The World Bank: how is it doing?

Last week I spent some time in Washington D.C., on the fringes of the World Bank/IMF autumn meetings. I was discussing International Alert’s recommendations for making the next round of the Bank’s International Development Association (IDA 17) funding as effective as possible in the fragile and conflict-affected countries which make up an increasing proportion of the IDA caseload. From what cab drivers told me, the autumn meeting came at an opportune time, since the impasse over the US federal budget has limited tourism and official travel considerably, hence is having an impact on their incomes. Given many D.C. cab drivers are originally from places like Pakistan, Ethiopia and Somalia and frequently send money there, this will be having an impact on the livelihoods of their relatives back home.

But the Bank is also supposed to have an impact on poverty and development in more direct ways, and for years there have been voices saying it is out of date. International Alert where I work has long been calling on the Bank to up its game in fragile contexts, where in the past it has sometimes inadvertently undermined good governance and therefore peace. Based on my impressions during this visit I was quite inspired by some of the Bank’s new thinking; but not enough entirely to undermine my scepticism that such a huge institution is really the best mechanism for transferring resources from wealthy to poorer countries.

On the plus side of the balance sheet the Bank has adopted – for the first time, a senior Bank official said – clear high-level goals against which to judge its options:

• End extreme income poverty &
• Promote shared prosperity with a focus on the bottom 40% by income, in each country

… both of these to be achieved with a view to their social and environmental sustainability.

It has also developed a three-part strategy to achieve these goals, viz.

• Work with client governments to identify and focus clearly on the 2-3 most important factors inhibiting progress towards the goals, in each country
• Marshall the World bank Group’s resources and departments much more effectively – “working as one World Bank Group”
• Maximise development impact through partnerships.

This new strategy, under the leadership of Bank President Jim Yong Kim, has created a palpable buzz among staff and others. Meanwhile, other encouraging elements of the Bank’s current reforms include:

• Official recognition, since the landmark publication of the 2011 World Development Report on Conflict, Security and Development, of the need to work differently in what the Bank calls Fragile and Conflict Affected Situations (FCS), and that this means adopting very different approaches – including a different approach to risk and an understanding that programmes in FCS cost more, are slower, and should be designed specifically to help reduce fragility and increase reslience
• The establishment of  the Center for Conflict, Security & Development which is shepherding the Bank through some of the conceptual and operational changes it needs to make in FCS, through planned changes in its results and success indicators, staffing and capacity, incentives, risk appreciation, operational systems,  funding and support instruments, and relationships
• Recognising the need to enhance citizen participation in governance, and that the kind of infrastructure projects the Bank often supports provide opportunities to do this, by involving people in project planning, implementation and evaluation through what the Bank calls “social accountability” mechanisms. The Bank has persuaded 32 countries to joint the Global Partnership for Social Accountability which means, in its own words, that part participating governments have thus “allowed the Bank to give grants to civil society organisations in their country, to hold them to account”.
• A recognition – I would not call it humility, yet – that the Bank may not be better placed than others to help provide solutions, and that its optimal role may be as a connector rather than a provider
• The announcement of $400m in savings, to remove some of the fat that has accumulated over the years
• A plan to rejig the Bank’s standard country office organogram, to minimise the perverse incentives which currently mean that country programmes tend to avoid innovation and stick instead to what they already know

I had conversations with people at a variety of levels and roles in the Bank, and found myself encouraged by their account of these and other changes. Including an Executive Director (ED) – one of the people to whom Jim Yong Kim reports, in principle – who shocked me (in a good way!) by saying that one of the things she was asking for was more honesty from Bank staff about the challenges inherent in client government policies, attitudes and practices – something which is difficult when a staff member is drafting a document which the client government will read. Alert has been calliing for “a more honest conversation about development” for years, so it was good to hear someone at the very heart of the development establishment saying the same.

All this is encouraging, but….

… there were also plenty of reminders that the Bank is a resilient institution which is by nature conservative and resistant to change. The very same ED who was so enlightened and enlightening about the need for honesty also said that the Bank should limit its focus to what it already does well – surely at odds with the idea of the revolution in Bank approaches which is being talked up publicly. And I also heard senior officials repeat publicly that the Bank is not and must not be political. Again, how to square this with its highly political role in providing cheap dollars to imperfect governments, and to its avowed intent to support citizens to hold their governments to account.

I know from International Alert’s work with some Bank country programmes that they are beginning to adopt or try out new ways of working in FCS: in Kyrgyzstan and the Democratic Republic of Congo, for example. But convincing examples were given by some people at the D.C. meetings of a continued sense of resistance to change: of strategic suggestions not taken on board by country teams because of old ways of thinking; and of civil society consultations held but then ignored. I can’t vouch for these but I am not surprised.

I was also slightly concerned that so much of the focus of the new Bank strategy (one out of three strategic areas of emphasis – or potentially 33% of strategic effort) is on itself, “working as one WBG”. I remember when Koffi Anan came in as SG at the UN, and told the UN agencies to work better together. For the next few years they spent an enormous amount of their time on “working together”, to the extent that one often felt they had forgotten whose lives they were supposed to be helping improve.

I also find it hard – very hard indeed – to picture the World Bank “amplifying citizens’ voices”. Not because I doubt the logic and the sincerity of the idea, but because such work is so incredibly subtle, and the Bank is – by its nature – so ham-fisted because it’s so damned huge. Civic society work is surgical; it requires a surgeon’s deft touch, her responsiveness to unexpected events, and her sharp array of tools. This will be hard, and will require some massive shifts in the power dynamics within the institution – to rebalance the power of economics, engineering and the classic social sectors – in favour of governance and other societal factors.

Ultimately the most difficult element of the reforms is about the Bank’s relationship to its clients: to the often not very legitimate or citizen-responsive governments which it advises and to which it lends money. This is what the ED quoted above was partly referring to when she spoke of the need for – and difficulty of – honesty. Figuring out how to manage its relationships with clients more adeptly is one of the institution’s biggest challenges, especially in FCS as outlined in International Alert’s 2011 report Peacebuilding, the World Bank and the UN. No government represents its people’s interests perfectly, but this is a particular problem in fragile situations, where democracy may be nascent or absent; so how can the Bank ensure its programming choices are the right ones? This challenge requires political skills of the highest order.

Reformers in the Bank – and those around it with a voice – need to keep their feet on the gas pedal of change for some time to come, and I am tempted to suggest in doing so that they focus on:

1. Leadership: continuing to promote and model the kinds of changes which are being made, from Kim Yong Jim on down
2. Decision-making: decentralizing decision-making as far as possible down the line, mainly to country offices, and holding them to account for discarding some of the useless practices for which people still get promoted, and adopting new ways of working in line with the new bank strategy
3. Staffing: broadening the mix of skills to be fit for the Bank’s purpose of today, by enhancing economic, financial and project management expertise with softer, anthropological and political skills and talents at all levels
4. Accountability: identifying and using the right scorecard indicators – both generic and context-specific – to guide Bank staff in the complex work of reducing fragility and improving resilience in FCS.

The Bank’s senior staff are presenting their new strategy as a revolution, not an evolution. They are right to do so, because the Bank is in danger of becoming irrelevant, 70 years after it was established, and their reforms are the minimum which is needed to bring it up to date. Because of this, and because of the innate resilience and resistance of the Bank to change, I am tempted to recall what Lenin once forcefully pointed out, that you can’t have a revolution without firing squads. Those charged with changing the Bank have difficult task on their hands: needing to change approaches by their shareholders, client governments and staff. They have the most control of the last of these, and may need metaphorically to shoot a few of them (if I may be permitted to mix my historical references) “pour encourager les autres….”