The Development Puzzle | Veronica Nyhan Jones

If you are interested in the field of natural resources and economic development, then you surely know Veronica Nyhan Jones. Currently at the IFC Sustainable Infrastructure Advisory, she has been central to the implementation of World Bank Group development programmes in the extractives.

After decades of persistent reduction in global poverty, do we still need global development banks?  In this personal conversation with Veronica, we revisit the relevance of multilateral organisations,  discuss the nature of economic development and consider the most pressing global development challenges ahead.

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Highgrade is a not-for-profit organisation that produces interviews and documentaries that identify, capture and disseminate analysis and insights in the field of natural resources and social progress.

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With support from the German Federal Ministry for Economic Cooperation and Development, through BGR, and the Inter-American Development Bank.

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Transcript

Åsa Borssén:
Altruism is the unselfish concern for other people. Doing things simply out of a desire to help. As such it as a cost to the actor but a benefit to the recipient. Today we explore the drivers and practice of international development in the natural resources sector. I'm Åsa Borssén and this is Highgrade.

Åsa Borssén:
Welcome to Highgrade and this Natural Resources Podcast. Lao Tzu, the father of Taoism sai: give a man a fish and you feed him for a day. Teach a man to fish and you feed him for a lifetime. If you are interested in the field of natural resources and development, then you surely know Veronica Nyhan Jones. Currently at the IFC Sustainable Infrastructure Advisory, she has been central to the implementation of World Bank Group development programmes in the extractives. And she has one of those convening and resolving voices that are difficult to forget.

Veronica, it's a pleasure to talk with you.

Veronica Nyhan Jones: 
So great to be here. Thank you.

Åsa Borssén:
You studied in Africa, you went to Harvard to specialise on public policy, then followed a career at the World Bank Group. Everything seems driven by one same theme. Where does the attraction to development come from?

Veronica Nyhan Jones:
It actually started when I was really young. So when I was about 10, to 13, I worked in children's theatre, I was in the Boston Children's Theatre Stagemobile. We've travelled to community Parks and Rec centres all over the city to provide free theatre with a really diverse cast of kids. And we're delivering, you know, theatre to communities that were very diverse and probably wouldn't be able to pay to see live shows. We literally drove out, and there was a link to infrastructure because we drove out in a track that unfolded into a stage. And we propped up the sides on the jacks to create the stage and then unloaded the props, the stereo system, the costumes, we would put on two shows in the heat of summer, and then pack it all up, fold up the truck and go home and do it the next day for another community. And I think it really sparked this appreciation for how good it feels when you’re delivering value to often underserved communities, and particularly doing it with a group of diverse people, you know, kids from all different walks of life. And eventually when I went to Senegal to study at the University of Dakar and college that was just sort of that was the tip into the international sphere of community development.

Åsa Borssén:
Development is an interesting career choice. What do you think drives young students into it? Is it compassion? Is it a striving for control? Or is it about finding a place in the world?

Veronica Nyhan Jones:
I think it is purpose and connection. And I think that's true for young people and older people. But you know, today young people are going to be 75% of the workforce by 2025. But they're three times more likely to be unemployed. It’s a huge concern. And recent ILO study actually talked about how 12,000 young people from 120 countries, 73% of them were experiencing school closure. 13% had no access to education, 18% lost jobs. All through the COVID crisis. But 13% of them has started volunteering to help out and I think young people are really craving this sense of purpose and connection and companies and organisations that can provide that will be able to unleash an incredible amount of energy. But I think it's one of the things that we are not focusing on enough today.

Åsa Borssén:
So that explains the attraction to international development. Then how did the focus on natural resources come about? Was it planned or as for so many of us, accidental?

Veronica Nyhan Jones:
Accidental. You know, growing up in the US, I didn't learn a lot in my formal education about natural resource management, which I really regret now. I ended up doing my master's thesis on Corporate. Social Responsibility, again with Bank Boston, and uncovered sort of this missing space where they were doing lots of philanthropy, but hadn't figured out how they could transform those efforts into making local underserved communities more bankable. And when I moved to the World Bank after grad school, actually, the engagement with the private sector wasn't a huge focus. I was devoted to local community development and capacity building for local government. But after six years, I realised that all the capacity building we were doing, even if it was relevant, was for organisations and district authorities that really had no resources. And so the impact was always going to be limited. And I found that frustrating. So when I got a call from IFC, they were setting up CommDev in response to the extractive industries review, where IFC wanted to commit more intentionally, to local community development around its natural resource investments. And so I moved over to IFC 15 years ago and have really appreciated the unique opportunities of working with natural resources and infrastructure companies. Because many times they can only exist in a certain place, especially for natural resources. They're around for a very long time. And because of that, they have this unique incentive to build constructive rapport with local stakeholders, which is really self-enlightened and getting stronger every year.

Åsa Borssén:
I want to dig a little bit deeper into economic development. Let me put to you a philosophical question. Is economic development something that can be ‘imparted’ on recipients? Or does it need to be ‘acquired’ by them?

Veronica Nyhan Jones:
I, I am so uncomfortable with both of those words, actually. And I would first I would actually go back to my theatre roots. You know, for me, it's all a co -creation, it's a play with many characters, it's a dance. It's an orchestra that needs to move together, like great jazz. And actually, I do feel that there's a great connection between development and art, dignity and voice, you know, chemistry and soul. So really, economic development happens when you unlock the potential of individuals and communities. And our role at IFC is to be a catalyst through the private sector, to remove barriers and hopefully create those conditions. So that communities have the tools and freedom to achieve their aspirations, which may be economic, but also might have other important values like environmental stewardship.

If I could share an example of the work that we do in Guinea, you know, for example, we often find that there are multifaceted barriers around development. And sometimes we don't have the conveners and brokers to help this orchestra move together. So in one of the spaces where we've done a lot of work is around procurement and making sure that local people are included in the value chain of these companies. And some of the barriers are that, you know, companies want to work with local suppliers, but the companies don't have the right system and orientation to get that local in that granular. They need to break their contracts down into smaller bits and find ways to make it accessible to local communities. And then you have local, truly local entrepreneurs that either don't have the access and information to plug into those value chains, or they're lacking specific skills or capital to sell to large companies consistently, which large companies need. And then the governments, which ideally should be creating this enabling space often don't have the data or the policies to really ensure those localised solutions. So we work with all three.

We've done a recent study, actually, that shows that mining has benefited the broader economy in Guinea. But translating those benefits to local lives and households remains really insufficient. And so we need to think about ways we can spread that value chain and provide the social and physical infrastructure and financial infrastructure needed. But also, we've learned through the study on perceptions, that the more people know about mining and other major operations in their area, the more positive are their views, and the more they feel that they have the opportunity to be part of that upliftment. So a lot of our work also focuses on getting information out to communities in ways that they can understand and find relevant

Åsa Borssén:
It’s a very interesting case and it shows the complexity of it all, really. And theory does suggest that development is an alchemy of observable variables. And we used to believe that capital was the main ingredient. So a lot of development programmes were all about injecting money into places. Today, we know that productivity is ultimately the key. So the focus has shifted to education, technology and enabling infrastructure. How can we encourage investment in these fields?

Veronica Nyhan Jones:
I think you've hit on such an important point, especially rebuilding post-COVID, or through COVID. And of course, education is key. And we're really interested in expanding options for women and girls, especially in tech and engineering, partly to you know, feed the pump that infrastructure and natural resource needs, but also to avoid programming and artificial intelligence biases that, you know, if we don't have a diverse workforce, designing all of these things, we're just going to mirror the bias we have in our physical world into our virtual world. Ghana is one of those examples, where we've done a lot of incubation with local organisations to support data analytics, so that communities can better access and understand natural resource and infrastructure data. And I think this is particularly important to engage young people who are you know, are naturally kind of they’re digital natives. But they often feel an interested in these sectors. And they think that these sectors are not a necessary part of life, in part because they don't always understand the relationship between all these things and how they can contribute to a more responsibly designed and delivered, you know, natural resource and infrastructure sector.

And just to give another example from another part of the world. Similarly, in Mongolia, we supported the largest ever hackathon with young people on water and mining data. There's so many conflicts around water and mining. And again, most people don't understand how water is being used and the different techniques available to safeguard it. And so actually, this hackathon young people came up with three great ideas on different ways that they could help with the management of water and mining and make sure that herders and government and everybody was engaged. And actually, the local ministry got really interested in is now trying to incubate some of those ideas.

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You are listening to this Natural Resources Podcast in conversation with IFC's Veronica Nyhan Jones. We're talking about the nature of economic development, and it's link to the extractive industries. She puts forward a colourful analogy. She says, "development is like great jazz". And so we asked, can development be orchestrated? Stay tuned for the rest of the conversation.

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Åsa Borssén :
Extreme global poverty over the last decades dropped at a speed never seen before. Mind you largely the result of economic growth in China and India rather than World Bank interventions. Why do we still need global development agencies?

Veronica Nyhan Jones:
I think that the world still needs global development agencies, because we need somebody to convene collective action. We need somebody to provide a demonstration effect that it can be worthwhile to go into the most vulnerable, volatile places. And we need people who actors who are going to take risks, what risks with standards and transparency. And while I really recognise the many shortcomings of development agencies and I, I've reflected a lot on this, and very often we get it wrong, and that's very painful. I'm worried that if you don't have these actors, the market will not fill the gap. Unfortunately, global poverty is expected to rise now largely because of COVID but compounded with, you know, forces of climate change and conflict which we're already underway. So the World Bank estimates that an additional 88 million to 115 million people are going to fall into extreme poverty in 2020 and 2021. According to McKinsey, the world needs to invest an average of like 40 trillion annually, until 2035 into roads, ports, power, water, telecom, just to keep track with projected GDP. And today, two thirds of the global infrastructure needs are in emerging markets. I mean, almost 900 million people in the world are still living without electricity. So while I sincerely appreciate and celebrate that there are many more actors in the market, and, you know, some huge countries like China and India have been able to move their needle, there are still a lot of countries that desperately need partners and support.

Åsa Borssén:
And how would you say the rise of China as a superpower has changed the Global Development map?

Veronica Nyhan Jones:
Well, I'm actually really interested in China and climate. I mean, the global fight against climate change cannot be won without China. So in 2020, China announced a new target, that they were going to peak emissions before 2030 and be carbon neutral by 2060. So, you know, there's been lots of progress made, but the path to a net zero by 2060, is completely uncertain still, and would require a fundamental transformation of China's power sector. And the good news is, if they make progress, they also have the ability to influence and transform the world economy. But it means they would have to phase out coal immediately have a steep ramp up to renewables. We also know that phasing out coal has huge political and socio-economic implications that have to be dealt with, like where do you move all those people to. We're thinking a lot with the World Bank about the just transition around coal. And China would also need, you know, things like carbon capture and storage to make that big of a dent. So one of the things that we're thinking a lot about as an organisation is how do we ensure that we focus on climate change and reducing emissions, but we do it fairly, and we don't treat every country and region the same?

Åsa Borssén:
Let's move on and look specifically at the IFC approach. What does the organisation believe in when it comes to economic development?

Veronica Nyhan Jones:
So one of the challenges that we're seeing today in delivering on all of these values and opportunities is that there's a lack of bankable infrastructure projects in the world. So there's a huge need. But a lot of the needs are not packaged in a way that a financier could come and invest in. So one of our new approaches is upstream. So it's really helping to prepare these projects. Not waiting for beautifully packaged investments to come to us or come to the market, but to invest in research and development, diagnostics and proof of concept that ideally will create more bankable projects for all investors. And just as one example, in energy, were doing a lot to support energy storage technologies, venture capital investments and battery storage, and supporting nascent technologies like an offshore wind, floating solar PV support from mini grids.

We believe fundamentally in local benefit sharing, whether it's in hydro, wind, and solar, as well as mining, and for us benefit sharing, you know, making sure that the host communities and societies impacted by the risk and inconvenience of these projects, that they receive some tangible benefit. And so, importantly, this goes beyond doing no harm and just mitigating negative impacts. This really means, you know, having them able to say I was better off because this investment came here, even if I had a lot of sacrifices along the way. And for us benefit sharing typically takes four forms. So it might be in the shape of, you know, revenue sharing, or shared ownership, even like, like equity shares in hydrogen, Nepal, might be about better public service and infrastructure delivery, and might have to do with local skills and livelihoods like we talked about in Guinea, or it might have to do with environmental stewardship.

Åsa Borssén:
There has been a fierce debate, both in the World Bank Group and beyond on whether or not to support the extractives sector. Where do you stand in that discussion?

Veronica Nyhan Jones:
Well, let me focus on mining. If something has not grown, or today, 3d printed, it’s mined. You know, mining is such a dominant part of the economy in over 80 countries worldwide. And it's such a part of our lives every day that we cannot immediately change. So, for us, the focus is on you know, mining needs to happen, but it needs to happen in a way that is responsible and transparent and inclusive. And that really supports the environment and communities along the way. And one of the reasons that this is becoming even more important, and this is where I'd love young people to have the opportunity in their formal schooling to be given better information about, is really this shift towards a green economy and a low carbon model. Because we're not going to be able to fuel the green economy without mining. There's so much in terms of, you know, metals and minerals that are required, you know, copper, silver, lithium, cobalt nickel. And as we have population growth, and increasing urbanisation, as well as hopefully, you know, income growth, this is just going to put even more demand on these minerals to provide these things.

Åsa Borssén:
And would you go as far as to say that the extractives is actually good for development.

Veronica Nyhan Jones:
I think that's too binary for me. Because we have to be very frank, that there are good and bad aspects to every mining operation, for example. And that the importance is for us to try and internalise all of those potential ripple effects to ensure that we have, you know, guarded for human rights and for the environment, while also making sure that the benefits in the in the short term, but also critically in the long term, outweigh the sacrifices. And that calculation should be made around every project and design choices need to be made to ensure that I think we've made a lot of progress, we're still a long way off from the kind of clean and inclusive mining as a catalyst for development that we would all like to see.

Åsa Borssén:
A lot has been said about embracing the private sector as an engine of growth. And possibly IFC supports companies more than any other multilateral agency. What is ultimately the track record in steering companies to do the right thing?

Veronica Nyhan Jones:
Well, we fundamentally believe that good ESG - environment, social, governance - is good for business. So that is really our brand and our bread and butter. We integrate ESG into our entire project cycle. And what I think makes us somewhat unique is we have experts in house who engage in this and opine at every single stage of a project. And they monitor compliance with our performance standards, but also offer additional support in terms of advisory and policy. So as a lot of folks know, we have a sustainability framework that includes eight ESG performance standards. And this is a model for all the equator banks and increasingly, you know, for other large investor institutions, as well. So you don't have to take our word for it, you can ask JP Morgan, or Barclays, or increasingly a lot of institutional investors, who are judging their potential investments now, with a really strong ESG lens. And so we would say that, you know, if you want to be a partner of choice, both to potential investors, as well as to host governments, getting a strong ESG in house capability is essential. And we're seeing a lot of organisations kind of scrambling to build up those skills, or at least find the partnerships that they need. I mean, today, I think if, I think it was EY recently said that, you know, global mining executives are still listening social licence to operate is like one of their top three risks over the next 12 months. And that's with everything else going on in the world.

Åsa Borssén:
It does sound like you believe more in in a carrot approach than a stick approach.

Veronica Nyhan Jones:
We believe in a hand holding approach. So we want to partner with organisations, both developers, investors, governments, that share our values and believe fundamentally, that this is the right way to do business, because it's good for host societies, and it's good for business.

Åsa Borssén:
Veronica, this has been a really interesting conversation. And I'd like to conclude by looking forward, to think about the issues ahead. What do you say will be the biggest global development challenge of the decade?

Veronica Nyhan Jones:
We're not taking care of young people around the world, and that includes very wealthy nations. You know, youth disillusion could lead to a huge lack of confidence in society and institutions, which would really shake us to the core. Related to that is this issue of climate. But for me, you know, how are we collectively managing natural resources, especially water? I don't think we're preparing people to understand what is required to make good decisions around those natural resources and how we can create space in the cycles for people to have safe access. And then finally, when it comes to social cohesion, versus this digital divide, you know, we're on the brink of just exacerbating what is already outrageous inequality. And I don't know how globally we're going to function if there's a complete lack of trust and disconnect.

Åsa Borssén:
And is the world prepared to tackle these issues?

Veronica Nyhan Jones:
I see a lot of hope, and energy, in addition to all the challenges. So I fundamentally believe that more people want to be moving in a collectively positive direction than those who want to just take care of themselves. I think that that is the Battle of human nature and the Battle of this fragile planet. But if you don't maybe like the recent wonder woman movie that probably a lot of people saw because it was during lockdown. I just believe in people around the globe, wanting this shared prosperity and being willing to make sacrifices and trade-offs that they feel are fair in order to achieve that. And so every day, I'm just seeking out those people and trying to find ways that in our in our own way we can support them.

Åsa Borssén:
What a perfect way to end this conversation. Veronica, thank you so much for joining us.

Veronica Nyhan Jones:
My pleasure. Thanks for having me.

Åsa Borssén:
And thank you all for joining us. Development is like great jazz, a co creation that happens when different players get together. Sometimes these players need a bit of hand holding, and that's where the IFC comes in. 

Following decades of consistent global poverty reduction COVID has inverted the trend. In 2021, the world poverty will grow by an additional 88 to 115 million people. Veronica argues that the work of the IFC is as necessary today as it has ever been. 

This podcast was done with support from the German Federal Ministry for Economic Cooperation and Development through BGR and the inter American Development Bank. Be sure to join Highgrade in our social media channels for daily insights and behind the scenes moments. Until next time, so long!