©Arne Hoel/World Bank
Improving the investment climate and empowering people are the two pillars of the Bank’s long-term antipoverty strategy. The pillars intertwine, with progress in human development providing the capacity to sustain improvements in the investment climate, support economic growth, and address economic and social inequality. Pillar 1: Improving the Investment Climate The Bank fosters economic growth through advocacy for more equitable trade, support for policy reform, and project-specific investments in trade, private sector initiatives, infrastructure, the financial sector, and extractive industries, often in partnership with other Bank Group institutions. Promoting Openness to Trade The Bank continued to advocate for an ambitious outcome to the World Trade Organization Doha Development Agenda negotiations, emphasizing substantive agricultural reform, participation by all countries, and increased aid for trade. On agriculture, Bank research underlined the critical importance of access to developed-country markets for farm products. In cooperation with the IMF and other partners, the Bank designed proposals for increasing aid for trade, including the enhancement of the Integrated Framework for Trade-Related Technical Assistance for least developed countries. Trade-related lending has almost tripled over the past three years, rising to 6 percent of its overall portfolio. Integrating trade into national growth strategies remains at the core of the Bank’s work. In addition, the Bank conducted trade analyses and provided support to more than 35 countries on issues ranging from standards harmonization to customs reform. The Bank continues to support its clients engaged in negotiating regional trade agreements. It has also provided analyses and technical assistance on free trade agreements sponsored by the United States and the European Union, particularly in Africa and Central America. (See Evaluation: World Bank Support for Trade and www.worldbank.org/trade.) Assessing the Business Environment The third annual report of the Doing Business Project, Doing Business in 2006: Creating Jobs, provides quantitative indicators of business constraints in 155 countries. This year’s report added three new indicators: on the taxes that businesses pay in each country, on dealing with business licenses, and on countries’ procedural requirements for importing and exporting. It also presented an aggregated global ranking for the first time. The Bank’s enterprise surveys, another source of data on the business climate in developing countries, now cover 51,000 firms in 76 countries. These data fed into 23 investment climate assessments and activities delivered to the client in fiscal 2006. To help client countries strengthen their corporate governance framework, the Bank completed 7 country corporate governance assessments in fiscal 2006, bringing the total to 55 of both new assessments and updates on previous ones. In addition, the Bank launched three pilot assessments of the governance of state-owned enterprises. The analyses in these assessments are useful in guiding government reforms and have supported Bank projects in more than 30 countries. Commitments for new projects with private sector development as a major theme amounted to more than $6.1 billion in fiscal 2006. Going beyond the assessment phase, the Bank Group also helps reform-minded governments improve their investment climate through the Foreign Investment Advisory Service, a joint operation with IFC. In fiscal 2006, the advisory service completed 82 projects in 43 developing countries, with 52 percent of advisory projects in high-risk or low-income countries. Many of the projects built on the analyses undertaken by the Doing Business Project and the enterprise surveys. (See www.doingbusiness.org and www.enterprisesurveys.org.) Increasing Support for Infrastructure In fiscal 2006 there were 125 new projects approved with an infrastructure component; these totaled more than $8 billion. This increase of approximately 10 percent over the previous fiscal year is in line with the Bank’s Infrastructure Action Plan, developed in 2003 to respond more robustly to client requests involving both infrastructure investment needs and broader development objectives as outlined in the MDGs. Most of the commitments were in the transportation sector (40 percent) and the energy and mining sector (38 percent), followed by the water, sanitation, and flood protection sector (21 percent). Project quality has remained consistently high since the plan’s inception, and the proportion of projects at risk continues to be lower than the Bank average. In addition, the Bank delivered 139 analytic and advisory products related to infrastructure, one of which was a major study of lessons learned, Infrastructure at the Crossroads: Lessons from 20 Years of World Bank Experience. At the G-8’s Gleneagles Summit, the Bank was asked to assume global leadership in two infrastructure-related areas: ensuring successful coordination of the sizable increase in aid provided in support of the infrastructure agenda in Africa; and creating a new framework for mobilizing investment in clean energy and development. (See Responding to Climate Change, www.worldbank.org/infrastructure, and www.worldbank.org/energy.) Increasing Access to Financial Services Sound and inclusive financial systems are essential to reaching the MDGs. Improving access to financial services such as savings, credit, insurance, and remittances is vital to enabling the poor to take advantage of economic opportunities and guard against uncertainty. The Bank, working closely with the Consultative Group to Assist the Poor, delivered international training on balancing the Anti-Money-Laundering/Combating the Financing of Terrorism regulation with the need to provide access to finance, especially for the poor. The Bank led an international effort to establish indicators quantifying access to financial services. In partnership with clients and other development institutions, the Bank is seeking more systematic ways to incorporate indicators of access to financial services into processes for setting development priorities. In addition, it has studied the effects of financial access on the attainment of the MDGs. Finally, the Bank has intensified its efforts to develop risk management products aimed at softening the impact on the poor of natural disasters, commodity price fluctuations, and other shocks. (See www.worldbank.org/finance.) Facilitating Remittances for Migrants With 200 million migrants worldwide and remittance flows to developing countries reaching $167 billion in 2005—more than double the volume of official aid flows—international migration has become vital to development. Remittances are typically distributed more widely in the receiving economy than other financial inflows such as bank loans or foreign direct investment; thus, they, too, contribute directly to reducing inequality. Evidence also shows that remittances reduce poverty in those households where they account for a significant proportion of income. Thus, immediate gains can result from policy adjustments, as well as promotion of market competition among service providers, aimed at reducing the cost of transmitting remittances. The Bank is working to improve systems for international remittance flows and access to finance. The General Principles for International Remittance Services was published with the Bank for International Settlements to help develop secure and efficient remittance payment systems. Pillar 2: Empowering Poor People Investing in people to empower them to lead productive lives, make sound decisions about their future, and preserve the environment forms the second pillar of the Bank’s antipoverty strategy. Investments in human development improve quality of life and foster participation in economic activities that advance a country’s development, increase access to services, and reduce inequality. The Bank continues to monitor progress using the measures established in the MDGs, the global effort aimed at improving lives in developing countries by 2015. The Bank plays a central role in this effort, in partnership with governments, United Nations agencies, and other international financial institutions. The third Global Monitoring Report on the MDGs, Strengthening Mutual Accountability: Aid, Trade, and Governance, a joint Bank-Fund publication, identifies measures to make aid work more effectively and ensure that donors, international financial institutions, and developing-country governments deliver on commitments. The report also examines the central role of governance in development effectiveness and proposes a framework for monitoring key elements of national governance systems. Increasing Educational Opportunities Poor children with the same educational opportunities as economically advantaged children have a better chance, as adults, in competing for employment. Today, more than 100 million children of primary school age are not enrolled in school. To help achieve universal primary education by 2015, the Bank has increased its support for the Education for All Initiative. This enhanced support came primarily through the Education for All Fast-Track Initiative (FTI), a global partnership between donor and developing countries that made great strides in the past year thanks to new financial and technical aid from donors. The FTI has increased domestic and external financing for education in developing countries and has made that aid more effective. It also has led to a more productive policy dialogue, expanded flexible aid for primary education, and increased donor commitment to cost-effective standards for school construction. All low-income countries committed to achieving universal primary education are eligible for FTI funds. Currently, 20 countries are Fast-Track partners. An IEG report, From School Access to Learning Outcomes, calls attention to the striking progress in school enrollments in the past 15 years, as well as to the crucial need to give the same emphasis to learning outcomes as is given to greater access. In fiscal 2006, country-level donor partners endorsed the education strategies of seven countries, signifying that they were ready to sustain significant increases in external financing. Disbursements under the FTI Catalytic Fund, created for countries with limited donor presence and support, totaled $60.2 million. The first round of disbursements under the Education Program Development Fund, the new fund for capacity development in education, was completed in fiscal 2006. Disbursements amounted to 45 percent of total commitments of $4.9 million. Twenty-eight country programs received technical and financial support from the fund. Overall, the Bank also lent $2 billion for education, higher than the total for fiscal 2005. Support for education components in projects in other sectors stood at $533 million. (See www.worldbank.org/education.) Fighting Communicable Diseases Countries cannot aspire to greater equality while their poorest people suffer disproportionately from ill health and communicable diseases. The development community has acknowledged the importance of improving health; three of the eight MDGs target reductions in ill health as a measure of development progress. HIV/AIDS. New infections and AIDS-related deaths continued to rise in 2006. The new Global HIV/AIDS Program of Action reflects the Bank’s commitment to providing funding for sustained support of effective national and regional programs, focusing on strategic planning, strengthening country monitoring and evaluation systems and evidence-informed responses, and accelerating implementation. The Bank’s knowledge agenda for HIV/AIDS includes impact evaluation and analytic work to better understand the epidemic’s diversity and improve program effectiveness (see Evaluation of HIV/AIDS Assistance). Malaria. The Bank intensified its support for malaria control through the new Global Strategy and Malaria Booster Program, begun in fiscal 2005, which has been well received by client countries and partner agencies. This program combines an emphasis on monitoring results and outcomes with flexibility in approaches and lending instruments. The program is under way in Africa, where it began with a three-year “intensive phase” that set a financing target of $500 million from IDA by the end of fiscal 2008. Since the launch of the booster program, the Bank has approved malaria control projects and related components in Benin for $31 million, Burkina Faso for $12 million, the Democratic Republic of Congo for $30 million, Eritrea for $2 million, Ethiopia for $20 million, Niger for $10 million, and Zambia for $20 million, and a subregional project in the Senegal River Basin (Guinea, Mali, Mauritania, and Senegal) for $42 million—totaling $167 million in fiscal 2006. Projects in at least seven other countries are under preparation, and the Bank is on track to commit $427.5 million of its $500 million target. Also, in collaboration with partner agencies, the Bank continues to explore options to improve access to a new generation of antimalaria drugs. Tuberculosis. The Bank participated in the preparation of a new Global Plan to Stop Tuberculosis, launched at the 2006 World Economic Forum in Davos, Switzerland. Cumulative Bank commitments total approximately $600 million and cover more than 30 countries. In addition to this direct support, the Bank is engaged in cross-cutting work on service delivery to improve tuberculosis control. And because tuberculosis often afflicts patients whose immune systems have been compromised by AIDS, several Multi-Country AIDS Program operations (such as those in Eritrea, Kenya, and Uganda) now include an antituberculosis component. Improving Maternal and Child Health The fourth and fifth MDGs address reductions in child and maternal mortality. In fiscal 2006, Bank commitments for child and reproductive and maternal health increased to $259.8 million, with disbursements of $301.3 million. Results of global efforts are beginning to show. A recent report prepared in connection with IDA’s 14th replenishment of funds showed that the proportion of births attended by skilled health personnel increased from 40 percent during 1997–99 to 44 percent in 2002. Mortality among children under five fell from 125 per 1,000 live births to 120 during the same period. As an example, an IEG evaluation of interventions in Bangladesh to improve maternal and child health and nutrition showed reduced death rates for children under five and a two-thirds decrease in maternal mortality. The gains were attributed to an increase in government service delivery supported by a Bank-led donor consortium. Resources were also used to expand family planning services and increase childhood immunization rates from less than 2 percent to nearly 75 percent. (See www.worldbank.org/hnp.) Achieving Gender Equality Through innovative research on the effects of gender-based barriers to development, the Bank is building a knowledge base that can help countries address gender inequality in economic empowerment. During the past year, the Bank organized a series of workshops on gender and economics for development practitioners. The workshops were designed to strengthen developing countries’ capacity to analyze and address the constraints imposed on economic growth by gender inequality. The Bank also hosted a high-level consultation called Promoting the Gender Equality Millennium Development Goal: The Implementation Challenge, which set a new agenda for promoting gender equality. From that meeting, a new action plan emerged that was formulated to help accelerate progress toward this goal. Financial support from the governments of the Netherlands, Norway, and Sweden continues to encourage innovation in the mainstreaming of gender issues in the Bank’s work. Bank-funded projects increasingly incorporate gender analysis in their design, particularly in the areas of health, education, and social protection. (See www.worldbank.org/gender.) Improving Equity through Social Protection The Bank’s approach to social protection is guided by the social risk management framework through which it supports the unemployed, develops equitable labor market practices, works to eliminate child labor, helps create viable old-age income security for poor people, and provides social safety nets for vulnerable groups. During the past year, the Bank focused on including equitable job creation in the poverty reduction and growth agenda. It also implemented a promising labor market research strategy that emerged from a Bank-wide stock-taking process. Two publications on pension systems and reforms were also released: Old Age Income Support for the 21st Century: An International Perspective on Pension Systems and Reform; and Pension Reform: Issues and Prospects for Non-Financial Defined Contribution (NDC) Schemes. (See www.worldbank.org/sp.) Encouraging Social Development The Bank’s social development strategy highlights inclusion, cohesion, and accountability. To improve governance and service provision and support reforms linking local governments to communities, the Bank provided approximately $2 billion in community-driven development funds. The Bank also enhanced social accountability methodologies used by Bank staff to help countries expand citizen responsibility in holding public officials accountable. Equitable project outcomes have also improved since expanded poverty and social impact analyses were integrated into the early stages of Bank operations. (See 2006 Global Development Marketplace and www.worldbank.org/socialdevelopment.) Increasing the Participation of Civil Society Civil society organizations play an important role in giving voice to the disenfranchised, promoting transparency and good governance, and providing community services. Bank staff members at all levels continue to engage in substantive dialogue with civil society organizations on issues such as debt, trade, and extractive industries, especially during the Bank-Fund Annual and Spring Meetings. Staff members also reach out to civil society through meetings in-country, at headquarters, and through video conferences. The Bank undertook country-based research on social accountability, participatory budgeting, and community empowerment, and encouraged civil society participation in Bank operations. Civil society organizations were consulted on nearly all of the 31 country assistance strategies approved by the Bank in fiscal 2006, and they were consulted during the preparation of 72 percent of new loans approved. The Bank encouraged borrowing governments to engage civil society in the formulation of poverty reduction strategies in 19 countries and promoted funding of civil society development efforts through a variety of mechanisms, including the community-driven development portfolio. Significant Bank–civil society collaboration occurred on Asian tsunami reconstruction efforts, particularly in Indonesia, where more than half of the foreign assistance spent on relief during the first year was channeled through civil society organizations. (See www.worldbank.org/civilsociety.) Supporting Environmental Sustainability The Bank strives to help developing countries meet the cross-cutting goal of ensuring environmental sustainability by integrating environmental concerns into all development-related work. Through the implementation of its environment strategy, which addresses the links between environment, poverty, and economic growth, with a particular emphasis on the health, livelihoods, and vulnerability of poor people, the Bank is cooperating with partner countries to systematically evaluate their environmental priorities, the environmental implications of key policies, and their capacity to address development priorities and related environmental concerns. At the same time, evidence points increasingly to the country, regional, and global implications of environmental management—be it in the form of climate change, health effects, or natural hazards—which demand more attention from the Bank. The Bank has developed a set of measurements to assess changes in natural wealth taking place in developing countries as a way to track progress in achieving the MDG of environmental sustainability. (See www.worldbank.org/environment.) Strengthening Results Management The Global Monitoring Report 2006 finds progress in shifting the emphasis of international financial institutions and country programs toward results management; that is, managing for outcomes rather than managing for inputs. This shift toward results requires a long-term vision, additional resources, and support for capacity strengthening in partner countries. To facilitate this shift, the Bank is implementing changes in its key instruments and procedures. For example, the Bank has mainstreamed the use of a results-based country assistance strategy to ensure that country programs are aligned with country development plans, and it has modified its guidance on the appraisal process to include a sharper focus on results management at the country-level. In addition, the Bank has initiated the Development Impact Evaluation (DIME) Initiative to coordinate impact evaluations for projects and programs supported by Bank lending. To date, the Bank’s Independent Evaluation Group has played a leading role in evaluating impact institutionwide and for specific country programs and projects. The DIME Initiative proposes to take such evaluations a step further to guide the Bank in its shift to results management. Currently, two dozen rigorous evaluations on education projects, conditional cash transfer programs, and slum-upgrading initiatives are under way through DIME. EVALUATION: WORLD BANK SUPPORT FOR TRADE EVALUATION OF HIV/AIDS ASSISTANCE 2006 GLOBAL DEVELOPMENT MARKETPLACE QUALITY ASSURANCE GROUP FINDINGS © 2006 The International Bank for Reconstruction and Development/The World Bank |
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