IFI governance


World Bank’s new strategy: ‘deliverology’ for the private sector?

26 June 2013

As the World Bank’s attention moves from goal-setting to implementation of a new strategy, it is becoming clear that it intends to further prioritise the role of the private sector and adopt many practices of its private sector arm, the International Finance Corporation (IFC), as the main pillars for the whole group.

World Bank president Jim Yong Kim’s two proposed goals, reducing extreme poverty to 3 per cent by 2030 and promoting income growth of the bottom 40 per cent of the population (see Update 85), were approved by the Development Committee, a direction setting body of finance and development ministers, at the Bank’s spring meetings in mid April.

The Bank has now begun to develop its implementation plan, combining work on the goals with work on internal restructuring (see Update 84). The Bank has set up 10 working groups and change teams to develop proposals. A corporate strategy working group was set up with four subgroups: one World Bank Group, finance, operationalising poverty targets, and budget. Two further working groups are developing proposals on knowledge flows, and on the ‘solutions bank’ and the ‘science of delivery’. A change team on “client impact and results, accountability and risk” was also created. Finally, two working groups – on people and talent, and on leadership – and one change team on the “global footprint” of the Bank, will be looking at issues related to staffing and human resources.

the Bank has already lost its grounding in reality

The ten groups and teams came together in mid May to present a draft set of recommendations, which were discussed internally with the executive board in early June. Final recommendations from the working groups are to be delivered by the end of June for two further informal consultations with the executive board in July, one at the beginning of the month and one on 30 July. After that the strategy will be finalised, signed off by the board in early September and sent to finance ministers for approval at the annual meetings in mid October.

Private sector to the fore

The working group on one World Bank Group deals with the most important aspect of the reforms. According to an inside report of the first board consultation in June, Kim sees the shift to a more integrated World Bank Group as his key change from ‘business as usual’. A leaked copy of one of the working group’s draft recommendations included adopting some IFC practices for the entire group, including “mov[ing] to one set of environmental & social policies for the World Bank Group based on IFC’s performance standards” and introducing “targets and metrics for World Bank Group mobilisation”, including staff incentives. A particular focus of several of the working groups is on the IFC’s model of building client systems, rather than maintaining in-house responsibility for things like safeguards (see Update 85, 83). The one World Bank Group working group also controversially suggested “mov[ing] IDA [International Development Association] towards being more directly involved in private sector activities” including “leveraging IDA’s balance sheet to raise additional financing from capital markets”. IDA is the Bank’s low-income country grants and concessional loans arm.

The leaked copy of the recommendations from the working group on operationalising the poverty targets focusses on changing country strategy processes. The working group recommends moving away from responding purely to client demand and also away from sector and volume targets. The buzzwords in the discussion on how to implement this at the country level are “selectivity” and “transformational”, with a focus on interventions that are within the Bank’s comparative advantage, have “high pay-offs relevant to clients” and are relevant to the two goals. Kim apparently wants presidents and prime ministers in client countries to consider the Bank as “the most important partner”.

Commenting on the working groups’ draft recommendations, Titi Soentoro of Indonesian NGO Aksi said: “The Bank is moving away from its commitments to protect people and the environment as stated in the safeguard policies; on the contrary it is giving more space to private sector to intervene into the development agenda without any binding obligations to respect human rights nor accountability.” She concluded: “the Bank has already lost its grounding in reality. It is now the time for the Bank to revise its charter from serving development to serving the capital markets and corporations. The Bank must not use ‘development and poverty reduction’ as its justification anymore and admit its failure to reduce poverty.”

Emerging areas

A number of other issues are swirling around the strategy review in terms of World Bank reform. Most significant among them is the “science of delivery”, a topic that Kim has spoken on a number of occasions over the last six months. Kim has brought in Michael Barber, a former adviser on public service reform to then UK prime minister Tony Blair, to advise the Bank on ‘deliverology’, which Bank staff economists describe as a system to focus on specific targets in service delivery, monitor achievement in real time, and make corrections mid-course. Barber, who also works in private education (see Update 86), pioneered this approach in the UK in the early 1990s. Barber’s influence is seen in the push for more and faster data collection being included in the strategy, and the shift in focus from intensive project design to promoting beneficiary feedback and course changes after a project has started.

Rhetorically, however, the Bank has continued to try to be everything to everyone. In mid May Bank managing director Sri Mulyani Indrawati wrote a comment piece on anti-corruption measures, despite herself being under investigation for corruption in Indonesia (see Update 86), saying “without improving governance it will not be possible to lift the 1.2 billion people who still live of $1.25 a day or less out of poverty and to ensure that economic growth will benefit all citizens.” In late April, at an IMF-organised conference on fiscal policy, Kim promoted conditional cash transfer programmes as a key way to end poverty. Elsewhere Kim has focussed on infrastructure (see Update 86) and on universal health coverage (see Update 86).

Goals face yet more criticism

In mid April, 10 international NGOs, including CIVICUS and Human Rights Watch, issued a statement saying that the Bank’s strategy would “be undermined if it fails to recognise the importance of human rights” and urging the Bank “to make a commitment not to support activities that contribute to or exacerbate human rights violations”.

Most criticism of the strategy focuses on the Bank’s failure to explicitly target inequality despite frequent reference to inequality in narratives about the Bank’s goal (see Update 85). In mid May Robert Bissio of the Uruguay-based secretariat of the global network Social Watch wrote that despite the Bank’s vision of ending poverty, “people are not rejoicing around the world”. He says the extreme poverty the Bank is targeting “is not the poverty that the public perceives.”

Even researchers in mainstream think tanks in developed countries have found the Bank’s target misleading. Introducing his April paper on global poverty, Laurence Chandy of the Washington-based think tank Brookings Institution wrote: “The conclusions from our work are quite emphatic when it comes to issues of inequality: Bringing the global rate of extreme poverty down … cannot realistically be achieved through a strong performance on economic growth alone. Strong growth and distribution changes that favour the poor are required simultaneously to meet the target.” Michael Cichon, president of the International Council on Social Welfare, a network of organisations in more than 70 countries, wrote that the strategy “still – implicitly – seems to be built on the trickle-down concept of economic and social development. At several points it stresses economic growth as the main driver of poverty reduction.”

Even those who support the target on extreme poverty feel that the Bank is being unambitious, because the poverty line of $1.25 a day is too low, especially in light of wealth elsewhere. Charles Kenny of Washington-based think tank Center for Global Development commented: “The global median income is around $3 to $4 a day. Despite the fact that 50 per cent of the population of the planet lives on less than that today, that’s still an insufficient floor. Why? In part because it’s less than the cost of a vente caramel frappuccino at Starbucks, and it seems wrong that most of the planet would subsist for a day on what many happily throw away on a caffeinated milkshake.”