WORLD BANK

The 'World Bank' (the Bank), a part of the World Bank Group (WBG), was formally established on December 27, 1945, following the ratification of the Bretton Woods agreement. The concept was originally conceived in July 1944 at the United Nations Monetary and Financial Conference. Two years later the Bank issued its first, and largest, loan; $250 million to France for post-war reconstruction; an issue which has remained a primary focus, alongside reconstruction after natural disasters, humanitarian emergencies and post-conflict rehabilitation needs affecting developing and transition economies.

Contents

Organization

Activities

Areas of operation

Comprehensive development framework

Poverty reduction strategies

Country assistance strategies

Members

References

Organization

The World Bank, as it is commonly referred to, consists of two agencies of the five that comprise the World Bank Group:

★ The International Bank for Reconstruction and Development (IBRD)

★ The International Development Association (IDA)
The Bank consists of 185 member countries, all of whom are shareholders, represented by a Board of Governors, the ultimate policy makers of the Bank. The Board of Governors, generally, consists of member countries’ ministers of finance or development, and these meet once a year at the Annual Meeting of the Board of Governors of the WBG and the International Monetary Fund (IMF). Due to the fact that the meeting occurs once a year, the governors delegate specific duties to 24 on-site Executive Directors. The five largest shareholders; France, Germany, Japan, the United Kingdom and the United States, each appoint one Executive Director while the remaining member countries are represented by 19 other Executive Directors, thus making up the 24. The President of the Bank serves a renewable five-year term. The President is, by tradition, a US citizen nominated by the United States; the bank’s largest shareholder. The Presidential nominee is confirmed by the Board of Governors. As the wealth of a country in terms of its size as a shareholder determines the voting power it will have, the World Bank is often labeled undemocratic and unfair.
The President of the Bank, currently Robert Zoellick, is responsible for chairing the meetings of the Boards of Directors and for overall management of the Bank. The Executive Directors make up the Board of Directors, usually meeting twice a week to oversee activities such as the approval of loans and guarantees, new policies, the administrative budget, country assistance strategies and borrowing and financing decisions. The Vice Presidents of the Bank are its principal managers, in charge of regions, sectors, networks and functions. There are 24 Vice-Presidents, 3 Senior Vice Presidents and 2 Executive Vice Presidents.

Activities

The constituent parts of the Bank, the IBRD and the IDA, achieve their aims through the provision of low or no interest loans and grants to countries with little or no access to international credit markets. The Bank is a market based non-profit organization, using its high credit rating to make up for the low interest rate of loans.
The Bank’s mission is to aid developing countries and their inhabitants achieve the MDGs, through the alleviation of poverty, by developing an environment for investment, jobs and sustainable growth, thus promoting economical growth and through investment in and empowerment of the poor to enable them to participate in development. The World Bank sees the four key factors necessary for economic growth and the creation of a business environment as:
#Capacity Building – Strengthening governments and educating government officials
#Infrastructure creation – implementation of legal and judicial systems for the encouragement of business, the protection of individual and property rights and the honoring of contracts
#Development of Financial Systems – the establishment of strong systems capable of supporting endeavors from micro credit to the financing of larger corporate ventures
#Combating corruption – Eradicating corruption to ensure optimal effect of actions
The Bank obtains funding for its operations primarily through the IBRD’s sale of AAA-rated bonds in the world’s financial markets. Although this does generate some profit, the majority of the IBRD’s income is generated from lending its own capital. The IDA obtains the majority of its funds from forty donor countries who replenish the bank’s funds every three years, and from loan repayments, which then become available for re-lending.
The Bank offers two basic types of loans; investment loans and development policy loans. The former are made for the support of economic and social development projects, whereas the latter provide quick disbursing finance to support countries’ policy and institutional reforms. Although the IBRD provides loans with a low interest rate (between 0.5 – 1% for a standard Bank loan), the IDA’s loans are interest free. The project proposals of borrowers are evaluated for their economical, financial, social and environmental aspects to ensure that they are viable before any amount of money is distributed.
The Bank also distributes grants for the facilitation of development projects through the encouragement of innovation, cooperation between organizations and the participation of local stakeholders in projects. IDA grants are predominantly used for:

★ Debt burden relief in the most indebted and poverty struck countries

★ Amelioration of sanitation and water supply

★ Support of vaccination and immunization programs for the reduction of communicable diseases such as malaria

★ Combating the HIV/AIDS pandemic

★ Support civil society organizations

★ Creating initiatives for the reduction of greenhouse gases
The Bank not only provides financial support to its member states, but also analytical and advisory services to facilitate the implementation of the lasting economic and social improvements that are needed in many under-developed countries, as well as educating members with the knowledge necessary to resolve their development problems while promoting economic growth.

Areas of operation

The World Bank is active in the following areas:

★ Agriculture & Rural Development

★ Conflict & Development

★ Development Operations & Activities

★ Economic Policy

★ Education

★ Energy

★ Environment

★ Financial Sector

★ Gender

★ Governance

★ Health, Nutrition & Population

★ Industry

★ Information & Communication Technologies

★ Information, Computing & Telecommunications

★ International Economics & Trade

★ Labor & Social Protections

★ Law & Justice

★ Macroeconomic & Economic Growth

★ Mining

★ Poverty Reduction

★ Poverty

★ Private Sector

★ Public Sector Governance

★ Rural Development

★ Social Development

★ Social Protection

★ Trade

★ Transport

★ Urban Development

★ Water Resources

★ Water Supply & Sanitation

Comprehensive development framework

According to the World Bank, in virtually all successful assistance projects the country itself was the driving factor, thus the Bank strives to help governments lead and implement their own development strategies and thus take a stronger hand in their own future development. Since 1999 the World Bank has followed a set of philosophies known as the Comprehensive Development Framework . These philosophies state that:

★ Development strategies should be comprehensive and shaped by a long-term vision

★ Development goals and strategies should be “owned” by the country, based on local stakeholder participation in shaping them

★ Countries receiving assistance should lead the management and coordination of aid programs through stakeholder partnerships

★ Development performance should be evaluated through measurable results on the ground in order to adjust the strategy to outcomes and a changing world

Poverty reduction strategies

For the poorest developing countries in the world the Bank’s assistance plans are based on Poverty Reduction Strategies; by combining a cross-section of local groups with an extensive analysis of the country’s financial and economical situation the World Bank develops a strategy pertaining uniquely to the country in question. The government then identifies the country’s priorities and targets for the reduction of poverty, and the World Bank aligns its aid efforts correspondingly.
Many academics and popular movements have argued that the World Bank is in fact a key cause of contemporary poverty.Furthermore a number of intellectuals in developing countries have argued that the World Bank is deeply implicated in contemporary modes of donor and NGO driven imperialism and that its intellectual output functions to blame the poor for their condition.^[1]

Country assistance strategies

As a guideline to the World Bank's operations in any particular country, a Country Assistance Strategy is produced, in cooperation with the local government and any interested stakeholders and may rely on analytical work performed by the Bank or other parties. In the case of low income countries, the Country Assistance Strategy is derived from the country’s Poverty Reduction Strategy Paper.

Members

Main articles: List of World Bank members

References

1. For arguments with regard to both of these claims see, for instance, David Moore's edited book 'The World Bank', University of KwaZulu-Natal Press, 2007