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The World Bank as a Foundation? Why I’m Scratching My Head Over the World Bank’s New Vision
April 7, 2011
Rapid changes in the world, especially the remarkable growth of so many once-poor countries and the revolutions sweeping across North Africa and the Middle East, will have tremendous consequences for institutions like the World Bank. The Bank-Fund Spring Meetings start next week and it’s a chance for shareholders and Bank management to check-in and throw issues on the table. Among the many big trends and questions about the future of the Bank, here are a few on my mind:
- The New Bottom Billion? With most poor people now living in middle income countries, how is this changing the Bank and its work? How is its relationship with the big emerging markets—as active shareholders rather than just clients—really going to change Bank strategy and governance?
- What’s to become of the Bank’s soft loan window? As Ben Leo and I project, the World Bank’s IDA is about to lose more than half its client countries as they become too rich. What is the Bank’s thinking on what to do? (Stay the course? Shrink? Change IDA’s business model?)
- What about global public goods? The development frontier is increasingly moving from narrow country programs to broader regional and global public goods, especially clean energy, technology, and infrastructure. What’s the Bank’s role here?
- The oil revenue problem? So many countries are heavily commodity dependent, yet the Bank and other development partners really do not have good answers to the problem of how to (1) mitigate harmful effects of resource income or (2) effectively leverage revenues for diversification. This is especially relevant for North Africa and the Middle East where so much attention is likely to focus.
That’s why I was excited to attend Bank President Bob Zoellick’s speech yesterday in anticipation of a major new announcement ahead of the Spring Meetings. What vision for the future of the Bank was going to be put to the shareholders? What was the Bank going to do to respond to the demands on the streets of the Arab world?
It started well, with Zoellick pointing out the frustration in the Middle East and the nugget that the region’s non-oil exports accounted for just 16% of GDP. But then—in what presumably is supposed to be the newsworthy bombshell of the speech—was this:
In 1944, the World Bank was established by governments to lend to governments. In 1956, our shareholders established the IFC to invest in the private sector. Now it may be time to invest in the private, not-for-profit sector – civil society – to help strengthen the capacity of organizations working on transparency, accountability, and service delivery….
I suggest it is now time for the World Bank to examine, with its Board and shareholders, whether the Bank needs new capabilities or facilities that could leverage support from countries, foundations, and others to strengthen the capacity of [civil society organizations] working on accountability and transparency in service delivery. We could give priority to countries in the Middle East and North Africa, and in Sub-Saharan Africa.
Huh? Now, I’m all for helping to create popular demand for accountability and transparency, but is this really the comparative advantage of the World Bank? Isn’t this exactly the kind of “mission creep” Jessica Einhorn (wisely) warned against a decade ago? Isn’t direct support for civil society better handled by foundations and organizations like the Open Society Institute than a huge international financial institution without the same on-the-ground links and legitimacy? The Bank’s mission to promote growth and reduce poverty may be broad, but the Bank should—I would think—still avoid trying to be all things to all people. This latest idea leaves me scratching my head.
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7 Responses to “The World Bank as a Foundation? Why I’m Scratching My Head Over the World Bank’s New Vision”
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April 8th, 2011 at 1:35 pm
Mission creep is always accepted for the world bank, they won the DFID Multilateral Review didn’ t they?
As an economical powerhouse, they never understood the difference between comparative advantages and added value themselves.
April 10th, 2011 at 8:23 pm
On the “oil revenue” problem, the World Bank has been doing a substantial amount of work on this issue through its support of the Extractive Industries Transparency Initiative (EITI) and the Petroleum Governance Initiative (PGI). It has also begun an Extractive Industries Technical Advisory Facility (EI TAF) to deal with issues all along the EI value chain.
April 11th, 2011 at 3:41 am
I welcome the fact that the Arab awakening in North Africa and the Middle East is shaking up what has been a slow-moving effort to reform the effectiveness of development aid at the Bank.
A huge gap for direct funding of local organizations and movements remains under-recognized within the aid industry. In fact the World Bank has a robust history of civil society engagement, and has run a small grants program that directly funds civil society organizations since 1983.
Effective funding and capacity development initiatives are needed that will support a wider number of local leaders, enabling grassroots movements to emerge and gain strength, and in the process increasing the demand for human rights and development at local and international levels.
I am co-moderating a panel on this topic during the WB/IMF Annual Meetings Civil Society Policy Forum entitled, “Winds of Change: Will it bring a new development paradigm?” It will take place on Friday, April 15th at 2pm EST (6pm GMT). The session overview, webcast links, and bios of participants are featured at: http://www.how-matters.org/201.....nleash-it/
April 11th, 2011 at 5:04 pm
By way of example, the Inter-American Development Bank has long since made strong support to NGOs and civil society its mission. I see no real reason why the World Bank cannot do the same. Greater support to an approach that truly embraces social development is all that is required: This would need to include, inter alia, greater appreciation for a participatory approach to development, longer time horizons to build buy-in among stakeholders, support through grant mechanisms that can be used to leverage other kinds of support (particularly private sector) etc. However, support to civil society is generally not a development perspective that the World Bank has historically embraced. Mr. Wolfensohn, to his credit, shifted this significantly by responding to global civil society demands for the Bank to at least talk to NGOs. By and large, Goldman Sachs and other Wall Street firms, and other such organizations where most sr. management at the Bank have worked before coming to the Bank are not institutions that are intrinsically NGO-friendly.
Signing off from Seattle,
April 12th, 2011 at 12:12 pm
It is important for the World Bank to be responsvive to changing trends and circumstances. One has to distinguish between mission creep and appropriate changes. After all, it was Jim Wolfensohn as World Bank president who insisted that transparency and anti-corruption efforts be at the forefront of WB development efforts, and we are all better for it.
So what’s not to like about the World Bank trying to develop a facility or capability to strengthen the capacity of civil society to be more effective and responsible when it comes to service delivery, transparency and accountability? In some countries, the Extactive Industry Tranparency Initiative, for example, has given civil society organizations political space where it didn’t exist and, as importantly, skills to engage with government and industry on the use of extractive resources. The World Bank should be encouraged to strengthen and deepen this kind of work, given the pressing need.
April 13th, 2011 at 9:45 am
Thanks for all the comments. I think we should separate out whether external support for CSOs is a good idea or not from who should do it. The answer to the first is probably yes but done carefully and humbly. Which leads to the second: not the World Bank.
July 15th, 2011 at 1:42 pm
I agree with Todd. Mobilization of civil society orgaizations is important but The World Bank sitting mostly in Washington is simply not the institution to do it. There is much evidence that it has not done well in participative development. The comparative advantage of the World Bank is where it always has been – no change – global public goods such as environment and health, large cross border infrastructure and international economic policy advice. The current proposal is a recipe for getting increasingly bogged down in minutia which the Bank is unable to handle, and getting increasingly mired in bureaucracy as it sets endless new rules for new iniatives.
(PS I wrote all about these things in ‘Reforming the World Bank’ Cambridge University Press 2009, 2011)