Is the World Bank an Effective Steward on the Global War on Poverty?

In 2008, The New York Times revealed that pledges by the richest nations such as the U.S. and Western Europeans in Monterrey in 2002 and Scotland in 2005 to increase development assistance had not been met.  Times research indicated promises to reach 0.7% levels of GDP had in fact only reached 0.28%.  The U.S. was only at 0.16%.  Concurrently, most experts agreed key U.N. Millennium Development Targets for reducing global poverty by 2015 would not be achieved.  The World Bank is the leading international institution charged with reducing poverty.  Prior to the 2008 global financial downturn, the Bank failed to convince rich donors to live up to their commitments.

 I believe there were three basic reasons why the Bank had not been a more effective advocate during the 2000s:

1 –  Donor countries were deeply skeptical the Bank’s lending was effective.  Research from a number of development think tanks, economists and NGOs question suggested important shortcoming in the Bank’s lending effectiveness.  Weaknesses in the Bank’s lending portfolio undermined appeals by the institution to donors for more aid.

2 – Borrower countries found the Bank’s lending “conditions” stringent, draconian and often creating unnecessary hardships on their populations.  Conditions, such as structural adjustment lending that forced poor countries to reduce public spending, increase savings and reduce inflation may have been sound macroeconomic policies but belied the political realities facing developing economies.  As a result, borrowers have increasingly shied away from the Bank and turned to private capital financing for their development needs.  This led to an evolution of the Bank’s portfolio with more emphasis on emerging market economies rather than developing economies.  And importantly, the Bank influence over client countries weakened.

3 – Shareholders – donor and borrower members – and stakeholders such as NGOs, community-based organizations and private citizens viewed the Bank as a monolithic society where well-connected financiers close their doors to debate the economic fate of millions.  Critics accused the Bank of having a culture of secrecy, an aversion to transparency and a lack of accountability.  As a result, they hesitated to trust the Bank.  The result was the moral standing of the institution had been weakened and its ability to advocate for policies it supports had deteriorated.

In April 2009, the G-20 met in London and pledged to infuse $1.1 trillion in capital to the Fund and Bank.  Nevertheless, concerns for donors, borrowers and civil society stakeholders about the Bank have not been fully addressed.  Questions remain as to whether the Bank will be any more effective in using the aid provided from the G-20 or future aid than it had before the global economic downturn.

This is the second in a series of blogs to be offered in the next few months on the World Bank and transparency, accountability and reform issues.  I invite you to share your own experiences and observations with a wide community of international development practitioners and interested readers.

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5 thoughts on “Is the World Bank an Effective Steward on the Global War on Poverty?

  1. We agree with all the views provided and we are especially concerned about how seriously corruption prevails today and prevents aid to those that need it. However, we do feel that if we don’t do something immediately about the state of the environment that all countries in the world will experience very major problems very soon and this is extemely serious. If poor countries had good living conditions then the infant mortality rate would go down and the GDP of these countries would rise exponentially but nobody seems to recognize this or at least nobody appears to be doing anything about it. The sustainability of the living conditions of third world countries would assist immensely in aiding the long road to recovery and balance that is so urgently needed and if this environmental improvement doesn’t happen soon the situation that the entire world is in, not just the third world will cause irrepairable damage which we are experiencing right now. The environment must be focused on professionally and it must happen now.

  2. In my book, ” The Diinosuar Among Us: The World Bank and its Path to Extinction”, I point out that the Bank’s resources are quite small, relative to the size of the global poverty problem.

    Its net loans per year ( issued vs. repaid) is minisucle in the scheme of things. MOst of its work should focus on the truly needy countries and showing them the way to reform.

  3. I would like to draw the attention of those interested on the topic of eliminating corruption, to the following article of mine titled: “A prescription to end corruption”:

    A prescription to end corruption

    Unique identification of every citizen will help kill the corruption malaise in developing economies

    What ails the under developed and developing nations? Reply: corruption leading to self perpetuating poverty. Reason: lack of honesty & transparency. Result: lack of accountability for sustained growth. Economy is divided between rich & poor; the rich are growing richer and the poor are growing poorer. The poor cannot afford essentials such as food, clothing, shelter, health, education and social security. The division is so sharp between communities, while a rich family can afford to spend Euro500 per week on food items, a poor family of the same size can hardly spend Euro5 per week.

    Does this mean all citizens living in a poor nation are poor? Well the answer is a ‘NO’. The wealth in a under developed/developing nation is skewed. Almost 80-90% of the wealth of the nation is in the control of say 5-10% of the population. The majority of the population hardly has access to any wealth and live in abject poverty.

    One of the biggest factors is ‘Corruption.’ It is the cancer eating into the vitals of the society. It has permeated into all facets of life, affecting the poor and voiceless. Today, the common man with no money or muscle power, cannot think of getting any thing done in the developing world, without having to pay bribe.

    Global institutions such as World Bank, IMF, and UN must enjoy legitimacy from their member countries and the international community. They must be responsive, with the interests of all members, especially the smaller and poorer, being taken into account. The governance of these institutions must be flexible, must respond to new challenges, national priorities and specific circumstances.

    A scathing report from the Independent Evaluation Office (IEO) of IMF highlights the lack of transparency and accountability in IMF. The IEO measured governance along four dimensions – effectiveness, efficiency, accountability and voice – and against three standards – the Fund’s own governing documents, other international organisations, and private & public-sector corporations. The report finds accountability and voice are the weakest features of the Fund’s governance and these weaknesses entail risks to the Fund’s legitimacy, which in turn has a bearing on its effectiveness.

    If this is the situation with global institutions, we can well imagine what would be the situation with national and regional institutions. No wonder they abound in corruption of all sorts and get away with it. Then, how do we get over this corruption mania? One sure way would be to plug all the leakages in the system. This cannot be done without active support of the governments and its citizens. A unique identification of every citizen is the primary requirement. With the advent of ICT tools, every citizen can be uniquely identified from birth to death using unique identification methods such as fingerprint, iris, hand vein geometry and DNA linked to their ID, name, photo, etc.

    A Multi Purpose Biometric Smart Card for every individual and organisation linked to a money account and a e-Tool to link every citizen and service provider/public authority including the vertical and horizontal hierarchy of governance can be used as a single window of transactions for G2C, G2G, B2B, B2C, etc. If the transactions are thrown open, then total transparency and accountability can prevail, as envisaged in the Right to Information Act.

    Healthy citizenry can be created by covering all aspects of citizens from birth to death such as health, hygiene, housing, education, employment, expenses, consumption, savings, social security, et al, based on genuine physical transactions and not ghost transactions. Thus corruption, money laundering, arms trade and terrorism can be eliminated and all round peace and prosperity can prevail as every one would feel good that no one can cheat any one and all have equitable opportunities to contribute and grow.

    http://www.4psbusinessandmarketing.com/17072008/storyd.asp?sid=2112&pageno=1

  4. Dear all,
    the problem in sudan is even worst for the bank not only failed to help this country ,in protracted conflict situation ,but given the right to manage the peace dividends ,nver said this is not within their capacity ,and missed up. As part of the peace package a multi doners facility fund was established.The Bank officially unrecognised by the GOS,and he manipultaed these resource,which priorty is conflict mitigation to manipulate ,the government to impilenet the Banks priscription.The result is already backfiring on the peace building strategy.Sudanse CSOs, whose this wrioter represnt,have produced more than five statemnts(see http://www.suaneseonline.com) but to no avail.We feel that this country is relapsing to war and the bank should account for this as he wasted the resouces,meagre as they are,in their very costly and peace making insensitive appraoch.
    Thanks
    HajhamadM.K.alhajhamad(PH.D0
    Social &Human Developmnet Consultative Group(SAHDCG)
    CSO based in khartoum-Sudan

  5. How none of you realize the purpose of the world bank is trully depressing, it is people like you who perpetuate the paradigm.

    I cannot believe this was posted on Global Research, the author of this blog is as lost as everybody else, good luck you are going to neeed it.

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