There is certainly need in countries like Ghana, whose per capita GDP ranks in the bottom third of the world, with life expectancy in the bottom 15 percent and infant mortality in the bottom fourth. The IFC committed about $145 million in loans and equity in Ghana just in fiscal year 2012. Yet Takyiwaa Manuh, who advises the Ghanaian government on economic development as a member of the National Development Planning Commission, told me she doesn't think of the IFC's investments "as fighting poverty. Just because some people are employed, it is hard to say that is poverty reduction."
But the policies continue. Why? Tycoons and megacompanies offer relatively low risk and generally assured returns for the IFC, allowing it to reinvest the earnings in more such projects. Only a portion of this money ends up benefiting local workers, and critics contend that the IFC's investments often work against local development needs. "The IFC's model itself is a problem," says Jesse Griffiths, director of the European Network on Debt and Development (Eurodad), a Belgian-based nonprofit. "The IFC undermines democracy with its piecemeal, top-down approach to development that follows the priorities of private companies."
"We're not saying we're perfect," Rashad Kaldany told me. He is a veteran IFC executive and currently its vice president for global industries. The IFC operates "at the frontier," he said. "We know that not every project will work. It's about trying to make a difference to the poor and about achieving financial sustainability" -- twin goals that are challenging in combination.
When it comes to luxury hotels like the Mövenpick in downtown Accra, however, the IFC offers no apology for its investments, even making the case for them as an economic boon for poor countries. A January 2012 report from the World Bank says hotels "play a critical role in development as they catalyze tourism and business infrastructure," noting its partners include such "leading" firms as luxury chains Shangri-La, Hilton, Marriott, InterContinental -- and, of course, Mövenpick.
In Accra, Mary-Jean Moyo, the IFC's in-country manager for Ghana, told me the new hotel fights poverty by creating jobs. To illustrate, she recalled how the Mövenpick's manager "noticed that a few boys roller-skate on Sundays outside the hotel. The manager decided to hire them to work at the pool. That is development and helping local people." How many were hired, I asked. Six, Moyo responded.
When I spoke with Stuart Chase, the Mövenpick's manager, he told me that other kinds of investments besides the new hotel he was clearly proud of would do far more to stimulate Ghana's economy and reduce poverty. Chase, who has lived and worked in Ghana for years, mentioned the country's congested and potholed roads, poor electricity system, limited food supplies, and lack of trade schools. "There is no hotel school and no vocational training in the country," he complained. As a result, all the top staff members among his 300 employees are foreign.
Besides, Accra already has close to a dozen luxury hotels. Before taking over the Mövenpick, Chase managed another nearby five-star hotel owned by Ghana's Social Security and National Insurance Trust, the country's pension system. So when the IFC decided to finance Prince Alwaleed's hotel, it was entering into direct competition with the people it claims it wants to lift out of poverty. Moyo acknowledged to me that the IFC didn't study the local hotel scene before making this investment, unlike its standard practice. "We knew the company and had another successful investment in Kingdom that made the Ghana deal attractive to us," she said. The other investment? A $20 million deal in 2010 to help develop five luxury venues in Kenya, complete with heated swimming pools, golf courses, and organized safaris.
U.S. Sen. Patrick Leahy, a Vermont Democrat who sits on the Senate Appropriations subcommittee that has jurisdiction over U.S. participation in the World Bank, called the Ghana loan "not an appropriate use of public funds" when alerted to it by a 2011 Washington Times article. The U.S. Treasury Department, which administers American participation in the World Bank, defended the loan, telling the newspaper that the IFC package replaced funding expected from private banks that pulled out when market conditions soured, putting the entire $103 million project at risk. When I was in Accra in July, however, at least two other major hotel projects were under construction with private financing obtained in the same period. The prince's representatives didn't respond to requests for comment.