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Thursday, 22 August, 2002, 14:22 GMT 15:22 UK
World Bank wants green growth
A blizzard of big international donor meetings and governmental get-togethers is poised to set out goals for aid to the developing world for years to come during this summer.
In the midst of all this is Peter Woicke, executive president of the World Bank's private finance arm and one of the Bank's four managing directors.
Private firms "can, should and must" make a bigger contribution to development, Mr Woicke believes.
He has come to London to push "the business case for sustainable development".
It doesn't exactly trip off the tongue.
But sustainability is likely to feature strongly at the G8 summit in June, which is set to back a Marshall Plan for Africa, including a multi-year aid package of up to $64bn annually.
It will be followed in August by the World Summit on Sustainable Development in Johannesburg to flesh out environmental and poverty reduction targets, such as halving the number of people without sanitation and safe water by 2015.
Private capital should be "a full partner in Johannesburg, not an afterthought", says Mr Woicke.
Whereas 10 years ago, private finance and government aid played a roughly equal role in development funding, the former now provides $4 for every $1 in aid, he says.
IFC lends money to private firms for strategic projects in developing countries, doing so on a for-profit basis, whilst setting out standards for environmental and labour protection.
Sustainable development "is not charity", Mr Woicke insists.
"By being a better corporate citizen, it's actually good for the bottom line."
Take Polish pulp and paper-maker Intercell.
The firm cleaned up its act, saved itself $12m in pollution tariffs over five years and was able to sell sludge to a local power plant in exchange for electricity.
Intercell is also proof of another favourite point - the "myth" that capitalism with a conscience is only affordable for big firms from rich economies.
Early adopters of high standards can gain "significant competitive advantage"
"We have to move from a 'do no harm' to a 'do good' policy," he says.
But the IFC has critics among NGOs who find this prospect dubious.
Its focus on loans to private health care firms to move into poor countries risks fragmenting already weak state-run services, says the UK-based Save The Children Fund.
Such criticism is based on an unrealistic view of provision in sub-Saharan Africa, where 32% of educational services and 50% of healthcare are provided by the private sector, Mr Woicke says.
Nor does he accept that IFC loans to private hospitals are guilty of drawing the best doctors away from tending the poor.
The IFC funds the biggest private hospital in Mexico City: "The doctors there told me the reason they stay in the country is because of this hospital, otherwise they would be working in Houston, probably."
The World Bank's focus on privatisation of basic services has also come under attack.
Activists in Ghana have slammed the World Bank's decision to make water privatisation "a condition for accessing Bank resources" - as set out in the triggers for Ghana to reach the higher loan levels.
Plans to hand over the running of Ghana Water Co to international bidders could raise the cost of water by up to 300%, say opponents of the scheme from the ISODEC-Ghana NGO.
'No trade talks link'
"Some of these public sector monopolies work so terribly inefficiently there's so much water loss... and that's why water is so expensive," says Mr Woicke.
Patchy provision - only 25% of urban Africans have access to piped water - and inefficiency are the real villains, he says.
Nor does he believe that signing up for one-off commercial deals with private firms backed by the IFC will make it harder for poor countries to resist pressure for market opening trade deals in the same sectors.
International talks on opening up trade in services - such as healthcare - are at a delicate stage within the World Trade Organisation (WTO).
To Western firms, Mr Woike's message is plain: "the biggest opportunities are at the intersection of the private sector and emerging markets".
Blushes over Argentina
Ironically, the World Bank's private finance specialists have themselves been severely burnt by market forces this year.
Argentina's economic meltdown panned many of the IFC's investments.
But some shrewd past asset purchases in South Korea and Mexico have been sold off, yielding handy profits to save the day.
"I wouldn't have wanted to be the first Executive President (of the IFC) to show a loss," says Mr Woicke, who spent much of his career as an investment banker at JP Morgan.
About half of the organisation's $1.1bn of investments in Argentina will be written off in the fiscal year to June 2002.
Nonetheless, Latin America looks set to remain the IFC's biggest region, with about 32% of its project portfolio. Asia is growing rapidly but in Africa the list of lacks is comprehensive.
Africa needs bigger markets, better infrastructure and a better environment for the private sector, while the IFC needs more firms interested in operating there, says Mr Woicke.
"I think it would be fantastic if Uganda, Tanzania and Kenya would connect the power grid," he says as an example of the kind of market-expanding measures needed to attract more manufacturers.
It's something the IFC hopes to foster with its 20% investment in the $500m Bujagali hydro power project in Uganda, which will sell electricity to Kenya.
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