IFI governance

Background

The private sector and poverty eradication

The World Bank Group vision: Using results measurement to drive for change

19 April 2013 | Minutes

Sponsored by: IFC and Bill & Melinda Gates Foundation

15 April 2013

(Note that video of this event is available online)

Speakers:

  • Jin-Yong Cai, IFC CEO
  • Jim Yong Kim, World Bank president
  • Bruce Mac Master, director department for social prosperity, cabinet of the president of Colombia

Presentations

Jin-Yong Cai:

  • Private sector plays significant role in developing countries, provide tax revenues, jobs etc
  • Jobs surest path of reducing poverty
  • What gets measured gets done, lessons learned into results for improvement
  • How to do it so that it’s useful to our clients, not just measure for our own purposes?
  • How IFC measures results: integrated systems, 3 components: International Development Goals (IDGs), monitoring and tracking system, systematic evaluation of the impact of our activities
  • Relies on reliable data
  • Reporting requirement standards across financial institutions, working to harmonise these
  • One client said we are not in the business to collect development data, we focus on profitability
  • Jim Yong Kom focus on results measurement, this was discussed in hisfirst meeting with IFC

Jim Yong Kim:

  • Believe we are living in a moment of historic opportunity
  • Tremendous time achieving lifting people out of poverty
  • e.g. China, strong economic growth, jobs mostly in private sector lifted people out of poverty
  • But there is a difficult road ahead
  • This weekend we’ll be hosting governors, will put forward two goals:
  • Ending poverty by 2030, halve one more time, then another time and then another time to get below 3%, in next 15 years
  • Low hanging fruits have been picked, we now have hard work ahead of us to make progress, including fragile and conflict affected states (FCAS)
  • Private sector must be there to create jobs to lift people out of poverty
  • PPPs you will hear over and over again, like it’s a song, but its more than that
  • The extent to what we commit to working with the private sector, determines how ambitious we are to meet poverty targets
  • It’s critical if we are to meet our targets to end poverty and create shared prosperity
  • 90% of jobs in developing countries by private sector
  • Need to ask what it means for the poorest, what’s the impact on the environment
  • IFC IDGs implementation, started to reward employees in terms of development impacts changed the way IFC does its work
  • Come from evidence based sector, every sector has to go through its own evidence based revolution
  • People work more effectively when they have results to work towards

Bruce Mac Master:

  • Poverty main challenges facing Latin America, should be main objective of our agenda
  • Need more equal society, a main goal of the government
  • Working with moderate and extreme poverty, victims of internal conflict, population in marginalised territories, etc
  • 2011 poverty reduced by 1.2 million people
  • Poverty not just an income matter, it’s a condition that takes into account a number of issues – using multi dimensional index of poverty
  • 15 variables, education (incl literacy), childhood, work, health, public services and housing
  • Working on a number of initiatives, including on how to eliminate barriers to employability of young people, need private sector involvement to ensure they don’t only study but also that there are jobs
  • Extreme poverty can not be overcome by just growing the economy, jobs, its about exclusion – we have a specific programme to deal with this, covering 1.5 million families (6 million people)

Question and Answer

Web: Have you had experience before WB to use results measurement as tool to work with private sector?

Kim:

  • Each project in health sector has included private sector, eg targets for treatment of HIV
  • Medicines coming from the private sector, so a shared goal
  • Private sector much more ready to respond to the goal than ministries
  • Ministries at that time were not measuring clearly what they were doing with clear goals
  • Private sector knows how to have clear time lines, should bring principles from private sector to ministries

Web: Cai recently joined from Goldman Sachs, what experience do you bring of relevance?

Cai:

  • Most important thing the goal to achieve poverty eradication and shared prosperity, depends on the economy and the private sector
  • On Goldman Sachs and lessons learned, was working on setting targets and leveraging market forces, hope to bring this to the goal

NGO: Yesterday there was a book on Peru in papers, about lifting rural poverty but with unplanned benefits, such as improved communication, better roads, etc. Besides planning framework, we should not preclude the unintended benefits of better conditions.

Kim:

  • Peru, when I first went there in early 90s, time of incredibly difficulties
  • First project community pharmacy – if communities healthy would not revolt, against capitalism etc
  • It was rewarding to work in Peru, they were willing to tackle difficult problems

Academic: Outcomes, and multidimensional measure of poverty, but this doesn’t include safety, which is very much part of the poverty dimensions

Mac Master: You’re right, we have other measures that include safety

Kim: It’s everywhere, also private sector conversations mention security

Health insurance organisation: Past 5 years, seen progress in Africa, but IFC only spend 2% of budget in health in Africa. Nairobi Health in Africa initiatives, does encouraging things to stimulate investments. It’s about regulation and policy barriers

Cai:

  • Kim has been promoting a one WB group agenda since arrival
  • IFC leaves building the system to WB, need to talk to each other much more, to create important financial infrastructure
  • Look forward to seeing much more such cooperation, bringing WBG closer together

Kim

  • If we are only focusing on official systems, this won’t work and lead to missed opportunities
  • See Brazil, they see health as investment in human capital, better work force – that’s the right way to see it
  • Role of IFC and WBG to bring in other notion of investment in human capital, then think about how to finance it, private sector can play a role

Academic:  Setting goals and intermediate targets focus, we’ve been working on scaling up successful interventions. Critique, going back to old ways of central targets – is this a different approach?

Kim:

  • When we set goals before, we were not prescriptive, general guidelines, found things not predictable
  • Every country will be different, e.g. in Zambia much higher treatment rates for women
  • Though in the past Bank was too prescriptive, I was part of movement to close it down
  • Key not to provide prescriptions, but to provide every country all potential experience that is relevant so that they can pick and choose.
  • Nobody in private sector says we need to stick to a five year plan, trial and error to see what works for you, WB provides inputs and measures