A new Middle Income Country Action Plan will help guide the World Bank’s work on MIC development
Despite high growth rates, poverty remains a challenge in many MICs
A set of seven concrete actions will implemented over three years
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WASHINGTON , November 17, 2008 -- The Africa Region has developed its first-ever strategy for middle-income countries (MICs), in order to meet the needs of these countries in a changing global environment. This strategy, known as the African MIC Action Plan, was adopted in June 2008 and introduced to Africa’s MIC delegations during the World Bank-International Monetary Fund Annual Meetings in October 2008.
The African MIC Action Plan aims to operationalize World Bank Group President Robert Zoellick’s commitment to middle-income countries as one of the Bank’s institutional priorities. This commitment is based on the MICs’ importance as a source of lessons for International Development Association countries in every region; and on the fact that MICs are becoming increasingly important partners in the Bank’s work to address critical cross-border and global issues such as clean energy, trade integration, environmental protection, international financial stability, and the fight against infectious diseases.
In the case of Africa’s nine middle-income countries – Botswana, Cape Verde, Equatorial Guinea, Gabon, Mauritius, Namibia, Seychelles, South Africa, and Swaziland – their higher growth rate and relative success in poverty reduction have important spillover effects for other countries in the region. The MICs also serve as role models for the group of countries known as emerging MICs – Angola, Ghana, Lesotho, and Nigeria – which are on the path to achieving MIC status.
Development Challenges
Africa ’s MICs, which borrow from International Bank for Reconstruction and Development (IBRD), are in large part creditworthy and have varying degrees of access to financial markets. Yet they have large unfinished economic and social agendas. In addition to poverty, which remains deep and widespread in many of these countries, Africa’s MICs face constraints in mobilizing investment for infrastructure and essential services, in fully integrating into the global economy, and in addressing challenges such as inequality, effective social service delivery, corruption, and environmental degradation.
In a 2007 survey by the Independent Evaluation Group (IEG), these countries rated the Bank’s performance unsatisfactory in the areas of greatest concern to them – investment; capacity building; knowledge transfer; agricultural productivity; and the financing of regional power, telecommunications, and transport infrastructure. In addition, as MIC finance ministers told World Bank Africa Region Vice President Obiageli Ezekwesili during Annual Meetings, they look to the Bank for help to increase growth and build more effective economies, as well as to cope with the second-round effects of the financial crisis.
The African MIC Action Plan responds to these concerns by piloting new models of engagement that reflect the advanced stage of development and the high level of sophistication in these countries. It also facilitates the MICs’ access to the full range of services available across IBRD, International Finance Corporation (IFC) and the Multilateral Investment Guarantee Agency (MIGA).
MIC Action Plan
The Action Plan lays out seven concrete actions to be implemented over the next three years:
Action 1. Launch a three-year budget pilot to review the Bank’s internal budget system, staffing, and operational procedures, and adjust them as needed to allow greater flexibility and shorter response times. These measures will enable the Bank to show what it can do as a development partner.
Action 2. Launch a three-year pilot of an integrated management structure linking all parts of the Bank Group. The IBRD, IFC, and MIGA will work together as one team as a result of improved information flows, coordinated strategies, and better identification of opportunities for joint programs and projects.
Action 3. Provide knowledge services that are unbundled from lending. The Bank Group will explore the possibility of developing a region-wide facility for knowledge services for MICs; work with other development partners to set up country-specific and multi-country trust funds to finance knowledge services; and encourage fee-for-service arrangements.
Action 4. Pilot a new approach to financing regional public goods, with a particular focus on the public-goods challenge of HIV/AIDS.
Action 5. Increase support to regional programs to exploit the potential of regional cooperation, by developing practical suggestions on how to create a stronger knowledge base for regional integration; how to work across IDA and IBRD on regional infrastructure and other projects; and how best to partner with South Africa in knowledge and capacity building in the region.
Action 6. Develop a “swat team” with specialized knowledge of the Bank’s instruments, to train MIC country teams on financial products as the Bank designs more specialized and sophisticated financial products and instruments for middle-income clients.
Action 7. Increase the impact of our communications and outreach efforts, by establishing an advisory panel of communications experts; scaling up and revamping, as necessary, web-based communications and outreach; and ensuring there are additional human and financial resources to back up the communications and outreach program.
The World Bank’s Work
“Although the Action Plan is very recent,” Ezekwesili told the delegations during Annual Meetings, “good progress has already been made in several areas.” She cited the following examples:
On piloting new approaches to financing regional public goods, an interest rate buy-down by the EU in Botswana has enabled the Bank to help fund the country’s fight against HIV/AIDS. A similar arrangement for Swaziland is being discussed with the EC.
On providing knowledge services unbundled from lending, the Bank recently entered into a fee-based service agreement with Botswana in the area of water sector reform.
On working better as a World Bank Group, in Botswana, the Bank is working jointly with IFC and the Bank’s Treasury teams on several critical power sector investments. In Mauritius, IBRD and IFC are working together on an SME operation.
In developing practical suggestions for supporting regional cooperation, the Bank’s Africa Region has launched a serious of focused, policy-oriented studies jointly with Southern African MICs on critical regional issues such as HIV/AIDS, trade, labor, and migration. The Region is also providing capacity building support to regional organizations such as SADC and COMESA.
The success of Africa’s middle-income countries is critical for growth and poverty reduction in Sub-Saharan Africa; and the African MIC Action Plan is putting the Bank Group on a path to a more responsive and multi-faceted engagement with this dynamic group of countries.
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