World Bank Group makes critical reforms, wins US Congressional support in time for its COVID-19 response: Oxfam reaction

Responding to the US House Financial Services Committee’s (HFSC) announcement that the World Bank and its private sector arm, the International Finance Corporation (IFC), have approved a package of reforms, including a freeze on any investments in private for-profit primary and secondary schools and greater transparency in financial intermediary lending, Oxfam International’s Head of Washington DC Office, Nadia Daar, said:

“We commend Congresswoman Maxine Waters, Chairwoman of the HFSC, for advancing this crucial reform agenda at the IFC where the US remains the largest shareholder, and applaud IFC CEO Philippe Le Houérou for his leadership in making these reforms possible. This is a huge step forward not just for the IFC, but for how we understand the role of the private sector in development.

“This historic decision from the IFC will ensure its investments support improvements in education without excluding children or impoverishing families. Public aid money should not be used to fund corporate-backed private school chains that fuel inequality. Other donor agencies and governments now need to follow suit.” 

The IFC’s freeze on such investments responds to growing concerns raised by Oxfam and many other organizations around the world, including more than 170 civil society organizations from 64 countries, who, in October 2019, called on the World Bank to end support to for-profit private education and instead ensure it invests in the expansion of quality public education that all can access. It also follows similar decisions by the European Parliament and the Global Partnership for Education, the biggest multilateral fund for education, against directing their own aid to profit-driven education. 

So-called ‘low-fee private schools’ disproportionately exclude girls and the poorest children, while paying extremely low wages to underqualified teachers and skimping on learning materials like textbooks, which impacts on the quality of education. In Uganda and Kenya, these schools have been accused of refusing to comply with minimum government education standards.

In addition to the freeze, the IFC announced an evaluation of its investments in private schools by the World Bank’s Independent Evaluation Group (IEG), followed by a consultation to determine whether there are any exceptions under which future investments in for-profit schools could be made.

“The IFC can help build fairer societies by limiting educational investments to companies that support free quality public education —for example, those producing culturally-relevant textbooks and learning materials, or those providing infrastructure, such as classrooms, laboratories, equipment and working toilets,” said Daar.   

“The COVID-19 pandemic should not be used by any donor as an excuse to invest in for-profit private education provision. Oxfam is calling on the World Bank to scale up financing to help countries meet the educational needs of the millions of children who are out of school, especially those without access to the internet, virtual classes, tutors or personal tablets and computers.” 

The HFSC also announced that the IFC has committed to require its financial intermediary clients, including its commercial banking clients, to disclose basic project information for all high-risk projects in their portfolios that the IFC is exposed to, as well as a sub-set of climate-related substantial risk projects. 

“We’re extremely pleased to see the IFC make this unprecedented move. This commitment will allow communities impacted by high-risk projects to know who is investing the money and what protections and rights they’re entitled to. With 60 percent of the IFC’s overall lending now going to the financial sector, more transparency is long overdue and more should follow,” said Daar.

This commitment comes days after the World Bank and IFC’s Board of Directors announced a $14 billion package to support countries and companies to respond to COVID-19. Much of the IFC’s financing, which totals $8 billion, will go to financial institutions.