NewWorld Bank may be blind to harm of financial investments, says Oxfam
World Bank arm may sometimes be doing more harm than good, says global development group
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, according to global development group Oxfam.
In one project indirectly sponsored by the bank's International Finance Corp, 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 criticised a loan to the largest bank in Honduras, whose clients included a palm oil company tied to land disputes and killings.
"By channelling funds through third parties, the IFC loses control of how the money is eventually spent," Oxfam said in a report last month. "It has little proof of positive development outcomes."
The corporation directed about 63 per cent of its US$17 billion of commitments in the last financial 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.