The Politics of Poverty

Ideas and analysis from Oxfam America's policy experts

A vision in need of some clarity

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At the meetings and panels at the annual meetings of the World Bank in Washington earlier this month, high levels of energy and excitement as well as anxiety were apparent. The excitement is undoubtedly rooted in the new strategy to end poverty and boost shared prosperity introduced earlier this year by President Kim. The fear […]

At the meetings and panels at the annual meetings of the World Bank in Washington earlier this month, high levels of energy and excitement as well as anxiety were apparent.

The excitement is undoubtedly rooted in the new strategy to end poverty and boost shared prosperity introduced earlier this year by President Kim. The fear is perhaps rooted in the unknown—how is this going to happen and what if it ends up in failure?

We at Oxfam were quick to welcome the new strategy from an institution that has for decades worked with no cross-cutting strategy. We were especially encouraged that the World Bank’s recognized that ending poverty is not just about raising incomes but should take into account fuller dimensions of well-being, as well as inequality.

At the annual meetings, the Bank rolled out a list of positive announcements. For instance: a new interim goal of halving poverty by 2020 and a commitment to monitor the goals on a country by country basis; a significant increase in funding to fragile states in the next three years; and a new effort to provide universal financial access to all working-age adults by 2020. This certainly signaled that the new leadership at the Bank means business.

But there are some things we wanted to get clarity on, and, unfortunately, we didn’t get many answers.

Although President Kim did commit to streamline the Bank’s efforts and cut unnecessary expenses to the tune of $400 million, that won’t be enough funding to fit the high ambitions. Donors should also fulfill their obligation and signal their trust in the strategy by fully replenishing the International Development Association (IDA) in December, but at the meeting there were no clear signs that this would happen.

President Kim repeated that foreign aid is crucial but won’t be enough to end extreme poverty and that investment from private enterprise is paramount. We agree. The relationship between business and development is a complex and important one, and Oxfam is increasingly engaging the private sector in promoting social justice and shared progress. But there was no clarity on the Bank’s exact plans with the private sector. The World Bank, after all, should not be an ordinary Bank. Its added value in this context should be to leverage private sector investments that deliver for the poor through respect for social and environmental standards.

In a special guest blog post for Oxfam this week, President Kim provided some additional clarity on his vision of working with the private sector. We are pleased to see that one point he highlighted was that the Bank will not compromise on its standards. But to make this a reality, the Bank needs to continue strengthening its accountability mechanisms to ensure affected communities have the right to a meaningful redress process and that when failures are identified, the Bank responds by real change in its practices. Without accountability, standards are not sufficient. The Bank should also recognize that there are sectors, such as health and education, where evidence proves that the private sector does not deliver the best results for the poorest, and the focus of institutions like the World Bank should remain on building and strengthening public systems.

Finally, we would have liked to see a World Bank strategy that focuses on fighting inequality as a goal in itself. Inequality is a moral injustice that also leads to conflict, instability, and the impediment of growth. We simply cannot end poverty without fighting inequality. While the issue of inequality is getting increased attention at the Bank, and commitments are being made to monitor and foster the income growth of the 40% poorest, we would have liked to see real commitments to reduce the gap between the rich and the poor. But there is still time for this. As the World Bank starts implementing its strategy at the country level, we hope to see concrete actions to combat inequality such as progressive taxation, helping finance and strengthen government-led health and education systems, and social protection programs.

One of the tools the Bank should use in defining these actions is the inspiring report it published earlier this month on identifying social exclusion as a key barrier to promoting shared prosperity and stressing the importance of strong country institutions to promote social inclusion.

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  1. jmeyer@oxfamamerica.org'Jule Meyer

    President Kim is an extraordinary person–I spent several days with him years ago and knew his power of positive thinking would propel him into bigger influence. Coming from another Boston based NGO he is now is a very influential position and it’s great Oxfam is talking with him and commenting on the Bank’s plans. I appreciate too that as usual Oxfam is pushing and prodding, while lauding and applauding.

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