Politics of Poverty

Is the World Bank a good investment?

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The US considers IDA as a tool in fighting extreme poverty.

Nicolas Mombrial is Head of the Oxfam International office in Washington, DC.

The World Bank is asking donors to refill the coffers of its fund for the world’s poorest countries, the International Development Association (IDA). Should Congress maintain its contribution to the fund, as a contribution to fighting global poverty? Oxfam, among other NGOs, has often been critical of World Bank policies and practices, but Oxfam supports this US investment in IDA. Why? Let me explain.

What role can the replenishment of IDA have in global development? Source: http://ow.ly/pha1g

When global health expert Jim Yong Kim became the World Bank’s president last year, he brought a breath of fresh air with him. His willingness to refocus the bank on eradicating poverty and fighting inequality is right on track. However, to do this, as well as enact other reforms at the World Bank, he needs the right tools. The IDA, covering the 82 countries where 80 percent of the world’s poorest people live, is definitely one of them. The replenishment of IDA, which happens every three years, will be a first test of the United States’ and other donors’ willingness to see Jim Kim’s vision succeed.

Some argue to cut IDA or change it significantly because many poor countries have or will graduate to middle income status, thus no longer being eligible to receive funds from IDA. Regardless, IDA is going to need to continue to support fragile and conflict-affected states, where it costs up to three times more to fight poverty in these environments. IDA is also going to have to take up new challenges, like helping poor countries adapt to and mitigate the impacts of climate change.

It’s true that IDA’s performance could improve. Notably, a better job needs to be done on reporting how the fund contributes to the two goals articulated in the bank’s “common vision”: ending extreme poverty and promoting shared prosperity at country level. Detailed and comprehensively transparent information about how the bank tracks and spends IDA money in poor countries is needed, to show how and where its loans and grants are making inroads on ending extreme poverty.

Regardless, it is clear that IDA has had some impressive results in the last decade, for instance, helping ensure 65 million people receive access to health services and 8.5 million people get access to seeds and fertilizers. Also, Publish What You Fund ranks IDA second among 72 donors in terms of transparency and IDA receives good reviews from its peers, including a “very good value for money” rating from DfID’s 2013 Multilateral Aid Review.

IDA, as an investment for the US in global development, fits with President Obama’s declaration in his 2013 State of the Union address to “join with our allies to eradicate such extreme poverty in the next two decades.” IDA can certainly complement the significant US investment and knowledge in sectors such as food security with the Feed the Future and electrification via Power Africa. Success will be found in the willingness and effectiveness of these joint efforts to reach people who are poor in the developing world.

IDA’s role in coordinating donor assistance and its use of country systems have made it an intrinsically effective poverty-fighting instrument. And for the US, cutting down on aid fragmentation and delivery costs makes it a worthwhile investment.

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