Interview to Fisseha Tessema – Development Finance Expert Washington, DC

Many of the supplies of materials for the agricultural or health sector – in developing countries – come from funds managed by the World Bank: what are the procurement logics used? Or rather, are there ESG criteria when choosing UN suppliers, or price is still the dominant variable?

Let me give a bit of background: procurement logics are very different depending on the types of financial tool. For instance, investments tools (long term, 4/7 years) are the very powerful one, in which we come up with ideas, develop objective for the project, break them down into project activities and then the recipient government designs a development workplan. Once that it is ready, we obtain a list of activities, a budget and a timeline. Then Governments discuss the whole package and agree on it. The purchases should be in line with the scope of the project, then the quality of materials is another criterion (counting usually for 70% of the decision process), then price (counting for 30%). Last but not least all the goods purchased need to have a social and environmental risk management tool. This latter criterion is a Yes/No variable, without ratio, meaning that if the good has no environmental risk analysis nor mitigation tool, then it cannot be purchased by the World Bank. 

The perception of the importance of environmental sustainability in Africa is not at all prioritised in the middle and lower segments of the population in determining consumption choices. Should this fact worry us or is it only a matter of time? And if so, how long could it take to reverse that?

Poverty is the worst enemy of environment and social justice. As people get poorer and poorer, they attack the rest of the ecosystem. This is what happened, for instance, with deforestation dynamics. However, the key to avoid all that is to leapfrog the classic path to growth (very capital intensive) followed by other countries, and finally reach a more sustainable level of consumption. Obviously, the process is not easy, as politicians are often damaging the system injecting corruption and diminishing the funds for adopting greener solutions. Yet, Africa middleclass needs to leapfrog and this is not just a theoretical ambition: in Rwanda, for instance it is happening. It’s the fastest growing country in Africa and the greenest. Obviously, there is no need to copy-paste what Rwanda did, as all countries are very different, and they need to find their own way. The biggest capital in Africa is natural capital, and it is there for allowing these countries to grow. If it is not happening it’s a matter of governance. 

The innovation funds available to developing countries mostly intercept innovations that are ready for scaling and managed by large companies: is there a way to connect WB purposes to the hundreds of small innovators who have products that work but no mature commercial and logistical structure yet?

This is related to how financial instruments are designed. Some go to small scale innovators. The only problem is that funds are limited but the willingness is there. The prevalence of big funds for big beneficiaries is related to how the money is challenged. 

The funds available to UN agencies and traditional donors seem to be getting less and less: is there a crisis in multilateral development aid (a reflection of lower Govts contributions) or is International Aid changing? If so, how will financial interventions in support of developing countries develop in the coming years?

In my view the concept of multilateralism is in crisis. Why? In many countries nationalist movements are growing and the violence (war, state fragilities) is also growing. Just think about Ukraine. People confidence in multilateralism is decreasing due to that. Consequently, when such concept is in crisis also the organizations based on it are in troubles. Interestingly, the overall financial availabilities for aid have decreased, yet the share of responsibility of such multilateral organizations has risen, this because there are fewer players than before. Lastly, there are more and more competing priorities: Ukraine crisis is eating up money for other needs. So unfortunately, yes, the whole system is in crisis. 

If you had unlimited room for manoeuvre and no budget problems, what would you do to help solve the top 3 problems/emergencies related to climate change?

If I had no financial problem and no political problems, then I would complete the energy transition, bringing all economies away from fossil fuels. Then I would expand forest areas decreasing deforestation. Lastly, I would focus on sustainable water management…. of oceans, rivers and underground waters. 

Could you recommend a book and a film to help us better understand your work and the relevance of International Development?

I recommend a BBC documentary called “Hope in a changing climate” by John Liu, focused on landscape management. Forest restoration is possible: it is in our power and authority. For instance, EU has recently approved a law aiming every EU country to restore 20/30% of their own land ().. 

As a book I would suggest “Poor Economics” by Abhijit V. Banerjee and Esther Duflo because it is evidence-based exploration of the fight against global poverty.

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