James D. Wolfensohn and the World Bank
On January 3, 2005, World Bank President James D. Wolfensohn informed the World Bank's Board of Executive Directors that he would not seek a third term as head of the institution. Under Wolfensohn's leadership, the World Bank evolved in many significant aspects, and this is a brief summary of some of those developments during his two terms, which concluded May 31, 2005.
Wolfensohn at the Bank, 1995-2005
Over 10 years as President of the World Bank Group, Jim Wolfensohn brought about major change in the way the world's largest development organization operates, firmly refocusing it on its main goal, that of fighting global poverty. He has led the modernization of the 60-year old institution through rapid decentralization of Bank activities to over 100 country offices, and through the adoption of cutting-edge business practices and technology. At the same time, there were new and significant policy directions, most notably major efforts on debt relief, anti-corruption, the environment, the private sector, post-conflict reconstruction, HIV/AIDS, inclusion, disabilities and a broad range of social issues.
By decentralizing the Bank, working more closely with other development partners such as nongovernmental organizations (NGOs), and placing greater emphasis on home-grown development planning, Wolfensohn shifted the Bank closer to its client governments than ever before.
The effectiveness of today's Bank in delivering results for poor countries and people has been recognized by both developing and developed countries. In September, 2004, The Economist magazine stated that the World Bank today "does more to fight poverty than any other public body." An independent audit of the International Development Association (IDA), the Bank's lending arm for the poorest countries, by Booz Allen Hamilton in June 2004 showed IDA met and, in some areas, went beyond its performance targets.
During the Wolfensohn Presidency, a fundamental shift took place in terms of the Bank's support for poverty-reduction programs. These are now designed by developing countries themselves—comprehensive, home-grown plans structured in a way that enables both donors and recipients of aid to achieve better results on the ground. There has also been a greatly increased focus in the Bank's lending for improvements in policies and institutions, meaning that aid is used more selectively, and increasingly is focused on countries with strong records for good policy-making—such as Uganda and Vietnam.
Success rates in Bank-supported projects, as judged by its Operations Evaluation Department, increased from just over 70 percent in 1995 to closer to 90 percent in recent years.
Other significant changes include:
- At the beginning of the Wolfensohn Presidency, debt relief was not on the World Bank's agenda, nor was it considered a priority by the international community more widely. Today, largely due to Wolfensohn's drive for an initiative for the Highly Indebted Poor Countries (HIPC), 27 countries are receiving debt relief on the order of $54 billion.
- At the beginning of the Wolfensohn Presidency, corruption was rarely mentioned in international development circles. In 1996 Wolfensohn gave a groundbreaking "cancer of corruption" speech to the World Bank/IMF annual meeting, citing corruption as a major burden for the poor in developing countries. Corruption is now widely recognized as a major impediment to development that must be tackled aggressively. The Bank itself is supporting some 600 anti-corruption programs in nearly 100 countries, and has debarred more than 200 companies and individuals on the grounds of fraud or corrupt activity.
- At the beginning of the Wolfensohn Presidency, HIV/AIDS was not viewed as a significant issue on the development agenda, nor were women's issues. Today, the Bank is the largest provider of external resources to the developing countries for HIV/AIDS treatment and prevention initiatives. Additionally, between 1995 and 2003 the Bank committed nearly $7 billion for girls' education as well as for health, nutrition and population projects, where women are the major beneficiaries.
The decade also saw the Bank refine and broaden its approach to one of its core mandates, that of reconstruction. The Bank's efforts in Bosnia during the mid-nineties showed a new, more active approach to reconstruction that sought to provide swift assistance to survivors of this brutal conflict, and cement the fragile peace accord. Since then, the Bank has played a vital role in West Bank/Gaza, Kosovo, East Timor, Sierra Leone and over 30 other countries—its expertise and finance helping to restore growth and peace. The Bank is now working closely with those governments affected by the tsunami disaster of December 26 to help pave the transition from relief to longer-term reconstruction.
When Wolfensohn took office, the World Bank was perceived almost solely as a lending institution. It is now equally focused on the importance of advice, knowledge and global experience, powered by a technological revolution that links Bank offices all over the world by satellite, allowing videoconferencing on a global scale. The Bank also has taken advantage of the enormous potential of the Internet to help create an independent, web-based portal for all development information called the Development Gateway.
A further major change was the increase in openness and transparency on the part of the Bank. Wolfensohn personally encouraged efforts to reach out more to other international organizations, the private sector and to civil society. NGOs now participate in most of the Bank's projects. Wolfensohn has also made partnership with the private sector a central part of the Bank Group's activities.
Environmental activities have also expanded rapidly over the past ten years, and the Bank is today the largest external provider of financing for environmental projects, providing $1.3 billion in the most recent fiscal year.
At the World Bank's 2004 Annual Meeting of its member countries, Wolfensohn commented on how he saw some of the major changes at the Bank over the last decade. "We listen more and we lecture less," he said. "And we are not afraid to be self-critical...I am proud of our achievements over the past ten years. We may be 60, but we are young. We are a united institution, determined in our goal to fight poverty with passion and professionalism."
Wolfensohn's announcement to the Board of Executive Directors, Jan. 3rd:
"On May 31, 2005 my second term as President of the World Bank Group comes to an end. It has been a true privilege to serve the institution. I will be forever grateful for the opportunity and could not imagine working with a finer group of colleagues or on a more important cause. I would like to retire at the end of my term and would suggest that the Board seek a new President for the Institution as I would not wish to be considered for a third term. You can be assured of my full cooperation in every way."
Commenting on Wolfensohn's announcement, US Treasury Secretary John Snow said:
"Over the past ten years, Jim Wolfensohn has been an outstanding leader of the World Bank…Because of Jim's leadership, the World Bank today is a more dynamic and effective development organization. I view his accomplishments as historic. Jim's tireless efforts to assist the world's poor have been marked by unmatched passion and accomplishment. The world's poorest people have clearly benefited from Jim's tenure at the World Bank. He deserves great thanks and praise for his service. I look forward to working with him over the next six months as he continues to lead the Bank. His counsel will be invaluable as we go through the transition process."
Also commenting on Wolfensohn's announcement, the President of Nigeria, Olusgun Obasanjo said:
"Over the past ten years that Jim has led the World Bank Group, he has made the institution a beacon of hope and a true partner for developing countries working hard to improve the lives of their people. He has led the fight to improve education and health outcomes, beat back the HIV/AIDS pandemic, and provided debt relief thought the HIPC initiative for the poorest countries in the world. Jim stands out for his passion, enthusiasm and boundless dedication to the cause of poverty eradication. Early in his tenure, he promised that the World Bank would put Africa at the centre of its development efforts. He kept his word and today, the Bank Group enjoys an unprecedented partnership with African countries and institutions across the whole spectrum of development challenges, from post-conflict support to early childhood education."
President Wolfensohn's message to Yahya Alyahya, Dean of the Board of Executive Directors, on January 3, 2005:
On May 31, 2005, my second term as President of the World Bank Group comes to an end. It has been a true privilege to serve the institution. I will be forever grateful for the opportunity and could not imagine working with a finer group of colleagues or on a more important cause. I would like to retire at the end of my term and would suggest that the Board seek a new President for the Institution as I would not wish to be considered for a third term. You can be assured of my full cooperation in every way.
We are preparing a full transition briefing on the Bank Group for the next president. I have appreciated the chance to work with our shareholders and with all Executive Directors and feel sure that we will be able to arrange an orderly, seamless transition.
Once again on behalf of Elaine and myself, let me express our profound appreciation to you and to all colleagues across the Bank Group for your support and friendship during my tenure.
Message from Yahya Alyahya, Dean of the Board of Executive Directors, to Jim Wolfensohn in response:
I should like to thank you on behalf of the Executive Directors for your email of yesterday, informing us of your decision to retire at the end of your second term and your suggestion that the Board seek a new President for the Bank as you do not wish to be considered for a third term.
We also thank you for the meetings we have had with you in the past few months on this issue and our appreciation for the candidness, clarity and objectivity you have shown during those meetings. We know this is a difficult decision for you and therefore appreciate very much the timeliness of your decision as well as your well-founded desire to have an orderly and seamless transition.
Let me take this opportunity to acknowledge our deep appreciation for your outstanding leadership of the Bank over a whole decade and for imbuing it with passion and purpose to the benefit of the whole world and especially the poor. Your indefatigable efforts have energized not only the staff and management but an ever-growing set of partners both in developed and developing countries. Largely through this leadership, the Bank has been transformed into the premier development financing institution in the world, more effectively and efficiently carrying out its poverty reduction mandate.
We look forward to our continuing good relationship with you during this last part of your tenure and also to an appropriate time when we can properly recognize your most able dynamic leadership of the institution. We also place considerable value in your offer to cooperate fully in the process going forward and will highly appreciate your wise counsel. In the meantime, the Board will proceed to exercise its responsibilities in connection with the selection of the new President.
Our very best wishes to Elaine.