People must drive development

Mieko Nishimizu, the World Bank Vice President for South Asia, likes to visit villages and towns in countries that come under her purview, and interact with a villager or a hard-working farmer rather than go by what a government

bureaucrat or private sector executive ensconced in the capital may say or want to do. To this senior World Bank official, a visit to a village in the north or a rural hamlet in the south is a must-do on her annual trip to Sri Lanka. In an exclusive interview with The Sunday Times FT, Nishimizu talks on a range of issues from the need to develop a country according to people's needs and aspirations, the need for transparency and to a promise that the World Bank would honour the trust placed in it to help Sri Lanka emerge out of poverty. Excerpts of the interview:

The pulse of the people during your trip up north … what are they saying … what do they want?

This is my second trip (January 2003) since visiting Jaffna last May. In this sense I can compare notes with the May trip. The most striking feature is that the road from Jaffna to the line of control. This time I couldn't recognise it… any town on it, in fact. Chavakachcheri the last time was rubble, buildings broken down. There was very little agricultural activity on the road. I was amazed at the change. The main street is like any other main street. Buildings have been fixed, shops and businesses are operating. People are walking about buying goods. Vegetable growing has begun.

That's what we see in every country that goes through the reconstruction phase. It always starts with people, - small and medium sized private sector businesses and farmers. They are the first to get going. That's what accelerates the fruits of the normalisation process and the peacetime economy.

At the beginning, donors and government cash helps kick-start that process. If you add up all the money spent on reconstruction, donors and government money are in the minority. The major share comes from the private sector. That happens everywhere … it happened in post-war reconstruction in Japan and also in Afghanistan. In Sri Lanka's north it was good to see the private sector energy, drive and results. That was a very encouraging thing.

What about the mood of the people? Are they hopeful of peace … do they want anything from the bank?

They take it for granted that the World Bank will help. The poor people who spoke to us trust us. We will honour that trust. But what worries me a bit is that they look to the government and the World Bank to give them money, resources. They should be asking themselves what can we as citizens do. They should take some initiatives and then come to the government and the bank for help. This is the problem across Sri Lanka. The people look too much to governments for handouts.

Would the World Bank like to see people taking the lead role?

Our position is much stronger than that. We are not interested in helping a country unless the whole development process is driven by the people who we consider as the leaders (in development, in their future). In the reconstruction phase in the north and the east, the kind of project we will finance will be projects that come from people. We are not interested in a government-delivered, top-down reconstruction programme in which people have no say. We would like to finance development in a simple way that looks at the priorities of the people the way they see it. If water is their priority, then yes … we would get involved. We want the men and women in the village and the farmers - not the powers-that-be in the village - to decide their development. They must also contribute in whatever way they can. They could for instance maintain the infrastructure of a project themselves. That's the kind of partnership we are looking at.

Women and children are the worst affected by the conflict? Any World Bank programmes for them?

The bank is not the only one involved in reconstruction. All international organisations including many arms of the UN and others are involved in a coordinated way. Speaking for the whole engagement of donors, yes … we are paying attention to women and children. When it comes to reconstruction, women will be at the centre of everything. Otherwise it's not going to work.

Is there a need for a central coordinating agency for north-east development instead of donors/agencies working separately?

It is the government that must do that. That's not the job of the World Bank or any donor. We keep asking the same question. For example, there are some 17 government agencies involved in reconstruction work. So, who is going to coordinate this exercise?

Will there be answers to this by the time the donor meeting in Tokyo takes place?
Yes.

You had a meeting with the Sub-Committee on Immediate Humanitarian and Rehabilitation needs?

I met some officials of the LTTE and some members of this committee. It was the first time I was meeting the LTTE. I don't know maybe I may have met them unknowingly in the past.

Is this a chance for peace that we should not miss - in an alliance with the LTTE?

It's a question that every Sri Lankan is probably asking. It is by the way of actions by both sides, government and LTTE, that will demonstrate to the people that they are serious. It is action and an accumulation of that action and consistency of these actions all the time that will convince people. People are not coninced by words because they have been hurt so much.

On the proposed Tokyo donor meeting:

The process of work towards the formation of a Trust to disburse these funds has begun. The first serious pledging session is in Tokyo in June for development across Sri Lanka. It will work like this, the donor makes a choice of whether to bring funding directly to the government to finance projects in the northeast or to contribute to the Trust Fund. That's what I expect to happen. For instance if an X amount of money is pledged, some part of it will go through the Trust and the balance through the government.

The World Bank has accepted a request from both sides to run this Trust. We have conveyed our decisions to both sides.

Is the World Bank involved in organising the Tokyo meeting?
The lead organiser and convener is the Japanese government. The World Bank, ADB and the Japanese Bank for International Cooperation (JBIC) will be working together to assist the Japanese government at that meeting. The World Bank country director for Sri Lanka will with the ADB representative here go to Tokyo shortly to start that process. The teamwork is already happening.

Will the World Bank make pledges at Tokyo?
Yes, but I don’t know how much. It depends on the time frame. If we start in the next fiscal year, it would be new assistance; if it is this year then we will include what has already been pledged and allocated. What is important is for all donors to indicate their support over the medium term; not just for one year. It is not a pledge because every government has annual budgets and no government can pledge over many, many years. In a situation like this most governments could indicate their commitment say over a five-year period.

How do you write a cheque for an organisation that is banned in many countries including the US and Britain? Do you have a problem with that?

The LTTE is a party that a sovereign government here has recognised sufficiently to negotiate peace. Therefore there is no issue. You seem to think we would be disbursing money to LTTE authorities or their administration. As far as the World Bank is concerned, it is a loan which will be undertaken by the sovereign people of Sri Lanka. It will be on the government of Sri Lanka balance sheet as a debt to the World Bank. It makes no difference because any group of people in Sri Lanka is part of that governance system. As long as a group is legal and accepted by the government we have no problems with that.

You have been visiting Sri Lanka for many years. Is this a peace process that we should grab and not let go this time? What is your message?
Without peace, Sri Lanka will not be able to develop as fast as it should. Sri Lanka has everything going for her to grow at double-digit rates over a long period like some of the Asian Tigers. As an economist I think Sri Lanka can grow in peace times - with good economic policies and the necessary reforms, easily at 10 percent at least in real terms every year. For instance if a baby is born today, by the time that baby reaches school-going age, the national income of Sri Lanka would have doubled. It is obviously a chance that Sri Lanka cannot afford to lose from the point of view of capturing the dream of a dynamic model economy. This country has the ability to keep everybody and life worth living if there is peace.

You simply cannot afford, politically and economically, to miss this chance. That applies to every citizen in the north and south.

Would you describe the World Bank as a driver of the peace process or a facilitator?
We are not a party to the political peace process. The role of the bank is to help Sri Lanka reduce poverty and that's it! That's our mission. We are convinced whether in Sri Lanka or any part of the world, without reducing poverty no nation can enjoy peace. Poverty is one of the causes of instability across the world. It can last a long time and cause social injustice; exclude groups of people; exclude women. In that context we are helping the Sri Lankan people regain peace through our development work.

People are concerned that the peace dividend is yet to come?
When a post-conflict reconstruction process begins, one of the first things we do is to advise governments to focus on benefits that reach the people as quickly as possible. From day one when the reconstruction phase hits the ground, there is a need to focus on ensuring that people see the benefits. If it takes time to see the benefits of peace, the leaders need to be explaining to the people why and that for instance schools are going to be reconstructed. If the results are not yet there, there should be a constant flow of information at all levels to make the people aware of what is happening and going to happen. I hope everyone involved whether the government, LTTE or local authorities - will change their mindset and always drive things from the people's point of view. Otherwise the hopes and expectations of the people in the north-east will not materialise. They would be disappointed if they have to wait longer to send their children to schools or for the farmer to work a land free of landmines.

Is better communication necessary to keep the people informed?
It's not only necessary; it is absolutely a prerequisite for everything. I will be frank enough to say that the government of Sri Lanka has not been good at that in peace times in the north and throughout the island.

There seems to be a tradition of associating information with power. I think that is part of the Sri Lankan culture which is very harmful in general and very harmful in a situation like today in the north-east. You have to be absolutely transparent. If you don t have credibility and a long track record of transparency and governance, then people begin to doubt decisions. You need to be consistent for some time and then people will begin to trust you.

Will rising costs of living particularly rising fuel prices dampen southern enthusiasm towards the peace process?
Fuel prices levels have nothing to do with peace. It is good that fuel and related prices have to rise (when it rises overseas) and the government has a good policy on this because when prices fall, then it will also come down here. The political intervention in prices should not happen other than those supplied by monopolies. You don t want monopolies to be overcharging you. That's the role of the government.

On the other hand the reconstruction effort in the north-east will not succeed unless the government and the people focus on the south too with equal passion, equal opportunities, equal design. I visited the south first and the only difference in poverty between the two (north and south) is that buildings in the north-east are ringed by guns and shells, while in the south you see houses of poor farmers ringed by elephants. That's the only difference. Everything else whether there is clean water or better schools, is the same … the dreams are the same. For people, every waking moment is spent keeping one's body alive. There is no time to think, no time to read, no leisure. It's a life that you can't imagine. It's the same in the north and the south. I am more convinced of that now than ever before. The people in Sri Lanka should not worry about donors being biased towards the north. To the World Bank and the international donor community the whole nation is important, not just a part of it. The World Bank will be visibly present in both the south and the north and that is a pledge.

In fact even now a lot of attention is being paid to the south. There are a lot of good efforts already going on in the south. The minister responsible for southern region development is very sincere and doing lot of good work that I was able to see, by delivering goods to the people in a healthy, transparent way.

It's just that the people don't know that this development is taking place in the south. What appears in the newspapers is all about the north and the east and the peace process and Tamils being happy because the war is over. The south is not in the news and to some extent the media has also failed to spotlight development issues in the south, instead of concentrating on the north-east.

There is a programme called “577” representing 577 villages in the south, where a sponsor from the private sector is found to partner a village, with small sums of Rs. 10,000 to begin with. Villagers get together and decide how to work with this sponsor and his or her money.

So far 150 villages have found a sponsor and development activity in these villages has begun. Some sponsors are rich and give a lot of money and others not rich but give a lot of their time. It is a partnership between people who are better off in Sri Lanka and the communities who need knowledge, goodwill and a little bit of money. It is a fantastic programme. Do people in Colombo really understand about what poverty is really like in the south? They talk about it but cannot really understand it.

There are serious issues of corporate governance being raised over recent developments in the public and private sectors. Any comments?

I know little about what’s happening at the Securities and Exchange Commission. The government's new reforms programme is also focused on ensuring good governance in every aspect of Sri Lankan policy and institutions. I hope the government will not only come up with a good programme but also demons- trate their seriousness to implement it.

If the people don't believe what the government is saying then there is a lot of work to do to convince people who support a government, that the government is serious about being transparent. The only way people are convinced is when there are consistent actions attacking corruption … every month, every year. Consistency of action is important and that communication to the people is even more important. Honest and factual dissemination to the people is paramount.

There seems to be culture where governments feel they have to communicate with the masses only during election time. The rest of the time it is mere rhetoric that gets echoed. That culture should change.

The government needs to ascertain whether what they are doing is the right thing from a people's perspective. Perceptions are also important. If people (including the media) have doubts about government decisions or actions, then it is a serious issue and must be tackled by the government.

Are regulatory agencies working (given the kind of criticism they are facing at present)?
What Sri Lanka has to be proud of is that there are many regulatory agencies here that are well set up and independent. Sri Lanka is ahead of other developing countries in this context. Where you see that most is in the Central Bank. The Central Bank here is better than many central banks in the world, not just in the Third World, in doing their job. With regard to the small bank (Pramuka) that collapsed, Sri Lankans should be celebrating the fact that the Central Bank didn't allow a bad bank to collapse. It made sure that it was the investors of the small bank that got hit; not the savers.

That's a good practice. I would have been worried if the Central Bank allowed the bank to go bankrupt. It was a good thing that happened. The entire banking system didn't even have a hiccup. It means that the systems and the people have enormous trust in the Central Bank.

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