Stressing that the time is right for action, World Bank President James Wolfensohn called upon the Board of Governors to seize a historic opportunity to build an “equitable world.” His address emphasized the complementary roles the World Bank and the IMF have in improving the quality of life and reducing poverty. While the Bank’s core mandate is to reduce poverty, the IMF’s key role is to promote and maintain a stable international financial environment conducive to growth and development.
As he embarked on his second term, Wolfensohn noted he had learned numerous lessons about development: it is about inclusion and empowerment, not charity; environmental issues do matter; money cannot be given to the poor with one hand and taken with the other—and thus the HIPC [Heavily Indebted Poor Countries] Initiative is vital; people the world over want the same things for their children; and if poverty is to be overcome, passion isn’t enough. All countries must act effectively and persevere.
“We must treat globalization as an opportunity, and poverty as our challenge,” Wolfensohn remarked, though he underscored that globalization is “about risks as well as opportunities.” He argued that these risks must be dealt with at the national level by managing adjustment processes and strengthening social, structural, and financial systems and, at the international level, by establishing a stronger international financial architecture, fighting disease, and using the extraordinary power of new communications technology “to give voice to the voiceless.”
Much progress has been made, Wolfensohn said, noting improved developing country policies, rising primary and secondary school enrollments, longer lives and reduced mortality among infants and mothers, and, in the economic sphere, falling inflation rates and rising investment. But he cautioned against focusing solely on the positive news. In many countries, he said, population growth, AIDS, internal conflicts and wars, and wildly fluctuating commodity prices had obliterated these gains and worse.
He also expressed deep concern over the continued sharp divide between rich and poor countries and between rich and poor within countries. The forces of globalization are making the world smaller, he noted, and poverty is “in our community, wherever we live. It is our responsibility.”
In recent years, the fight against poverty has yielded valuable lessons. There is convincing evidence, Wolfensohn observed, that poverty is about a lack of voice as well as a lack of income. Market-oriented reforms can deliver economic growth, but growth is not sufficient. The poor must be able to build up assets of their own through access to education, health, and land, and deep-seated gender, ethnic, social, and racial inequalities must be confronted. Development needs to be comprehensive, he added, and—perhaps most crucially—it cannot be imposed from the top. Development must be “homegrown and home-owned.”
Recognizing the importance of a comprehensive approach, the World Bank last year launched its Comprehensive Development Framework. This “holistic, long-term, and country-owned” approach, Wolfensohn explained, is now being implemented in 12 countries. Participation “delivers powerful results at the project and program level,” and the Bank is also working at the national level, he said, to ensure that state institutions are more responsive to poor people. “Fighting poverty is also about fighting the vested interests of an economic elite.”
Wolfensohn expressed confidence that ongoing information and communications revolutions would be key allies in the fight against poverty. They afford broader and more equal access to knowledge and information, greater empowerment and inclusion for local communities, and improved access to basic services. A series of Bank initiatives, he said, is tapping this technology to allow local communities to improve education, health care, and business opportunities.
Bank is delivering
Over the past five years, the World Bank has embarked on initiatives or boosted investment in a wide variety of key areas, Wolfensohn noted. It has focused more intently on social sector investment; expanded AIDS programs; initiated postconflict projects; designed and implemented, with the IMF, the HIPC Initiative; intensified anticorruption and good governance efforts; significantly increased its environmental portfolio; and worked on building sounder regulatory systems.
In the process, he added, the Bank has also strengthened the quality of its programs, moved its operations closer to its clients, and become more transparent. “We are a different Bank, doing development differently,” he said. The Bank is still only halfway through a major reform effort, however, and the next five years “will focus still more sharply on implementation” and on improving collaboration with the IMF, relevant UN agencies, and other multilateral development banks.
Wolfensohn committed the Bank to working with governments, supporting fully owned country strategies, streamlining conditionality, being more responsive to individual country needs, reducing the administrative burden on clients, and providing speedier and more effective implementation.
Chiding developed countries for not keeping their side of the bargain, Wolfensohn pointed to aid far below international targets; financing still needed for deeper, faster, and broader debt relief; and trade barriers in need of dismantling. He also urged developed countries to explore innovative instruments to address AIDS, environment, education, and health needs; simplify procedures used by multilateral and bilateral donors; and recognize that more and more issues call for global solutions.
Wolfensohn cautioned that rising populations in the developing world will intensify the challenge. Without a commitment to development, he said, “we will not hold back the tide of deprivation, want, and despair”—with dark consequences for the future peace and stability of the world. But a wiser development community and a changing international institutional environment offer “a chance to make the next decade one of real delivery in the fight against poverty.” He urged all countries to seize that opportunity.