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The New Development Bank and the ‘monster that is destroying lives’ in Limpopo

"the monster that is destroying lives" Medupi Power station. Image: Oxfam

By Desmond Latham (guest writer)

When the BRICS nations, Brazil, Russia, India, China and the middling South Africa, signed an agreement to launch a new international development bank, it promised lofty new ideals.

These included “contributing to development plans established nationally through projects that are socially, environmentally and economically sustainable” and “build a balanced… portfolio giving proper respect to their geographic location, financing requirements and other factors…”

It was sold to the world as a counterweight to the International Monetary Fund (IMF) and World Bank, both regarded as stooges of the West. Things would be different at the NDB promised the signatories. It would be about the people first, not the financiers.

Since the bank’s launch in 2014, first, as the BRICS bank then renamed the New Development Bank or NDB, it has shifted its headquarters to China and has increased its membership to nine from the original five. Bangladesh, Egypt, the United Arab Emirates and Uruguay have signed up over the past eight years.

The NDB was supposed to be an institution that had a better approach to transparency and accountability than the IMF and World Bank by establishing an independent accountability mechanism.

“However this has not been the case” reported Oxfam at the launch of two discussion papers as part of their Transparency and Accountability Series.

A much-touted Independent Accountability Mechanism (IAM) was supposed to be created as part of this promised transparency, so that affected communities at NDB projects could voice their opinions about development projects. As part of the BRICS stated aim of giving the developing world a new voice, there was much expectation about this democratic ethos.

According to advocacy agencies, this grand promise has been an illusion.

“We do understand that there is at least an intention to post project documentation online, but it is not yet on the website,” said Oxfam Global Impact Manager, Marianne Buenaventura-Goldman.

“But that is quite different from the information disclosure policies, and how challenging it is learning about what projects are about in terms of best practice.”

The African Development Bank and World Bank provide these sorts of project documents, but the NDB does not despite the fact that it has been operational for six years.

Dr Magalie Masamba, post-doctoral fellow at the Centre for Human Rights, University of Pretoria and member of the Civil Society Forum on the New Development Bank
Dr Magalie Masamba, post-doctoral fellow at the Centre for Human Rights, University of Pretoria and member of the Civil Society Forum on the New Development Bank. Photo by Oxfam.

“This is a platform for project-affected people to raise their concerns if they’ve been harmed by a project or policy,” said Dr Magalie Masamba, post-doctoral fellow at the Centre for Human Rights, University of Pretoria and member of the Civil Society Forum on the New Development Bank.

“It is important to ensure that financial institutions comply with their own policies, and the IAMs create a link between the community and the lenders of the projects.”

“While the IAMs differ in their design, but broadly they need to have three main things: Some sort of platform for compliance review, a dispute resolution platform and an advisory function of some sort,” she said.

South African state-owned enterprises such as Eskom, Transnet, the Trans-Caledon Authority and SANRAL have all borrowed cash from the NDB. One of the biggest recipients was Medupi Power Station which received USD480 million for “the Medupi Thermal Power Plant Environmental Protection Project”.

The objective is to reduce the amount of sulphur dioxide (SO2) emitted by the plant to less than 500mg/m3 (cubic meters) starting in 2026. The project entails the design of six flue-gas desulphurisation units along with ancillary features which will eventually cost a whopping USD2,75 million, of which 17 percent would be financed by the NDB.

So far so good.

Except it isn’t according to Oxfam’s Buenaventura-Goldman. “The… phases of the project at Medupi have given rise to numerous environmental and social concerns by community members located in Lephalale, Limpopo.”

Oxfam Global Impact Manager, Marianne Buenaventura-Goldman.
Oxfam Global Impact Manager, Marianne Buenaventura-Goldman. Photo by Oxfam.

During the launch of the two discussion papers, community leaders told media that Medupi has not had a positive impact on Lephalale. Activist, Elana Greyling, explained how the flow of cash into Eskom supposedly to deal with the sulphur-dioxide danger remains opaque.

“Giving Eskom loan after loan… to install pollution abatement technology, and them not doing it is problematic,” she said.

Greyling said that they have yet to find out the impacts from the original construction of Eskom/Medupi power station are. “It was a surprise to me, even though I am very active in the community… to hear that the NDB is funding the pollution-abatement technology for the power station,” she said.

Medupi is the fourth biggest coal-fired power station in the world and puts out a large amount of sulphur dioxide and other pollutants. These are extremely hazardous, and the Waterberg coal is particularly rich in sulphur.

“So, there is a lot of sulphur dioxide in this air,” said Greyling “Medupi exudes three times as much sulphur dioxide into the air as the whole of Britain.”

“Sometimes the sulphur smell comes, but it is not a clear indication of how dirty the air is,” Greyling warned.

She maintains the community of Lephalale are paying the price for development with their health, their water and their environment.

A Lephalale resident who preferred to remain anonymous said the citizens of the area were very happy about the development of the coal station because of the promise of jobs.

“I was thinking our poverty is gone, but only to realise now that we have had to add more to our problems,” she said.

“As you standing here, I’m sick. I have eye problems, my kids, they have problems, they can’t see, and I was wondering what I was going to do. I’m a child and health care worker by profession and I can tell you, God, why did we allow this to come to our place.”

“But now we are left to live with this monster that is destroying our lives,” she told journalists at a media conference.

“Electricity is being produced in my backyard ... but where I live ... I don’t have electricity,” said the Lephalale community member.

“The NDB won’t think about us, won’t think about the people of Lephalale, we are the poor of the poorest, so our lives matter less.”

Money in, pollution out

The NDB is not alone. The World Bank gave Eskom a loan specifically to reduce pollution at Medupi, but the flue-gas desulfurisation technology was never installed.

Activists want to know what the NDB is doing to ensure that their cash is being spent in a transparent way and yet community leaders say the NDB is not willing to intervene. Ironically, said Greyling, the NDB uses the very same argument that the World Bank uses – that the recipients of these loans must be accountable and transparent.

NDB Corporate Communications professional, Lavinia Engelbrecht, joined the launch of the papers online from bank headquarters in the Chinese city of Shanghai. She defended the bank’s record, saying the IAM was in the process of being established, but could not say how long it would take before it was functional.

“The NDB is six years old, and we’re learning, growing and maturing as an institution, we’re open to proposals to enhance transparency and accountability, and are in the process of operationalising this AIM,” said Engelbrecht.

“We have established an independent accountability mechanism in the bank, and we are in the process of operationalising this IAM in the form of the independent evaluation unit which is under the Board of Directors,” she said.

“The independent Evaluation Unit’s guidelines of operation are currently being carefully formulated and learning from stakeholders will be extremely valuable to the bank in this process going forward.”

The NDB has appointed senior staff at director general level to lead the work, but she could not say when the IAM would be likely to see the light of day. When pressed about the issues at Medupi including the poor air quality and high pollution levels, she refused to be drawn into discussing the specifics.

“Once projects have been approved, we do conduct monitoring and evaluation visits … but the NDB is not in a position to comment on this part of Eskom’s work, we are focused on emission reduction,” she said.

A year of waiting…

The Articles of Agreement (AoA) signed by all members of the NDB include section 23 of the Environmental and Social Framework which states that the NDB ‘…is committed to working with the client to ensure that social and environmental documents are made available in a timely manner…”.

But community leaders say there are no social and environmental documents for Medupi that are in the NDBs possession. In line with the right to request information from the NDB, Oxfam has received no formal response to their submissions from the bank.

The first information request submitted on July 28, 2021 concerned the need for information on the signed COVID-19 emergency programme loan documents concluded between the NDB and the South African Treasury.

A second request was sent by partner African Forum and Network on Debt and Development (AFRODAD) on October 22, 2021 requesting information about the Lesotho Highlands Water Project. The Bank responded to both requests through a generic letter which read:

“According to the Information Disclosure Policy, the Bank aims at publishing Project Documents [sic] to the Board for sovereign operations and summary documents for non-sovereign operations after Board approval.

“But what does sovereign and non-sovereign mean and what information is confidential?” asked Human Rights lawyer Dr Magalie Masamba.

“The NDB does not publish any information about what they mean by this.”

Another request for information was sent by the International Development Law Unit on September 24, 2021 about the status of the IAM. In response NDB Corporate Communications Division stated that:

“…Updated guidelines for project complaint mechanism (sic) are currently being formulated by the Compliance & Investigations Department. The same shall be reviewed further in due course to evolve into an Independent Accountability Mechanism as may be required for the circumstances of the Bank.”

Oxfam and the Centre for Human Rights say that the bank could deal very quickly with concerns about its transparency record by improving access to information immediately. They recommend that the NDB publish project documents and allow public discussion by improving their website and application for information process.

“We struggled with this,” said Oxfam’s Buenaventura-Goldman. “When we logged a request, we failed to receive an automatic response or any response to our application, and if you send a request via email you should get an acknowledgement,” she said.

However, one of the attendees pointed out that because the bank is based in China, the concept of engaging with citizens is not on the top of the NDB agenda. Access to information is highly regulated by Beijing, which does not poll its population for their point of view. They believe character of the communications arm of the NDB has been negatively impacted by a determination to avoid engaging with citizens.

Note: At time of publishing, Eskom had not responded to a request for comment. We will update the story once we receive that comment.