World Bank’s Vision for Burma’s Future

By The Irrawaddy 5 November 2012

Reaffirming support for the reform process in Burma, the World Bank’s board of directors has confirmed a new interim strategy plan for the country as well as an US $80 million grant linked to community-driven development projects (CDDPs).

This aims to empower rural communities in choosing infrastructure investment they most need, such as roads, bridges, irrigation systems, school, health clinics or local markets. The World Bank Group will also help the government to improve fiscal governance and create conditions for growth and jobs by providing policy advice and technical assistance.

Kanthan Shankar, the World Bank’s country manager for Burma, spoke with The Irrawaddy reporters regarding the new program.

Question: Will the strategy work in conflict zones?

Answer: In the ceasefire areas. Conflict and development do not go together. There you would need humanitarian assistance from the UN and other donors. We are looking for CDDPs for the whole nation. It is good to start slow and learn. It is $80 million for 600-odd villages. We’re initially preparing for what we are going to be doing.

Ultimately, the projects themselves, the communities will decide—it’s not for us to decide. So to get to the point, it needs additional consultation and workshops because it is new for us in 25 years. We need to understand the process of each other step-by-step.

We hope the whole of Myanmar will be covered by these projects. We hope that these types of project will be in areas under conflict now. But that is something we will have to see how it plays out. It’s good to start with a few places.

Q: How much of the 80 million will flow into the government?

A: No. We don’t transfer the total money to the government. We create designated accounts at the township level. These will be created in every township for the CDDPs. We would transfer small $25,000 grants for these types of activities. It is still being prepared manually so I can’t say exactly. But maybe 20 percent or 30 percent of that will be first transferred. They will spend the money, show the receipts, then once half of this amount is spent, we’ll replenish the amount. For big projects, normally we do transfer directly to the contractor who is implementing the project. But that will not happen here as these are very, very small projects. They could do two projects with $25,000.

Q: How do you ensure transparency in the accounts?

A: You would need to have audits done on all those accounts quarterly. So it is called financial management reports. So you will know what has been spent and what they are expecting to spend and they can plan. There is an auditor in this particular case. As part of the agreement which we signed with the government, there is a commitment to audit every six months of every year.

We would also promote transparency. So we will help them have these projects, their budgets, what they are planning to do all as public information. On top of that people like me and my team will also be visiting and doing supervision of these projects.

Q: How do you manage the risks associated with these projects?

A: Well, the thing is to identify the different types of risk—like political risks or other capacity risks. We can then mitigate risk. This is our practice to look from the risk side. What risks there are that could prevent the project meeting its goal. That is our objective for development. Then we design the mitigation measures. Risk can never be eliminated but mitigated.

For example, we haven’t worked together for many years and so we don’t know each other. That is a capacity constrained risk. So what we do is start slow with no rush, see how everything goes. Then we would be able to scale up in terms of timing. Secondly, if you look at this project, there’s nearly 70 percent of the amount flowing towards capacity-building with training. Training is more important in our processes which have worked in other parts of the world with success.

We bring experiences and solutions from other countries and transfer them here. Money will be used on that—taking some of the implementing agencies and some of the decision-makers of village-level to other countries and show them how it works. So these are the ways we mitigate risks.

Q: So if the project is a failure do you have any proposals for changes?

A: We don’t expect the project to be a failure. We don’t mean it is a prefect plan. Development has a lot of challenges. Like I’ve said, to mitigate that risk we need to start slowly because we will learn that some things will work but some things will not work. And we will not repeat mistakes. So that’s how we would go ahead to do all things. We would need to be focused on the three main areas—the technical systems, the CDDPs and the policy advice.

Q: As you mentioned earlier, the World Bank, Asian Development Bank (ADB) and the Japanese government are trying to clear the arrears of the debt. I want to know whether you are forgiving the overdue debt of $397million?

A: We are not forgiving the debts. With regards to what happens normally, when a country is in arrears, the bank cannot have a program. In this particular case, we want to get rid of the arrears so that we could have a program. They need to do work not only with us but also with the ADB and with the Japanese government who is going to provide a bridge loan to go ahead and clear it so that we would be able then to pay back that loan through the government. So centrally the three of us are working together with the government to be able the address the arrears issues.

Q: How do you see the civil society organizations (CSOs)?

A: I met with CSOs in my six weeks. I was invited and enjoyed meeting them. They are young, very dynamic and very helpful. And there are a lot of issues which they bring up which are important. They are part of all of us trying to help.

Q: Which of the three pillars you mentioned is the most difficult for you?

A: All have their challenges. I wouldn’t try and separate one as being more difficult. We just want to show results on the ground. And this is part of these three pillars—one is this kind of the transforming institutions and we have already been doing this type of technical assistance. We are doing public finance management, financial sector, microfinance. We want to bring the good microfinance-helping regulatory framework.

There could be difficulties in the transformations of institutions. It may take longer than what we envision. We are very impressed by the pace of transformation and the pace of reforms in Myanmar. In terms of building confidence, the CDD type of projects, we are doing slowly but you’ve got to see the benefits on the ground. It’s very good to design the project but if you can’t see how it is helping those communities then questions will be asked. So there’s a risk in that.

With regards to preparing the road ahead, perhaps that is a kind of something that post-arrears we’ll work towards. Because there are so many priorities like what do we choose, what the government want us to do? So as for the World Bank, we have to be fit to be able to have the most impact.

Q: Are you also responsible for the International Finance Institutions (IFI)?

A: I’m responsible for the World Bank role. IFI is the International Finance Institutions which include the ADB. With the World Bank, we have the World Bank and the International Finance Corporation. We have a representative of the International Finance Corporation, Charles Schneider, who is also here in Myanmar. We all share the office and are working together for coordination.

Q: What about the timeframe to meet the three pillars of engagement?

A: This is the 18-month project. Normally we prepare a country’s assistance strategy as the bank’s internal purpose. This is what we plan to do in this country. But this takes four years. So why isn’t four years here? Whenever we are out of the country for an extended period of time, you want to come back and start with a smaller version and more flexibility. The flexibility which we are learning and after this, the next one could be a longer term strategy as it is a learning phase.

Q: When will you start the CDDPs?

A: It will start immediately in the sense that the preparation, the capacity building, as there are a lot of steps which need to be taken for us to understand each other’s processes. So the team is coming here in the end of November, beginning of December, to start the first launching workshops on the project implementation manual. So they are going to be working on finalizing that. So that will lay out all the tiny little steps like reestablishing the accounts, how the money comes in, what do you do for procurement, what do you do for the financial management, all that will be done.

Q: What are the real obstacles since you started at your new office?

A: It is surprising as we thought it would take a long time to know each other’s processes. But we are pleasantly and happily surprised that both your side and ours have been able to adapt very quickly. One thing which may be an obstacle is connectivity. For me I thought that connectivity could improve quickly—telecoms would be an area.

And telecoms is considered low-hanging fruit in most countries. The connectivity is so low here. I’ve worked in countries where the connectivity has moved from six to 60 percent in a matter of three or four years. So I hope that this is part of it as so many things are happening here. I’m very confident and positive.

Q: Regarding the political situation in Burma, what would you do if there is a derailing in the reform process?

A: We are looking forward and seeing the reform process go forward and we want to offer support like the rest of the international community. And we hope for the best for the people here.

Q: Do you have any message for the Burmese people?

A: There’s so much good will in the intentional community for the people of Myanmar. All of us are here to help. From the bank’s side, we bring global experience and solutions as our competitive advantage. The final decision is taken by the people of Myanmar what they feel is best for them and we are here to help them for whatever that may be.