Robert Zoellick (World Bank President), Sam Worthington (CEO Interaction)
We’re coming out of the worst financial crisis for fifty years. At the bank we’ve tried to move fast to assist our clients in the developing world. Our disbursement level has also been very high. One of the reforms we’ve made is with development policy loans. We also developed a special facility with IDA. We’ve been able to work closely with civil society in developed and developing countries.
We’re not out of the woods yet, unemployment will continue to be a problem. We have been working with shareholders to get a capital increase, the first one since the late 80’s. We expect $3.5 billion of paid increase, complimented by an increase of $1.5 billion related to the voice and vote issue.
If we’re not able to get this capital, we’d have to start slowing down, and wouldn’t be in a position to help countries moving forwards. We’ve tried to keep focus on core issues: to help countries with low carbon growth; fragile states – where we need to get the right mix of governance and security; agriculture; safeguards policies; and the MDGs; gender our next world development report will b on gender and development; will be focussed on a good replenishment for IDA 16.
There are a lot of aspects to the issue of voice. This meeting the focus will be on shareholding reforms. This meeting we plan to move another 3 per cent to get up to 47 per cent. Trying to raise money at the same time as taking away shares is not an easy task.
We are also trying to make the Bank a more open institution. Trying to draw from the Indian freedom of information act. The approach will be based on a negative list of the documents that you are not able to access. Another piece announced this week – was to start an open data policy.
Sam Worthington (CEO Interaction)
Where you see countries that have seen significant growth as a result of integration with the global economy, there has been significant retraction. As much as there is local resilience, that resilience is limited. Between 2008-2009 remittances dropped by $21 billion, again for the first time there has been a significant drop in aid flows – particularly private aid flows. There has been a stepping up of policies from the Bank and IMF of counter-cyclical policies. The real crisis has been the crisis that preceded the financial crisis; the food and fuel crisis.
Ultimately it’s not just about nation states pulling themselves out of poverty.
How can we put on pressure on donor promises? Can the Bank hedge these promises?
- RZ The OECD DAC tracks the commitments and contributions of donors. To keep the pressure on is something that’s all of our responsibility, it’s a matter of politics. IDA contributions are a multi-year pledge, we do this to keep pressure through several years. Leaders that want to show assistance – are under pressure to show results. This includes connecting inputs with outputs and outcomes. One of the reasons there has been good support for vertical funds on health is because of the ability to measure.
- We can show that performance is linked to public participation. There needs to be dialogue with people in the country. One of the best ways to counter corruption is to enlist the community. What can we do, what works, we have tried to institutionalise this.
MDGs …education in developing countries, lack of financial accounting, excessive payments for parents. Can there be a focus on corruption alongside the MDGs?
- RZ Need to make sure it isn’t a matter of the North saying to the South, we know you are corrupt.
Climate governance…perhaps the time has come for the Bank to actively encourage civil society groups to monitor, verify and report on these projects. Plea for funding for decentralised, renewable energy for the poor and no more Eskom-style loans.
- RZ Explaining the difficulty we faced. We tried to consider the baseload needs. But we didn’t see, and the South African government didn’t see a viable alternative to provide the extent of the energy needs. We are looking throughout Africa at off-grid facilities. It is supercritical technology, US EPA approved, it is among the best you would find in OECD countries.
What’s the Bank going to do with the money it’s asking for in the capital increase?
- RZ There is a pressure in a lot of countries to give bilaterally rather than multilaterally. Working multilaterally increases leverage, it reduces the fragmentation and flag planting of aid, which is why the Bank is keen on multi-donor trust funds.
What mechanisms is the Bank putting in place to help governments to harness the diaspora in the design and implementation of recovery efforts?
- RZ the best thing is not to lose the people in the first place. Botswana has worked out ways where post-graduate qualifications are paid for, but there is a requirement for them to come back afterwards. We seek in any country coming out of conflict to reach out to diaspora, they may come back or they may send finance.
Brazil and multilateralism?
- RZ One reason why developing countries might not have been hit harder during the crisis that we have tried to support was to do more financing in developing countries.
- The capital increase – If it goes ahead for the IFC will be a special increase related to voice. In addition we looking at the hybrid issuance – along-term bond that could issued to developing countries. 50 per cent of IFC projects are in IDA countries. We are trying to move out of emerging markets when they don’t need us, and moving into poor countries, and post-conflict countries.
Climate finance and governance. Donors seem to be looking at the Bank as a channel for climate finance, developing countries have concerns over the Bank due to equity. Are there opportunities within financial reform for climate change?
- We have been able to leverage the funds by 10:1 of which about 30 per cent is from the private sector. Our view has been, we’re trying to demonstrate what can be done on the ground, and how to leverage. We’ve built support in Asia and Latin America but have further to go in sub-Saharan Africa and small island states.
- We can use some of the tools that have backfired on other things, to help people. Eg weather derivatives for agriculture. There are possibilities for risk sharing across developed and developing countries.