What we’ve learned by tracking COVID-19 relief financing in Central Asia and the South Caucasus
By Hayk Abrahamyan
For the past two years, the COVID-19 pandemic has impacted us all. At the International Accountability Project (IAP), we shifted our work to address the immediate needs of our staff and partners. IAP also integrated tracking COVID-19 relief financing and addressing rights abuses in the name of limiting the pandemic into our existing work. You can read more about what we’ve learned by tracking COVID-19 relief financing for two years. More than two years after the COVID-19 pandemic gripped the world, what is the state of community-led development?
To respond to the urgent needs posed by the pandemic, development banks harnessed their political and financial power, committing billions of dollars to the pandemic relief. Many of the projects were proposed as part of a rapid disbursement or “fast track” modality. While funds were initially broadly welcomed, fast-tracking financing meant that projects were proposed and approved with shorter preparation times, often less environmental and social due diligence, and with substantial limitations on stakeholder consultations — that is, communities were less likely to be meaningfully consulted and provided clear opportunities for engagement.
From January 2020 to March 2022, the Early Warning System tracked 103 known COVID-19 relief projects in the region, a total of at least $7.92 billion USD. You can explore these investments and access project summaries, including project documents if disclosed, here.
- The Asian Development Bank, World Bank, Asian Infrastructure Investment Bank and European Bank for Reconstruction and Development are the leaders in terms of investment amount and the number of projects financed.
- The investments mostly went into the public sector to address urgent needs caused by the pandemic. At the same time, the private sector received more than 1 billion USD, which mostly went to MSMEs, as well as the finance, energy, transport and other sectors.
- Projects financed through financial intermediaries constitute at least 36% of the total number of projects.
- Around 38% of the total investments tracked by the Early Warning System during this time is directed at projects in Kazakhstan.
- Uzbekistan has the most number of projects: 22 with a total of $2 billion USD investment.
Domestic outbreaks of the COVID-19 and pandemic-related restrictions have caused serious economic and social hardships in the countries of Central Asia and South Caucasus. While the effectiveness of containment measures differed from country to country the severe socio-economic impact was not possible to avoid. In Central Asia, 1.4 million people were pushed into poverty and 135,000 people in South Caucasus were projected to become poor in 2020. The pandemic especially hit the vulnerable and marginalized populations — women, children, migrants, informal workers, etc. Existing gaps and challenges in employment, social support, education and healthcare sectors not only aggravate the impact of the pandemic but also create unfavorable conditions for post-pandemic recovery in the region. The humanitarian situation in some countries further exacerbated because of political instability and armed conflict.
The governments initiated targeted social protection programs to alleviate the social and economic hardships caused by the pandemic. The effectiveness of these programs has been questioned as millions of people in need of social security were excluded. Even though some development banks, like the World Bank, recognized the need for more universal social protection programs to address poverty and social-economic inequalities, they still financed many targeted social protection programs in the region. These projects included activities such as targeted support to food insecure households, temporary unemployment benefits, regular payments to pension beneficiaries, emergency cash assistance to households that fell below poverty line because of the pandemic, etc.
Our civil society partners in the region monitoring the implementation of social protection programs raised concerns about the lack of transparency and accountability. In many projects the partners noted the governments’ inability or unwillingness to provide accessible information to the public, as well as concerns about corruption and misuse of funds. In Armenia, a local health rights organization analyzing the international financial support to the Armenian government in response to the pandemic, has been struggling to find any accessible information about how the funding from the World Bank and the ADB is used. In Turkmenistan, a local public-health-education organization has been advocating for the World Bank to release a detailed stakeholder engagement plan accessible in Turkmen language for the COVID-response project. In Uzbekistan, Miraziz Bazarov, a blogger and human rights activist, published about the misuse of funds from development banks and voiced about a possible case of corruption in an ADB-funded COVID-response project. In Tajikistan, a monitoring of the World Bank-funded COVID-response project by a local organization revealed the gaps in the support to vulnerable households, including cases where beneficiaries received less than promised or nothing at all.
“The lack of interest from the government officials on local level results not only in misinformation or lack of accessible information about development projects for communities, but also in increased negative opinion that corruption is accompanying these projects. it is the lack of transparency that causes a negative public perception that all these [social protection projects] are not effective and are linked to corrupt interests of a small group of people” — Civil society partner from Uzbekistan
Development banks continued financing major infrastructure expansion, mainly transport, energy, and water resources. The development banks’ failure to ensure the communities’ access to information and therefore to ensure their meaningful participation can lead to significant negative consequences.
Since the start of the pandemic, major non-COVID 19 investments in the region have mostly come from five banks –the World Bank, Asian Development Bank, European Bank for Reconstruction and Development, Asian Infrastructure Investment Bank and New Development Bank (the New Development Bank only invested in Russia). You can explore projects funded by 15 development banks in the region here.
All the above mentioned five banks had the energy sector as one of their primary targets. Since 2020, 49 projects were financed with a total of 4.2B USD investment. Almost a third of those projects are proposed in Uzbekistan. The projects include support to development of the electricity market, construction of solar plants, hydroelectric power plants and thermal power plants. Gas sector was another priority, as large scale gas pipeline projects were proposed in Afghanistan, Turkey and Turkmenistan. Particularly, the TAPI Gas Pipeline Project is proposed to the Asian Development Bank by Afghanistan, India, Pakistan, Turkmenistan. The project is classified as high risk project (Category A), as it implies involuntary resettlement impacts and crossing of key critical habitat areas. It is estimated that approximately 7,730 people or 1,100 households (95 people in Turkmenistan, 1,450 people in Afghanistan, and 6,185 people in Pakistan) are within the 38-meter corridor who may be affected.
According to the data tracked by the Early Warning System, the transport sector is another priority area with 39 projects and a total of 3.34B USD investments. Transport sector is also notable for the large share of high-risk projects — 7 Category A (or the highest environmental and social risks, as categorized by the banks) and 16 Category B projects (substantial or moderate risks). The projects in the transport sector include financing of large scale construction projects, including construction and rehabilitation of roads (Tajikistan, Georgia, Uzbekistan), railways (Uzbekistan, Russia, Turkey), ports (Russia, Georgia) as well as development of urban public transportation systems (Armenia, Georgia, Turkey). In Georgia, the construction of Algeti — Sadakhlo road, E-60 Rustavi — Red Bridge Section (approved by the European Investment Bank) and Batumi-Sarpi Bypass (an Asian Development Bank-proposed project) both will affect hundreds of families and foresee resettlement of dozens of them. In Turkey, a number of high impact railway line construction projects are proposed or approved by EBRD, AIIB, and WB.
Water and sanitation infrastructure development projects received a total of $1.86 billion USD in funding. Two-third of those investments went into water supply and water resources management projects in Uzbekistan. A large-scale water supply infrastructure development project will be considered by Asian Infrastructure and Investment Bank in April 2023, which implies construction and rehabilitation of well fields and intakes, reservoirs, main water lines, water treatment facilities in Karakalpakstan and Khorezm regions of Uzbekistan. Another project in Kyrgyzstan, which was approved by the European Bank for Reconstruction and Development, will finance the rehabilitation of the irrigation water conveyance infrastructure, including on-farm canals, intake structures and pumping stations in Jalalabad, Naryn and Osh regions of the Kyrgyz Republic. Both projects imply acute ecological impact, land acquisition, and construction related risks.
Finally, a great number of policy-oriented projects were financed aimed at developing sectoral policies and strengthening institutions. Most notably, projects proposed in Uzbekistan included support to market reform, tax administration reform, development of PPP policy frameworks, etc. The World Bank will support the mining sector institutional framework in Armenia and Afghanistan.
Even before the pandemic IAP’s assessment of several banks’ access to information practices showcased the barriers for the meaningful fulfillment of communities’ right to information. (Read our assessment of the disclosure practices and policies of the IDB Invest; the European Bank for Reconstruction and Development; the New Development Bank; the United States International Development Finance Corporation; and the African Development Bank.) The pandemic and subsequent lockdowns and social distancing rules created additional burdens for citizens to participate in the development processes. As the governments started to use the pandemic as a pretext to impose restrictions on civic space, communities were effectively prevented from safely accessing information, expressing their opinions, and meaningfully participating and leading project processes. The experiences of communities and human rights defenders under pandemic restrictions were documented in Unhealthy silence: Development banks’ inaction on retaliation during COVID-19.
Hayk Abrahamyan is the Community Organizer for the South Caucasus and Central Asia at the International Accountability Project based in Armenia.