AIIB could fi­nance qual­ity de­vel­op­ment

China Daily (Canada) - - TORONTO -

Mo­bi­liz­ing fi­nance for in­fras­truc­ture in Asia is a crit­i­cal need. In 2009, the Asia De­vel­op­ment Bank es­ti­mated that Asian coun­tries would re­quire ap­prox­i­mately $8 tril­lion in in­fras­truc­ture in­vest­ment from 2010 to 2020 if they are to main­tain cur­rent lev­els of eco­nomic growth, but warned that there would only be lim­ited fund­ing for this avail­able. With its au­tho­rized cap­i­tal al­ready es­ti­mated to have reached nearly $100 bil­lion, the re­cently-launched Asian In­fras­truc­ture In­vest­ment Bank, which has the sup­port of all the mem­bers of the As­so­ci­a­tion of South­east AsianNa­tions and BRICS, as well as most G20 coun­tries, among oth­ers, is in a po­si­tion to make a sig­nif­i­cant con­tri­bu­tion to­ward clos­ing the fi­nanc­ing gap and thus pro­mot­ing Asian eco­nomic de­vel­op­ment.

To en­sure its in­vest­ments will not only sup­port growth but also di­rectly ben­e­fit – and bring no harm – to de­vel­op­ing coun­tries and peo­ple liv­ing in poverty, the AIIB has re­cently is­sued a draft En­vi­ron­men­tal and So­cial Frame­work. The ESF is open for pub­lic con­sul­ta­tion un­til the end of this week.

Es­tab­lish­ing an ESF is def­i­nitely a step in the right di­rec­tion. En­vi­ron­men­tal and so­cial safe­guard poli­cies have tra­di­tion­ally been treated as risk mit­i­ga­tion ap­proaches by in­vestors. How­ever, there is grow­ing recog­ni­tion that sound en­vi­ron­men­tal and so­cial prac­tices are cru­cial for suc­cess­ful in­vest­ments and long-term sus­tain­able project out­comes.

But to make the ESF con­sul­ta­tion process and out­come a suc­cess, the AIIB should take fur­ther steps. First, it should ex­pand the con­sul­ta­tion process to in­clude face-to-face meet­ings be­tween its man­age­ment and stake­hold­ers, es­pe­cially civil so­ci­ety or­ga­ni­za­tions, com­mu­ni­ties and the rep­re­sen­ta­tives of in­dige­nous peo­ples. It should also trans­late the draft into key lan­guages that have been iden­ti­fied by stake­hold­ers, and in­clude drafts of the op­er­a­tional pro­ce­dures in the con­sul­ta­tion.

Sec­ond, while the in­clu­sion of a stan­dard on in­vol­un­tary re­set­tle­ment in the ESF draft is wel­come, it should also ex­plic­itly in­clude the ob­jec­tive to strengthen, se­cure and pri­or­i­tize the ten­ure rights of vul­ner­a­ble and marginalised peo­ple. Fur­ther­more, it should pro­mote more eq­ui­table use of, ac­cess to and con­trol over land, hous­ing and nat­u­ral resources, with par­tic­u­lar at­ten­tion paid to the rights of women.

Third, the AIIB should rec­og­nize the def­i­ni­tion of free, prior and in­formed con­sent as en­shrined in theUnited Na­tions Dec­la­ra­tion on the Rights of In­dige­nous Peo­ples. Be­fore the ESF is fi­nal­ized, it is es­sen­tial that mean­ing­ful con­sul­ta­tion takes place with the rep­re­sen­ta­tives of in­dige­nous peo­ples on the re­quire­ments re­lat­ing to prior and in­formed con­sent.

Ad­di­tion­ally, the AIIB should make manda­tory en­vi­ron­men­tal and so­cial im­pact as­sess­ments for both high and medium risk projects, and pro­vide cri­te­ria and ex­am­ples of th­ese projects. It should also in­clude re­quire­ments in the ESF to screen pro­posed projects for ad­verse im­pacts on food se­cu­rity.

More­over, the AIIB should com­mit to due dili­gence, mon­i­tor­ing and su­per­vi­sion mea­sures of high-risk sub­pro­jects fi­nanced through third par­ties. The ESF should state ex­plic­itly that the AIIB’s so­cial and en­vi­ron­men­tal poli­cies will ap­ply to sub-projects fi­nanced through financial in­ter­me­di­aries, like banks or pri­vate eq­uity funds. The ESF must make clear the re­spec­tive re­spon­si­bil­i­ties of the bank and the client in mon­i­tor­ing and su­per­vis­ing projects that use clients’ sys­tems in part or in whole. The bank should also seek third party (in­clud­ing civil so­ci­ety) ver­i­fi­ca­tion in the mon­i­tor­ing of projects that use clients’ sys­tems, par­tic­u­larly when us­ing those of a cor­po­rate client.

Last but not least, given that it is ul­ti­mately the AIIB’s fi­nanc­ing that will be used for a project re­gard­less of the sys­tems used, there should be an ex­plicit pro­vi­sion in the ESF which al­lows com­mu­ni­ties who be­lieve they have been harmed as a re­sult of an AIIB-fi­nanced project to ac­cess and seek re­dress through a griev­ance mech­a­nism. The bank should seek pub­lic com­ments on the plans for a griev­ance mech­a­nism be­fore fi­nal­iz­ing the ESF to en­sure that from the start of its op­er­a­tions, af­fected com­mu­ni­ties have the op­por­tu­nity to raise griev­ances – both to en­sure re­dress, and to help in­sti­tu­tions learn from their mis­takes.

The author is the man­ager of Ox­fam’s China and the Devel­op­ing­World Pro­gramme.

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