was $168 million which we disbursed.”

Perhaps the problem for the World Bank was that donors failed to shunt aside the 2:1 rule in time when it became clear it wouldn’t work. Often, the two sides wanted to fund different projects.

The government wanted to pave roads in the capital, which only had 12 kilometres of tarmac in 2007, while the Bank looked at other projects in health and education.

Sometimes, the two wanted to hire different contractors with the Bank going mostly for the international contractors because local contractors lacked the years of experience necessary, while the GOSS favoured local contractors because the political pressure from people complaining that everything went to foreigners was becoming unbearable.
It is hard to imagine the Bank would recommend the 2:1 policy elsewhere.
When the Bank issued an annual report on the Multi-Donor Trust Fund for Southern Sudan mid this year, it titled it “Turning the Corner” in reference to how far Southern Sudan has come.

In retrospect, that title might as well have referred to the Bank itself as manager of the fund. In its report, the bank implies that a lot of the assumptions upon which the MDTF was based were wrong from the start.

“In designing the portfolio, political objectives and optimistic assumptions outweighed practical considerations of the limitations posed by Sudan’s severe conditions and scarcity of resources.

"Delivery of services was expected to be quick but also expected to be done through a trust fund working with a new and inexperienced administration. Getting all of this right would have required the kind of astute political analysis and capacity assessment that only hindsight can accurately guarantee.”

According to the Bank, in a post-conflict situation, this includes working out the roles of the Bank and other agencies or organisations, such as the United Nations, at the outset, so that the Bank can concentrate more on longer term development efforts while others can focus on quick delivery of relief and early recovery work.

“In a situation involving a weak institutional system of governance, the Bank should be prepared to rapidly build up its capacity on the ground, regardless of preconceived notions of adequacy,” says the report.

Leadership was often lacking. The Bank’s manager for Southern Sudan was often out of the country, leaving the office to an acting manager.

“Intensive and sustained attention by senior Bank staff must not be discounted,” the bank adds.

“Reputational risks are real. Negative perceptions and performance issues should be addressed at high levels of Bank leadership.”

The Bank argues that going forward, a project’s entire implementation process —project design, procurement, contracting, disbursements — should be tailored to fit the context of the environment.
“Uniform application of previous lessons does not work in all contexts, as experience in Sudan has demonstrated,” the bank says.

It adds that experience with the Trust Fund strongly suggests that the value in measuring operational success against a specific time frame should be reconsidered.

“It is better to under-promise and over-deliver than to over-promise and under-deliver,” the report says, adding that the limits of any such agreements must be fully understood before any promises are made.

In this, the Bank is in agreement with the GOSS Finance Minister David Deng Athorbei: “There is that frustration. It’s a function of our expectations of the World Bank. [But] the MDTF has done a great job.”

There is something else on which the Bank and the minister agree: the lessons learned in Southern Sudan should bear on future trust funds.

“They have done a great job and we feel that they will be the foundation upon which we will build a future World Bank relationship,” said Mr Athorbei.

“We in Southern Sudan rely on the World Bank to help walk us through until we reach the post-referendum period and start a new era in our relationship.”

He replied that in managing the MDTF the World Bank has to seek certain approvals which contributed to the slowness in disbursement of money.

“We feel that it’s a lesson for the future. It’s a learning process that we feel in future other MDTF would move differently,” Mr Athorbei said.

World Bank top officials are visiting Sudan as the country edges closer to the referendum. A few days after the vice president for Africa region Obiageli Ezekwesili left the the country recently, her operations policy and country services counterpart Joachim von Amsberg flew into Sudan.

Sunday as part of his maiden visit to the country since he was named to the post in July.
The officials, surprisingly, find mostly praise that it is as if the two sides never really went to ‘war’ over what Jan Pronk had long predicted.