The World Bank is permanently in danger of being shot by both sides. Many on the left have come to see it as a way for the developed world to exploit developing nations, whilst critics on the right sees it as either hopelessly ineffective or as propping up a series of disastrous economies.
Perhaps criticism from both ends of the political spectrum means that the World Bank is doing a good job of acting as "a global connector of knowledge, learning and innovation for poverty reduction."
However, one recent salvo was fired off by a body I am in complete agreement with. Twenty two of the world's leading clean energy entrepreneurs have joined with the Global Off-Grid Lighting Association to demand social bankability from the World Bank Group in the form of $500 million in risk-adjusted investment.
Social bankability provides public funds to projects that have been shown to be creditworthy and socially desirable, but have been refused support by the traditional banking sector. As Justin Guay wrote earlier this year in Greentechmedia.com, social bankability was operated by Franklin Roosevelt "...in 1933 when he decided that American farmers setting up electricity co-ops were creditworthy, even though banks didn't trust them. Muhammad Yunus did the same thing for enterprise loans to the poor with micro-credit."
A social bankability approach by the World Bank Group could help to bypass reluctant, sluggish or non-existent traditional sources of credit and shift aid and development power into the hands of those whom it is designed to support: farmers, micro-businesses and rural communities. As things stand, many people living off-grid have to find the money to pay for clean energy products – chargers, lights, radios, solar panels – but find they are stuck in a circular chicken-egg-chicken pattern. Money is needed to buy the products, but cannot be created without first buying the products. Credit is often the only option – and one that is too often not available to those who need it.
By pursuing social bankability, the World Bank can stimulate economic growth at a local level, help individuals and their communities to develop their own solutions and bypass the centralised bureaucracies that, by syphoning off cash that is desperately needed by those on the 'frontline', so often undermine development funding.
So, those 22 clean energy entrepreneurs and the Global Off-Grid Lighting Association are saying the right things. The World Bank needs to listen – and act.