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Kim’s World Bank strategy: real change or “PR exercise”?

6 December 2012

The World Bank’s new president Jim Yong Kim set out his vision for the institution at the Bank’s annual meetings in mid October, but his desire to build a ‘solutions’ bank and end absolute poverty comes with few details or big changes at the Bank. Next year’s replenishment of the International Development Association (IDA) will put Kim’s vision to the test.

Throughout the autumn the Bank has been publicising a campaign called “#whatwillittake”, which asks people to respond to the question “What will it take to end poverty?” via the social media site Twitter, which allows people to give 140 character responses. At his speech for the annual meetings in Tokyo, Kim revealed that within a year he would set a Bank-wide target to end absolute poverty, meaning bringing everyone in the world above the contested poverty line of $1.25 a day in income (see Update 80, 78, 62). Kim, though admitting that the Bank could not set such a target in isolation from governments, said that it would give the Bank “clarity” on how its activities, structures and processes “align with this notion that we are going to end poverty”. It is unclear if the Bank will be pushing to have Kim’s target included in the UN discussions about targets after the Millennium Development Goals reach their deadline in 2015.

Kim’s speech mentioned “build[ing] shared prosperity” as a goal, but did not delve into more detail. An internal committee at the Bank, chaired by chief economist Kaushik Basu and managing director Sri Mulyani Indrawati, is working on defining this concept in more detail and proposing targets, as well as agreeing a date by which the Bank proposes to end absolute poverty.

must address head on the issue of inequality

Sabina Alkire of the Oxford Poverty and Human Development Initiative at Oxford University welcomed Kim’s determination to end absolute poverty, but worried about other aspects of poverty that are missed by this focus. Alkire said “I’m hoping that the World Bank will think carefully about how it defines and targets poverty, so that its measures support seamless work towards eradicating deprivations in education, health, nutrition, assets, services and livelihoods, as well as in income.”

Alkire has pioneered a calculation of multidimensional poverty measures, and commented on emerging data from 11 countries: “For each country, we compared multidimensional poverty with monetary poverty using the same dataset. When the multidimensional measure did not include income as an indicator, 40 per cent to 80 per cent of multidimensionally poor people were not identified as income poor (the headcounts of poor persons matched for both income and multidimensional poverty). When each measure focused on the poorest of the poor, the mismatch between definitions of poverty was higher. This mismatch needs to be explored as the World Bank considers what targets to set itself to best achieve its goal of ending poverty.”

“If the Bank is serious about ending poverty, it must address the issue of inequality head on,” argued Nuria Molina of NGO Save the Children UK. “If even the IMF can recognise that inequality is one of the defining problems of our global economy, the Bank looks out of touch when it fails to put some of its analytical work into practice and support countries to actively manage and reduce inequality. It needs to think much more about inequality; but also about human rights, justice and sustainability.”

‘Solutions’ bank

In his annual meetings speech, Kim said that the Bank “must grow from being a ‘knowledge’ bank to being a ‘solutions’ bank. To support our clients in applying evidence-based, non-ideological solutions to development challenges. Let me be clear: when I say we will be a solutions bank, I do not mean to suggest that we have ready-made solutions for every development problem. We do not, nor is this our goal. Rather, as a solutions bank, we will work with our partners, clients, and local communities to learn and promote a process of discovery.”

Owen Barder, European director of US think tank Center for Global Development (CGD), expressed doubts about the solutions bank concept, writing: “Solutions emerge from internal processes. They are not things that can be put into banks.”

The final explicit theme in Kim’s presentation was internal reform at the Bank. Kim promised to “work with our board to streamline our procedures, simplify our processes, and cut down project preparation time.” The idea is for the Bank to focus on the results of its activities rather than the volume of finance it disburses. Kim has also promised that he has “no intention of diluting the Bank’s safeguards” (see Update 83).

New ideas

Aside from the overarching direction, Kim announced new initiatives in Tokyo. He promised to build upon the commitment to transparency and open data that was launched under his predecessor Robert Zoellick by “investing in data and analytic tools”. This includes the promise to “work with our partners to ensure virtually all developing countries have timely and accurate data.” In line with trying to tie Bank processes into his goal on poverty, he pledged that the Bank would make poverty data available annually instead of every three years.

The other new idea was something that Kim, a medical doctor, is borrowing from the medical sphere: openly examining failures. In a speech just before the annual meetings he announced that he wanted to build on the “fail faires” that the Bank has hosted in the past to “explore why specific projects fell short of expectations. I want to expand these events, make them more systematic, and disseminate the results. I will start chairing these workshops personally. The first is scheduled for early December. These sessions will not place blame on staff. Instead, they will let us collectively understand the factors that caused good intentions to yield less than satisfactory results. … Going forward, we’ll broaden participation in these exercises to include affected communities and outside critics, and we’ll publish the proceedings and conclusions.” Few further details about the new procedures have been made available, so it is not clear how far back the Bank will look for failed projects or who will be included in the initial discussions on why projects failed. Bank staff have said that operational policy staff will be selecting the projects to be discussed in the meetings.

Demba Moussa Dembele of Senagalese NGO Forum des Alternatives Africaines argued that Kim’s new directions represent only “another public relations exercise”: “I am not sure the new President has asked the fundamental questions why the Bank has so far failed in its mission. I am sure, like his predecessors, he would recommend the same old failed policies: the market, trade and financial liberalisation, minimal state intervention, and so forth. Without a radical departure from these policies, there will be no improvement. Unfortunately, he cannot go that road because his bosses, the US and Europe, will not allow him. So, when he talks of ‘non-ideological solutions to development challenges’, this is nonsense because the World Bank will always try to impose those ‘solutions’ with its ideology.”

The future of IDA?

Next year’s 17th replenishment of IDA, the Bank’s low-income country concessional lending and grants arm (see Update 69) will test the Bank’s new absolute poverty focus. Negotiations over IDA 17 will start formally in March, but in mid November the Bank held a mid-term review for IDA 16 (see Update 74) in Côte d’Ivoire. The progress report for the meeting, which assessed the 18 months of IDA 16 implementation, revealed that the Bank is still underachieving on some of its indicators. Only 48 per cent of completed country assistance strategies (CASs) reported at least moderately satisfactory achievement of their objectives in terms of development outcomes. The agreement for IDA 16 had targeted 66 per cent. The target of having at least 75 per cent of all IDA operations rated moderately satisfactory or better was also missed, as only 69 per cent of IDA operations reached that level. The Bank claims to be doing better on its special themes, reporting that all CASs discussed climate change and gender assessments, while 76 per cent of all IDA projects are gender-informed, up from 46 per cent at the beginning of IDA 16 (see Update 79, 75).

One of the key questions facing IDA 17 will be graduation, the process by which countries become ineligible to receive IDA funds and must take loans from the Bank’s middle-income arm, the International Bank for Reconstruction and Development (IBRD). A paper for the mid-term review identified six countries likely to graduate soon, including India, Vietnam, Georgia and Bosnia (see Update 83). India hosts the largest number of absolutely poor people of any country and about 35 per cent of the global total according to the Bank’s most recent analysis.

An October paper from a CGD working group, chaired by former director of France’s international development agency Jean-Michel Severino and CGD’s Todd Moss, argued that IDA needs to be completely rethought, including potentially shrinking it: “After 52 years of operating on more or less the same model, IDA is facing a perfect storm of reduced demand and slackening support for supply that requires longer-term thinking about the institution, its role in the international system, the tools at its disposal, and its overall business model.” Among their recommendations were to “revisit IDA’s performance-based allocation system” (see Update 43); “create an IDA+ transitional window between IDA and IBRD”; and “embrace potential new donors”.