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The World Bank is supposed to work with poor countries in distress. When it all goes well, the Bank supports reformers with advice and money. Sometimes, however, the Bank prolongs a country’s pain by throwing a lifeline to recalcitrant regimes. The difference between a helping hand and a counterproductive crutch requires the Bank to understand the trends inside a country and how its own actions might affect those dynamics. Often, it’s difficult to discern these subtleties.
Not for the first time, the World Bank has reminded me of NBC’s America’s Got Talent, the hit TV show where judges Mel B, Heidi Klum, Howie Mandel, and Howard Stern rate amateur singers, jugglers, and comedians.
World Bank presidents have often defined their success in part via ever-larger replenishments for IDA, the Bank’s soft loan window. But at his first ever Bank-Fund annual meetings this weekend in Tokyo, Jim Yong Kim should explain to the gathered illuminati why this is no longer an appropriate metric.
The Future of IDA
After 52 years, IDA is facing a watershed moment. Drastic changes in both the supply and demand for the World Bank’s cheap long-term loans to governments of poor countries requires rethinking IDA’s purpose, tools, and broad role. In Tokyo, Kim should be sure that shareholders understand that the future of IDA depends, not on its size, but on adapting its mandate and business model to certain new realities:
Advocates for a competitive, meritocratic selection process for the President of the World Bank are dead right. Allowing the White House to just pick is deeply unfair, inefficient, and a relic of a by-gone age. But why stop there? Here’s my list of international patronage anachronisms that should also go:
The Obama Administration, whether by design or by accident, has opened the door for the first time in the World Bank’s history to the possibility of a real contest over the merits of its nominee to take the helm there compared to a nominee from the developing world. All three candidates have experience working on development (and that is a refreshing change from the tradition of financiers and political heavyweights at the helm). But their strengths are different. In the case of Kim, the U.S.
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.
The IFC, the private sector arm of the World Bank Group, has come under criticism, including apparently from Senator Patrick Leahy, for a recent loan to a company owned by a Saudi prince to build a 5-star hotel in Ghana’s capital, Accra. This Washington Times article highlights three main criticisms: