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Biometrics, foreign aid, Africa, economics of resource-rich countries, growth and development, transition economies
Alan Gelb is a senior fellow and director of studies at the Center for Global Development. His recent research includes aid and development outcomes, the transition from planned to market economies, the development applications of biometric ID technology, and the special development challenges of resource-rich countries.
He was previously director of development policy at the World Bank and chief economist for the bank’s Africa region and staff director for the 1996 World Development Report “From Plan to Market.”
Less than a month until the anniversary of the earthquake that devastated the Haitian capital, 1.3 million still live in tents, clean water remains an issue with cholera rapidly spreading, and millions of cubic meters of debris litter the streets, hampering rebuilding efforts. But Haiti was hardly in great shape before the earthquake. Despite years of assistance, 80% of its population was living under the poverty line, 2 out of 3 Haitians did not have a formal job, and infrastructure was minimal.
The International Development Association (IDA) is the World Bank’s arm that provides highly concessional loans and grants to the world’s poorest countries. IDA is one of the largest sources of assistance for these countries – of which, half are located in Sub-Saharan Africa. And, it is the single largest source of donor funding for basic social services in the poorest countries. In FY10, the largest IDA recipients included India, Vietnam, Tanzania, Ethiopia, Nigeria, Bangladesh, Kenya, and Uganda.
According to the Center’s Quality of Official Development Assistance (QuODA) assessment, IDA is the only multilateral aid agency that scores in the top ten across all four sub-indices (maximizing efficiency, fostering institutions, reducing burden, and transparency and accountability).
The majority of IDA’s funding comes from contributions by roughly 45 donor governments. Every three years, these governments gather to replenish IDA’s coffers. The so-called replenishment negotiations provide an opportunity for shareholders and stakeholders to influence IDA’s institutional and programmatic objectives. The largest pledges to previous replenishment (IDA-15) were made by the United Kingdom, the United States, Japan, Germany, France, Canada, Italy and Spain. Additional funds come from the World Bank’s net income and from borrower countries' repayments of earlier IDA loans (i.e., “reflows”).
In mid-December 2010, donor governments will meet in Brussels to conclude the IDA-16 Replenishment agreement. This will be the last full IDA replenishment until the Millennium Development Goals (MDGs) deadline in 2015. The IDA-16 agreement largely will focus on several key themes, including: fragile states, gender, crises response, and climate change. World Bank management has proposed an overall IDA-16 financial envelope of $47 billion – of which, donor governments would provide roughly $33 billion. This would essentially entail flat donor contributions in real terms compared to the previous IDA-15 replenishment. However, it would mean a roughly 15 percent increase overall due to usage of the World Bank’s internal resources (i.e., IDA credit reflows, IBRD net income transfers, etc).
The Center has produced several proposals and analytical papers dealing with IDA’s operations. These include:
Leveraging World Bank Resources for the Poorest: IDA Blended Financing Facility Proposal. Research Fellow Ben Leo proposes a new World Bank financing model for creditworthy emerging economies, such as India and Vietnam. By doing so, IDA could free up to $7.5 billion worth of additional assistance for the world’s poorest, most vulnerable countries.
How Can Donors Create Incentives for Results and Flexibility for Fragile States? A Proposal for IDA. Senior Fellow Alan Gelb offers a concrete proposal for how IDA can: (i) rebalance incentives to increase attention on delivering results and to the frameworks for monitoring and evaluating them; and (ii) supplement performance-based allocations to fragile states through a performance fund to enable well-performing projects to be scaled up.
Inside the World Bank's Black Box Allocation System: How Well Does IDA Allocate Resources to the Neediest and Most Vulnerable Countries? In this paper, Research Fellow Ben Leo explores just how well IDA’s existing performance-based allocation system addresses the unique needs in the world’s most vulnerable countries.
The World Bank's Work in the Poorest Countries: Five Recommendations for a New IDA. This CGD report argues that donor governments should focus on five key actions: (i) affirming IDA's centrality in the international aid system; (ii) allowing IDA to concentrate on its core competencies; (iii) stop holding IDA hostage to broader geo-political battles; (iv) pushing IDA to find the right incentives for dealing with fragile states; and (v) sharpening the incentives for performance.
Browsing through Wikileaks to try to understand what the fuss was all about, Alan came on an interesting cable (10Beijing367) about African views on possible cooperation between China and Western donors on aid to Africa. According the summary of a cable from the U.S. embassy in Beijing, reporting on the views of African diplomats stationed there:
Last week, the Government of Pakistan hosted officials from the United States and more than 30 donor countries and multilateral agencies in Islamabad for the Pakistan Development Forum. The big news from the two-day event was the announcement that the United States would accelerate disbursement of $500 million in previously committed aid to help Pakistan meet its flood rebuilding needs. (This pledge is above and beyond the more than $500 million the United States had previously committed to the immediate humanitarian needs from the flood.) What officials did not announces is what the US flood aid will be used for. My CGD colleagues Alan Gelb and Caroline Decker have recommended one proposal that the U.S. policymakers are currently considering: directing up to $500 million to finance a housing capitalization fund for flood-affected households.
This is a joint post with Caroline Decker and originally appeared on The Hill's Congress Blog.
Pakistan clearly has an urgent need for swift, effective aid in the wake of its catastrophic summer of floods. Infrastructure has suffered unprecedented damage, and as many as 1.6 million households, mostly rural, have lost their homes and possessions. Beyond relief efforts to provide urgent needs—food, water, medical care, and temporary shelter—the priority of the Pakistani government and its international partners will be helping those directly affected get back on their feet and rebuild their lives. What is the best way to help? Even before the floods, spending aid money well in Pakistan was not going to be easy. In 2009, Congress pledged $7.5 billion in non-military aid over five years, but only a tiny fraction of that money has been disbursed. Finding channels (either inside or outside the Pakistani government) where the United States could be confident that dysfunction and corruption would not siphon away too much of the aid has been a challenge. That challenge is still present in the context of the flood reconstruction effort.
However, a new approach has the ability to leapfrog over these impediments.
The World Bank’s Shanta Devarajan and Marcelo Giugale in yesterday’s Guardian Poverty Matters blog write:
Except for Botswana, the track record of Africa's mineral and hydrocarbon exporters is sobering. While Africa's central banks are today better equipped to deal with currency appreciation, and its civil society more alert to environmental hazards, the institutions that control graft are not strong. They must be improved. However, this will take time. Is there a shortcut to better accountability in the management of natural resources? Yes, there is: direct transfers of resource dividends to citizens.
CGD and JHU-SAIS will host a seminar with Alan Gelb, Director of Development Policy at the World Bank. Andrew Berg, Division Chief, Policy and Development and Review Department, International Monetary Fund will serve as discussant.