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The World Bank Group’s New Strategy Proposes Comprehensive Reorganization

By Jane Tingley (Intern, IHC)
October 16, 2013

Earlier this month, Dr. Jim Yong Kim, president of the World Bank, announced the “World Bank Group Strategy” designed to reorganize bank operations, and focus on reducing extreme poverty and raising equality.  Approved this weekend by the Development Committee, a joint World Bank-IMF forum, the new strategy will organize the bank around 14 “global practices,” including agriculture, education, energy and extractives, health and nutrition, and trade and competitiveness.  For the first time, the bank has a defined goal of reducing poverty below 3% of the population, and a secondary goal of achieving shared prosperity by increasing the incomes of the bottom 40% of the population.  Dr. Kim remarked that the goal of the organization is to make the bank more efficient and more responsive within countries, ensuring that the bank not turn into “a series of regional banks rather than a world bank”.  Similarly to one of his presidential predecessors, James Wolfenson, Dr. Kim highlighted that the idea was to transform the bank into a “solutions bank,” which would provide lending or grants, consulting, and technical expertise to member countries.  With an increased commitment to collaborating with the private sector, Dr. Kim said the bank will be more tolerant of high-risk, high-reward and more controversial ventures.

While many in development are encouraged to see a clear commitment to addressing poverty and inequality, there is widespread concern over these changes transitioning from theory to practice.  Peter Chowla, coordinator of the Bretton Woods Project remarked in an Emerging Markets article, “It’s not clear how he is going to do it…The target says they will measure the bottom 40%.  Their income might grow, but in relation to what? If you don’t spell that out, it’s an ‘out’ for bank staff not to care about it”.  Moreover, a member of the 1818 Society, the World Bank’s Alumni Association, described Kim’s plans as “Patently uninspiring and simply confusing”.

Concerns over the impact of these reforms is not limited to those outside the bank, especially considering Dr. Kim has assured there will be “strategic” staff cuts to reduce those “just adding layers of bureaucracy”.  Additionally, over the next three years, the Bank Group will identify a minimum of $400 million in administrative savings, which will be reflected in future budgets.   Already, a number of high-level, tenured employees have left the bank, while Dr. Kim said he will be looking outside the bank for appropriate “practice directors”.  The exact implications these widespread reforms will have still remains to be seen, but it is commendable that for the first time in history, the strengths of each branch of the organization have been leveraged around a core set of goals to reduce poverty and increase shared prosperity, creating an unprecedented opportunity for the developing world.

To read more about the strategy, please click here.

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