Jim Yong Kim, the Korean-American, in July becomes the president of the World Bank, an institution that relies on rich nations to finance its anti-poverty projects in poor countries. However, Dr. Kim assumes leadership in a time of profound change in global efforts against poverty that requires a significant reorientation of World Bank operations. I briefly review drivers of this change and discuss four transformation strategies.
DRIVERS OF CHANGE IN GLOBAL ANTI-POVERTY EFFORTS
United States and Europe that account for nearly 50% of financial contributions to the World Bank are going through financial difficulties. Already, angry voters removed eleven heads of government in Europe since the onset of the global financial crisis. The World Bank can no longer lean heavily on U.S. and Europe support.
Momentum for global economic growth continues to shift from West to South, with China now the second largest economy in the world, after the United States. By 2025, China, India, Brazil, Indonesia, South Korea and Russia will account for 50% of the global growth, according to the World Bank. During the next decade, World Bank may lose up to 50% of its poor client nations to middle income status. By 2020, Africa will likely become the fastest growing consumer market in the world. Soon, the Bank must decide on how to serve the nearly two thirds of the global poor that now live in middle income countries. Two of such countries, China and India are not only both net donors to the Bank but also major global investors in poor nations.
Developing countries now enjoy easier access to commercial capital with nearly US$1 trillion available in 2011 alone compared to a combined US$26 billion from the World Bank and other regional development banks.
The Bank's capacity to finance big multi-country, multi-sectoral project continues to decline, allocating US$90 billion over three years for global infrastructure projects against its estimated cost of US$850 billion a year.
Rapid advances and uptakes in technology are reshaping development assistance. Today, the global poor use cell phones and social media to keep up with the rest of the world as demonstrated during the 2011 Arab Spring. Start-ups and shoe-string operations utilize online tools to reach the global poor, and at minimal costs. Furthermore, emerging development organizations emphasize public/private partnerships, lean overhead, simplified tasks, economies of scale and global network of experts. The super-rich Gates Foundation is now a game-changer on health and development issues.
FOUR TRANSFORMATION STRATEGIES
A business-as-usual strategy for the World Bank is evidently untenable.
The unprecedented challenge for the presidency of the World Bank by developing nations is a strong statement of intent. Incremental reforms are unlikely to suffice as winds of change gather speed. I discuss the following four transformation strategies:
1). Conduct an internal review and an independent external review to determine the best fit for the World Bank in a changing operational landscape;
2). Transform the World Bank into an evidence-focused institution that relies significantly on translating research findings into applications in the field;
3). Determine the specific role for the World Bank in ongoing efforts to address issues that transcend national borders and continents (global commons) and global public goods; and,
4). Utilize existing data on the global poor to set transformation benchmarks.
Moving forward, Dr. Kim should have the support of G-20 and developing countries. The G-20 leads global efforts on inclusive economic growth.
Developing countries remain resolute on governance reforms and transparency in global financial institutions.
1. Internal Review and Independent External Review of the World Bank
Internal Review. The review should focus on how to enhance operational efficiency and effectiveness in the Bank through a careful examination of operational logistics, human resources utilization and prudent management of financial resources. The review provides an opportunity for Dr. Kim to extend his "listening tour" philosophy to Bank employees.
Using rapid appraisals methodology, the internal review process should conclude within 90 days. Dr. Kim should plug identified operational weaknesses and failures in all phases of Bank operations.
External Review. Dr. Kim should appoint an independent Global Advisory Panel (Panel) comprising North and South experts to comprehensively examine and recommend viable options for a World Bank of the future for the next 5, 10, 20 and 30 years. The Panel should engage stakeholders and partners around the world. In particular, The Panel should make specific recommendations regarding organizational, legal, procedural, administrative, operational and logistic changes necessary for the World Bank to adapt to a changing development assistance landscape, to strengthen institutional cohesion and resilience, to promote accountability and transparency, to ensure adherence to best practices, to enhance partnerships with external collaborators and to institutionalize the voice of developing countries in decision making processes, including the choice of future presidents. The Panel should complete its work within 12 months and Bank leadership should swiftly act on viable recommendations.
2. Transforming the World Bank into an Evidenced-focused Institution that Relies Significantly on Translating Research Findings into Applications in the Field
The World Bank produces excellent reports. A focus on translational research will go a step further, ensuring a verifiable link between research outcomes and application in the field. Translational research includes both quantitative and qualitative studies. Luckily, Dr. Kim indicated a strong commitment to evidence based interventions in his acceptance statement as president-elect.
A translational research agenda should focus on: (A) Mainstreaming findings from applicable quantitative and qualitative research into all phases of Bank operations; (B) Determining what works and does not work and applying lessons learned from successful and unsuccessful Bank policies and projects; (C) Translating expert opinions and research conclusions from the literature into applicable phases of Bank operations, and; (D) Sharing results of translational research with external partners and the public.
3. Determining the role of the World Bank on Global Commons and Global Public Goods
The global community faces common challenges (global commons) of climate change, poverty, corruption, high youth unemployment, energy insufficiency, conflicts and growth of megacities to mention only a few concerns. Every nation benefits from timely access to global public goods. Investments in cheaper, renewable sources of energy such as solar, wind and geothermal energy will benefit every nation. Poor countries need massive investments to upgrade infrastructure, especially electricity, road/air/sea networks and better agricultural yields. Areas with perennial shortage of rainfall such as the Sahel region of Africa, the Horn of Africa and Western Asian plains face chronic food insecurities beyond national capacities.
However, the World Bank has neither the resources nor the capacity to address all global commons and global public goods. For example, the Bank set aside US$7 billion in 2011 for climate change when its own data suggested US$75-100 billion a year. Additionally, the Bank faces difficult technical choices. For example, the Bank favors massive cross border projects. However, a recent report by International Rivers, a policy NGO (www.internationalrivers.org/infrastructureforwhom) makes a compelling case for multiple small-scale projects closer to where the poor live and work. The World Bank may settle for global commons and global public goods strategy that emphasizes selective financial support, strong partnerships and proven technical intervention frameworks.
4. Using existing data on the Global Poor as Benchmarks for the Transformation Process
The transformation process should have verifiable benchmarks, relying on existing primary and secondary data on the global poor. The World Bank 2011 World Development Report (http://wdr2011.worldbank.org/fulltext) and the U.K. Independent Development Institute report on poverty (www.ids.ac.uk/files/dmlife/Wp393.pdf) could become important building blocks. Decisions on baseline, trend and impact indicators for the transformation process should adhere to appropriate technical standards.
Expert guidance on data reliability, validity and misclassification issues will be necessary.
In addition, World Bank leaders should take advantage of policy and program inferences from existing data on the global poor. The sheer number of the global poor is staggering. At least 2.4 billion individuals live on less than US$2 a day and 1.7 billion on the extreme poverty level of US$1.25 a day or less. Geography is important as most of the global poor now live in South Asia and Sub-Sahara Africa compared to 20 years ago when most lived in East Asia and the Pacific. National income status is vital as middle income countries now account for 79% of individuals living on less than US$2 a day. About 25% of the global poor live in the 35 poorest countries in the world, most of them in Sub-Sahara Africa. High incidence of poverty combined with huge poverty gaps between the rich and the poor in specific countries signify a level of inequality that may require long term development assistance. Fragile states characterized by internal conflicts, chronic public safety challenges and widespread economic woes trap families in poverty. At least 18% of the global poor live in poor fragile states compared to 7% in more stable poor countries. Two-thirds of the global poor in fragile states reside in only five countries: Nigeria, Bangladesh, Democratic Republic of Congo, Pakistan and Kenya.
Mounting evidence exists on how to reach and engage the global poor.
Successful strategies include direct contact with the poor, strong coalitions of donors and host nations, close attention to program implementation issues on the ground and scale up of successful programs.
Ongoing research indicates that doing more for less is not only necessary but also possible. The Copenhagen Consensus, an initiative of a group of internationally respected development economists (www.copenhagenconsensus.com), including four Nobel Prize winners, concluded that the addition of carefully selected services to existing anti-poverty programs can lead to better outcomes and at cheaper costs.
Adding school meals to an existing primary school program increases opportunities for learning by all children. Expanding access to vitamin fortified meals for preschool children increases the odds of achieving age-appropriate developmental milestones critical for normal adult life.
An investment of US$1 on enhanced agricultural production can lead to US$16 returns from ending malnutrition and assuring better food security. Another group of leading economic thinkers at the Project Syndicate (www.project-syndicate.org) believe that global problems such as poverty require customized solutions at local, sub-national, national and international levels. Specific programs that assist the global poor include social safety programs, cash transfers, fee waivers and access to banking services. Microcredit services, gender equity policies, property rights and timely access to global public goods assist the poor. Poor families stand a better chance when governments minimize corruption and promote good governance.
Dr. Kim will soon assume leadership of the World Bank. Priorities of donor and host countries are evolving. Developing countries have easier access to private capital for development initiatives. The World Bank must transform and adapt. In all likelihood, Dr. Kim will be judged at the end of his tenure on whether he had been the change agent that the World Bank eminently deserved.
Professor Chinua Akukwe is a member of the Board of Directors of the Constituency for Africa. He is a faculty member of the George Washington University (GWU) Center for Global Health, Washington, DC.