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EDRB: "Multilateral banks reaffirm pledge to support technology-driven sustainable infrastructure"

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Author: 
Jefferson Galt

A statement from the European Bank for Reconstruction and Development says that a meeting of the heads of the leading multilateral development banks (MDBs) meeting at the 2018 Global Infrastructure Forum (GI Forum) today reaffirmed their commitment to work together to deliver inclusive, resilient, and sustainable technology-driven infrastructure. "

There's a lot of blah-blah-buzzword-blah and then comes a sentence that should pique the interest of all in the financial and aid sectors.

The problem is that as soon as any talking shop says "sustainable," "partnership" or "stakeholders" or uses acronyms, or even names of groups, that are familiar to its insiders and allies, the feeling that any thing material is going to be in the statement is inescapable. Add in "inclusive," "resilient" and agile and it becomes more like a drinking game than a serious means of disseminating information. The yawn at the phrase "technology-driven Infrastructure" is not just jaw dropping, it's jaw dislocating.

There's a list of things that the group will pay attention to and, in PR speak, it says "The MDBs agreed that their joint efforts should be based around the following priorities:"

So, they've agreed a list of things they say are important. Unfortunately, it's a boring list that almost any financial grouping could have put together to persuade so-called activists that something was happening. There is nothing new.

Nothing new, that is, except the last item on the list. This, one might argue, should be the only thing on the list for one simple reason: it's the only thing on the list that isn't already within the scope of other groups.

This is what it says:

Identify infrastructure and capacity gaps, particularly in least-developed countries; and landlocked developed countries, and small island developing states and African countries.

OK, let's get the political bit out of the way: the reason for special mention of "African countries" is that it has the largest concentration of disadvantaged countries and "the west" is paranoid that China is using financial incursion to exert influence.

There have been many initiatives to help least developed countries. One more is not going to make any difference: that should be hived off to one of the other groups already dealing with these matters.

No, it's the "landlocked developed countries, and small island developing states" that, are the eight words that could change the world for these are those jurisdictions that are mostly referred to by the pejorative "tax haven" or similar term.

The whole communiqué skirts around this aspect. The question that the statement raises is this: what demands will be placed on those jurisdictions in order to obtain development assistance?

In 2017, the development banks issued not far short of USD75,000 million in long term infrastructure loans to what might be termed "the usual suspects." In 2016, it was just under USD70,000 million. Very little of that has gone to "tax havens" and remarkably little seems to have made significant improvements in the target countries. That, however, is to be expected: in many of those countries they are applying an Elastoplast over a deep wound: with the best will in the world, and vast amounts of money, the best they can do is minor patching up of major problems.

The meeting "looked at using technology to achieve the crucial but difficult “last mile” of getting services to end users." Well, not to blow our own trumpet, but our boss, Nigel Morris-Cotterill, discussed this on the sidelines of a law conference in Kuala Lumpur in 1999 and with banks in Ghana and technology companies the next year. Morris-Cotterill explained that there were even then technologies that would enable financial services - and education - to areas that don't even have roads. It's not complicated and that same technology is available and tried and tested. Add in solar-powered rechargeable batteries (such as one company is doing with redundant electric car batteries) and a village can be on-line for a few hundred dollars. The problem is not the tech and it's not the cost it's education. There's no point in putting the tech in if no one can use it or if the village head rejects it through, for example, fear that his own influence and power will be diminished.

The world has been talking about this for too long: it gets tied up with fashion and the future and becomes moribund. What is needed is action on a simple, practical level.

But for those "tax havens" most are, generally, poor countries. Yes, in some there is money farming (as Morris-Cotterill described offshore financial services in the mid 1990s) but there is also agriculture. "People farming," as Morris-Cotterill termed tourism, is both capital intensive and often harmful to the environment. The needs of those economies are very different to the needs of the, estimated, 1,000 million who have no electricity and the 660 million who have no access to clean water. What they need is work that generates a reasonable income. What they do not need is infrastructure projects (which will often require imported labour) that provide, largely, short term employment.

The deserted airports that countries built on the false premise that if there was a nice shiny new airport, tourism would boom is an example: what's worse is that the loans are coming due and the passenger numbers (and therefore revenue) stated by the commissioning governments have turned out to be wildly overstated. The next problem is that some of the countries that are trying to work their way out of poverty by encouraging inward investment and/or tourism are so unsafe that people don't want to go there. Until there is peace and security, throwing investment bank money at them is pointless. And that's before questions of corruption are brought into the equation.

The real worry is that infrastructure projects - nice new sea-front government offices or golf-courses, for example, will be built but insufficient revenue will be generated long term. The old model of saying "they need education so let's build a college" does not work. People will learn in a barn, what's needed is the actual education, without political or religious interference, and a genuinely well-educated workforce which can identify opportunities that they can exploit remotely and thereby earn a decent living without abandoning their culture and home.

But nothing in the statement talked about that.

 


 

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