World Bank reforms aim to cut extreme poverty in half by 2020

Edith Jibunoh reports on the outcomes of the World Bank Group and International Monetary Fund meetings, which took place last week in Washington, D.C. This year’s gathering was especially momentous as the World Bank Group is embarking on sweeping reforms, its first major strategic realignment in 17 years. 

Over the weekend, the Development Committee – a ministerial-level forum of the World Bank Group (WBG) and the International Monetary Fund (IMF) – unanimously endorsed a new reform strategy to align the staff, finances and priorities of the WBG to meet the twin goals of ending extreme poverty by 2030 and boosting shared prosperity for the bottom 40 percent of the population in developing countries. The new strategy will go into effect on July 1, 2014.

During Friday’s opening plenary, WBG President Jim Yong Kim emphasized that the restructuring effort is aimed at making the WBG less bureaucratic and fragmented, more efficient and effective, and more responsive to its clients.

“A development institution can’t operate effectively when its clients are confused, and when its most prized possession – knowledge – is walled off into disjointed, non-communicating silos,” he said.  “A development institution, like a business, needs to find innovative solutions, capture best practices, and share lessons of success and failure widely and as quickly as possible.”

President Kim injected some urgency, unveiling the WBG’s new interim target of cutting extreme poverty roughly in half by 2020, from its rate of 18 percent in 2010 to 9 percent in 2020.

If achieved, this will mark the first time for the poverty rate to fall into single digits, representing a major milestone toward the goal of eliminating extreme poverty by 2030. This would mean that the world would have 510 million fewer people living in poverty in 2020, compared to a decade earlier.

In his plenary address, President Kim also announced a new initiative to provide universal financial access to 2.5 billion working-age adults around the world by 2020. He emphasized that universal financial access is vital to ending extreme poverty and that innovation is key to overcoming this huge challenge. President Kim also unveiled the “Presidential Delivery Unit”, the first and only of its kind in multilateral institutions, geared toward improving the delivery of services and achieving real development results.

President Kim described three aspects of the WBG’s work in which the new delivery unit will measure outcomes: decreasing administrative barriers, becoming a better listener, and openly sharing knowledge and experience.

Over the next three years, the WBG will implement at least a $400 million reduction in annual administrative costs (including cuts in travel and staff) and seek to reinvest these resources. Although this will mark an 8 percent cut from the WBG’s current $5 billion in annual expenses, President Kim emphasized that these cuts won’t come at the cost of scaling back on development projects.

Also in his plenary address, President Kim highlighted the impressive achievements of the International Development Association (IDA) – the concessional lending window of the WBG – and called on donors for a robust replenishment.

“[T]o build on this work, have a transformational impact, and reach our goals, we need a strong IDA17 replenishment this year,” he said. “[W]e’re asking you to increase where you can and to at least maintain your precious contribution to IDA.”

IDA deputies are currently holding their third replenishment meeting this week.

ONE has been deeply engaged with the IDA replenishment negotiations as well as the WBG in general and has welcomed President Kim’s initiative to transform the WBG into a solutions and results-oriented institution.

In addition to these efforts to become a more open institution, ensuring that citizens around the world have information on the WBG’s activities and their focus on results and its demand-driven agenda should help orient development to realize progress on the priorities of the poor.

Watch President Kim’s full opening plenary here.