Transcript of the Opening Remarks for Robert B. Zoellick, President, World Bank Group At German Chancellor Merkel’s Panel on Aid Effectiveness

* Inaudible sections and words are marked with an ellipsis. (…) 

Thank you very much Chancellor, Prime Ministers, Mr. Niebel, Mr. Lane.

I think this opportunity is a particularly important one ….. We know…the financial crisis this will be under stress for many and we’re looking for new ways to address this.

Just to give you some of the context as we see it, we believe the world is going to continue to have slow growth, and there will be significant uncertainties.  The good news is, as Prime Minister Meles mentioned, some of these emerging market countries are new sources of recovery and source of exports growth from Germany and other locations.  We can see how in a multi-pole world economy is going to be critical and has benefits for all parties.

When resources are tightened as Prime Minister Stoltenberg emphasized in most countries, results are more important than ever.  Not enough to have good intentions, we’re going to have to show good investments.  And in this context, I think the MDG goals can be very useful in having a benchmark for better results.

Ghandi once asked himself looking at the poorest man: “Am I making his life better?”  And in a way, the MDGs are a way of answering that question.

To counter some of the skeptics it’s important to recognize that developing countries were making real progress on a number of goals prior to the combined food, fuel and financial crises of 2008.  In 1981, 52 percent of people in developing countries lived in extreme poverty; by 2005, the share had fallen to 25 percent.

Some of the economists probably know the key role that China played in that even if you take China out of these numbers, global poverty is expected to almost halve by 2015: from around 35 percent in 1990 to 18 percent. 

As Prime Minister Stoltenberg mentioned, we’ve seen real progress in getting girls in school, safe water, fighting disease ….  But because of this triple blow of the food, fuel, and financial crises there are now 64 million people were living in extreme poverty in 2010, and some 40 million more people went hungry last year.    We’ve lost a lot to AIDS and hunger because of this crisis.  Funds are scarcer too, and we’re going to have to be more effective.

One story that comes to mind for me, on a trip to Rajasthan last year, I met a very poor woman who had received a cow as part of a rural women’s income project.  She told me the very first investment she made was of selling … amounts of milk was to send her children to school.  But then she realized the teacher wasn’t showing up.  So she and the other women who were part of the milk collective went to the district authorities and demanded a new teacher.  The new teacher, I was told by the woman, is very respectful now to this woman in the community. 

So here’s a case where we can see increased income; improved nutrition; children in school; women’s empowerment --- all from one cow.

As Prime Minister Meles said, I think one of the others lessons we learned the hard way is that country and community ownership of development is critical.  If the country don’t own it, countries can put in resources but it just won’t work effectively.  That’s one reason the Bank’s focus on the poorest countries, with our  IDA, puts developing countries in the driver’s seat.   We try to allocate funds on a three year basis countries must have some transparent and predictable basis in support of countries’ development priorities.  And this is quite important as Prime Minister Meles said, countries have to have some transparent and predictable basis for their work.

It’s also helpful in that it now because it brings together over 45 developed and developing country donors, so we’re getting more contributions from some of the emerging powers.  And as the Prime Minister mentioned, this becomes the cornerstone for integrating other development work.  Some developing countries get between three or four or five hundred donor visits a year and frankly it overwhelms their capacity.  Each donor has their own project, their own flag and while they’re well intentioned it makes it impossible to have coherent development effort.

We also, prodded in part by Germany and others, trying to make sure we report the numbers.  From our past work with IDA we’ve identified we’ve saved 13 million lives.  As Prime Minister Stoltenberg mentioned, a real focus on vaccinations, over 300 million children have been vaccinated with the most recent funds, 170 million have had access to water and sanitation and 99 million additional nutrition.  So these are significant numbers but I think looking ahead we’re going to have to be creative about other ways to focus on results.  That’s why I’m very pleased that Chancellor Merkel – with her usual sense of drive and scientific method – has tried to focus on financing for results.

We’ve been doing some work on this at the Bank.  We’ve developed some interesting examples: we’re trying to develop a new results-based financing mechanism to more directly link Bank resources to the achievement of results.  But at the same time one other lesson that we’ve learned is that the conditions and the environment involving communities are also met.

So we would link results to disbursements and many cases results would have to come before the resources. We suspect that if we can do this in a way that aligns the resources with the national programs as Prime Minister Meles mentioned, we can also develop the capacity to implement the aid.

For example, in Pakistan, we have developed a results-based education project that disburse resources against demonstrated progress in merit and needs-based teacher recruitment, implementation of teacher incentives programs, and strengthened school management.  Now those programs are still focused on implementation and continue to drive the outputs.

In the last five years, we have lent more than $10 billion to support results and performance based budgeting in middle income countries, and we’ve seen this is very important to try to strengthen their capacity.

So far, much of the focus has been in the social sectors —for example, conditional cash transfers which gives money to the poorest, but on the condition that people send children to school or they get basic preventative health checkups which in many of these countries has probably done more for women’s health than anything.  And so about two thirds of this funding has targeted financing girls’ education, school feeding programs, social safety nets, and access to health services.

In Afghanistan we had financing resulted in the doubling of skilled birth attendants at delivery between 2002 and 2007.  The number of primary care facilities also doubled from about 500 to 1200 in the same period.  In Senegal, an output based financing program, the number of people with access to water services increased by more than 1.4 million over the course of 8 years.

Now results-based financing may not always be suitable for all countries and all circumstances.  We have to be careful of the lesson that one size doesn’t fit all.  So our challenge here is going to be trying to refocus this as a tool, learn better how to achieve the gains, while keeping up our environmental and social protection standards and fiduciary safeguards so we don’t lose this to fraud and corruption.

But the key message we’ve heard from clients is we have to keep coming up with innovative programs to try to meet needs.  And let me just cite one other: if you look at agriculture in Malawi, it’s rain based, totally dependent on rainfall.  So we’ve worked with the government of Malawi to invest in rain derivatives so we’ve taken the much chastised derivative market and put it to good use, because if the rain doesn’t reach a certain level then the government of Malawi will get money to be used to try to support some of these basic farmers.

One other point that I just want to draw to your attention [unintelligible] which I think is very important.  The Bank and a lot of institutions has reams of data from decades, and frankly a lot of it wasn’t available, wasn’t set up properly or we charged for it.  And part of I think the need to open a network horizontally for people to check what you’re doing, add other information sources, come up with different knowledge bases to change how we think about the openness of these institutions.  We’re going to try to develop something that focuses more on open data, developing open knowledge and open solutions.

And I think it also reflects the fact that we live in a changing world.  A lot of [unintelligible] will now come from developing countries.  We can take lessons from emerging markets and bring them to poor countries.  And frankly I hope that developed countries keep an open mind because we need the innovation coming from developing countries and it might also be useful for developed countries.  Thank you.