Oxfam says World Bank may be blind to harm of financial investments

Oxfam says World Bank may be blind to harm of financial investments

• Representational image File Photodna Research & Archives

The World Bank’s private sector arm may be doing more harm than good when it invests in private equity firms, banks and other financial intermediaries, global development group Oxfam said in a report on Wednesday.

In one project indirectly sponsored by the bank’s International Finance Corporation (IFC), 164 villagers in Cambodia lost their plots and thousands of others suffered when a Vietnamese company expanded plantations to their land.

In another high-profile case, the IFC’s own watchdog criticized a loan to the largest bank in Honduras, whose clients included a palm oil company tied to land disputes and killings.

“By channeling funds through third parties, the IFC loses control of how the money is eventually spent,” Oxfam said. “It has little proof of positive development outcomes.”

The IFC directed about 63% of its $17 billion of commitments in the last fiscal year to financial intermediaries in developing countries, to leverage its money to reduce poverty and boost economic growth.

Oxfam said more investments are likely to run into problems as the World Bank takes on riskier projects, including infrastructure and lending to conflict-affected states.

The IFC said it takes Oxfam’s findings “very seriously” and was already working to address the cases, many of which occurred before 2012, when the institution revised its social and environmental standards.

Since then, the IFC said, it has expanded its staff of specialists on safeguards, visited risky projects more often and audited financial clients every year to ensure they have good systems for managing environmental and social risks.

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