By Simone Galimberti
KATHMANDU | 21 June 2024 (IDN) — Since taking over the World Bank Group, Ajay Banga has been trying hard to bring bold and profound changes.
Such plans were at the centre of the discussions at the third meeting of 21st Replenishment process of the International Development Association, IDA, the grant and low interest rate arm of the World Bank, that gathered in Kathmandu from the 18 to 21 of June.
Some of the propositions are arguably symbolic.
For example, there are a new vision and a new mission aimed at better capturing the intricate and interlinked challenges of poverty, inequality and climate change. They also project a much stronger sense of purpose for whole WB Group, signalling to the world that the Bank has not lose relevance and it has a big role to play in the decades ahead.
The 21st Replacement, whose amounts will only be finalized at the end of the year in South Korea, is based on new Strategic Directions based on five Focus Areas.
These are namely People with a focus on health and education and social protection; Planet that is cantered on climate resilience, water and sanitation, and sustainable food systems; Prosperity with a focus on “support for sound macro policies by enhancing fiscal sustainability and quality public spending”; Digitalization with its emphasis on connectivity, an area that Mr. Banga has been pushing for a lot; Infrastructure that involves investments in sustainable transportation and green energy projects.
The ambition is to ensure that the ongoing negotiations for the next cycle of IDA funding will reach the never met threshold of $100 billion.
This is a staggering amount that, according to analysis by Clemence Landers for the Center for Global Development, will imply direct commitments by donors in the tune of at least $30 billion.
IDA should play a bigger role
While there are a lot of questions marks on the feasibility of reaching this mark but even if it will happen, we know that the international community’s needs are in figures of trillions rather than billions.
As much as Mr. Banga wants to be bring in quantum changes in the financing, even if the WBG will work together with other Multilateral Development Banks as it has been discussed by the current Brazilian Presidency of the G20, the financial means are not matching the ground reality.
Yet undoubtedly IDA should play a bigger role.
A recent research by the Bank, highlights the devastating consequences of factors like fragility, conflict and violence in blocking the economic growth of those nations that instead should become engine of growth if they want to uplift their population of poverty.
“While extreme poverty is expected to decline globally, the number of extreme poor will increase and become more concentrated among fragile and conflict-affected situations (FCS) countries”, according to a report entitled the Great Reversal.
“Today, almost half of the global extreme poor live in FCS countries. By 2030, it will be nearly 60%”, according to Indermit Gill, Chief Economist of the World Bank Group and M. Ayhan Kose, Deputy Chief Economist of the World Bank Group.
“Yet a historic reversal is underway among the world’s 75 countries eligible for grants and low-interest loans from the World Bank’s International Development Association (IDA). For the first time this century, the income gap relative to the wealthiest economies is widening in half of IDA countries” they further add.
Therefore, a successful 21st Replenishment is vital but there is an immense scope for the WBG to do not only more but also better. That’s why the so-called “New Playbook” must be welcomed.
Its tools are supposed to bring effectiveness at country and operational levels, forging more effective and value for money working practices on the ground.
Among them, there is also a new Scorecard, a revamped accountability tool that promises to do a much better job at measuring the impact of the whole WBG. It won’t only include much better-defined indicators but also will also monitor the work of all the institutions of the WBG as a whole. This could be a trail blazer initiative.
Revamping the way World Bank operates
After all the ambition and vision of Mr. Banga must be matched with a total revamping of the way the WB operates in the countries where it can make the most difference.
Climate change and biodiversity loss are further adding additional stress and vulnerability in these societies.
On its part, the WBG is equipping with important new analytical tools, the so-called Country Climate and Development Reports (CCDRs). They can become important tools if they are able to also incorporate the voices of the citizens.
In addition, there are efforts at making the World Bank and all its institutions a real “Knowledge Bank”, an ambitious plan that also foresees the creation of the so called World Bank Academy that is being rolled out throughout 2024 through a decentralized approach.
But WBG shareholders should ask themselves if the reforms proposed by Mr. Banga, will be radical enough. Probably no one dared to try to address this question head – on in Kathmandu but there is no doubt that this was the elephant in the room.
How can really the IDA and its sister organizations really bring those system changes when many of them will depend on recipients’ governments’ incapacity to effectively utilize vast resources?
In short, more money won’t make up for governance systems that have low spending capacity and are often mired by corruption and malpractices.
For example, one of the pledges being made by the whole WBG is to deliver quality, affordable health service to 1.5 billion people worldwide. How can this target be implemented at national and local levels? Will the WBG help build new hospitals? Will the focus expand by the support to neonatal care that is essential but too narrow in focus?
The same could be said for learning. Public education in many developing countries is in shamble. How will the WBG help its counterparts in the recipient countries overturn the scenario?
In the field of education, the WBG has been very active already with very colossal investments in the surrounding of $26 billion so far but the shift towards quality from access will be much more complex and daunting (and expensive). One more concerning area is that the all the new strategy and tools being introduced do not really focus on reinforcing accountability, transparency and compliance procedures.
With the new ambition and vision and with upgraded tools to make the WB Group more fit for the purpose to manage additional funding, the so called “Independent Oversight and Accountability Functions” of the whole WB eco-system must be rethought completely.
On one spectrum there is the monitoring and evaluation arm, the Independent Evaluation Group.
Then, on the other side, there is a Group Internal Audit for the whole WB Group and likewise, there is also an Integrity Vice Presidency (INT).
Silos like approaches still dominate and there is a huge gap between monitoring and evaluation and accountability and complaints mechanisms.
Moreover, the IDA has its own autonomous Accountability Mechanism that also looks at the work of the IBRD while the two commercial units of the Group, the IFC and MIGA have a separate body, the Office of the Compliance Advisor Ombudsman or CAO.
More resources to be managed will require a much stronger integration of monitoring/evaluation and compliance and complains procedures. In addition, a more relevant WBG should also drastically re-boot its consultative and engagement mechanisms.
A look at how the operational changes above mentioned were discussed with external stakeholders, is a damning indicator proving that there is still so much improvement to be achieved in this area.
For example the new vision and mission and toolkit were based on discussions and dialogues, that were supposed to be all integral to the so called Evolution Process.
Evolution roadmap
The Evolution Roadmap was the blueprint published in December 2022 that evolved into a more official and formal Development Committee Paper in March 2023 that finally took the shape of a final document, Ending Poverty on a Livable Planet: Report to Governors on World Bank Evolution in September 2023.
The level and in depth of the consultations on the roadmap did not match the ambition of the whole process. For example, the regional consultations that happened globally in July 2023 only saw the participation of 365 in person 552 online.
This was preceded by and Evolution Forum, Washington DC, 11 April 2023: 88 total 63 in person 25 online. Moreover, between 11 April and 31 July 2023, 81 submissions were made for an online survey supporting the process while only 43 formal submissions were made.
In South Asia, there was one virtual, one and half our event from Dhaka on 5 July and another one of the same length in person always from Dhaka on the same day. There was also another one, hybrid lasting 2 hours in Delhi on 27 July and there were approximately 20 participants attending in person.
They both had a very limited number of participants and obviously some members of civil society were attending but was the whole process really participatory and inclusive.
In his Leadership Message to the World Bank Annual Report 2023, Mr. Banga wrote:
“We are digging deep to boost our lending capacity, finding ways to leverage callable capital, and creating new mechanisms like hybrid capital that could unlock untold resources to deliver results. We want to expand and evolve concessional financing to help more low-income countries achieve their development goals, while thinking creatively about how to encourage cooperation across borders and tackle shared challenges”.
The president of the WBG is well meaning and really trying to shake the status quo.
Yet he will need to go into uncomfortable zones to really turn around an institution that is seen aloof and elitist and extremely difficult to dialogue with.
What will be needed is a real change of corporate culture at the WBG and it is where Mr. Banga should focus his efforts.
*Simone Galimberti writes about the SDGs, youth-cantered policymaking and a stronger and better United Nations. [IDN-InDepthNews]
Photo source: IDA-World Bank.
