Is the World Bank reforming its approach?

World Bank claims it'll take more risk, support project with potential to transform fragile, conflict-affected states.

Syed Mohammad Ali October 10, 2013
The writer is a development consultant and a PhD student at the University of Melbourne

Given that the World Bank’s proclaimed ‘fight against poverty’ is far from over, the international lending agency seems keen to adopt a shift in its approach towards addressing deprivation in poor countries. It is in its latest World Development Report that the World Bank has announced how the need for better managing risks is now to be at the centerpiece of its reform agenda.

The World Bank has placed a lot of emphasis in demonstrating how better risk management is vital for poverty alleviation. It points out that the world is currently facing a multitude of risks, which have potentially broad as well as specific implications, ranging from causing disruptions to the global economy as well as threatening lives and livelihoods of individual households. Moreover, the World Bank has also acknowledged that poor people in developing countries are hardest hit by risks.

The World Bank is thus keen to address the multidimensional aspects of risks so that its resources can be utilised in averting risks rather than addressing the suffering and deprivations which occur as an outcome of ineffective risk management. At face value, such an approach makes common sense and resonates with the age-old adage of ‘preventing being better than the cure’. The devil however lies in details.

The World Bank is famous for making bold rhetorical statements. Back in 1999, the World Bank had declared another radical shift in its approach towards development to make poverty reduction more participatory after two decades of failure in structurally adjusting the economies of poor countries. Yet, the World Bank endorsed Poverty Reduction Strategy Papers did no more than pour old wine into new bottles, given the continued emphasis on market-based approaches to eradicate poverty.

Now the World Bank is claiming that it will help poor people cope better with disasters by offering them the chance to purchase insurance schemes through the private sector, for instance. Yet, expecting poor people to pay for such insurance schemes will do no more than the provision of micro-credit did to alleviate deprivation. The World Bank is also advocating the need to establish ‘national risk boards’, but what mechanisms these boards will be able to put in place given the simultaneous pressure of paying back international debt and curbing spending due to World Bank pressure, remains to be seen.

The World Bank claims it will also take more risks to support projects with the potential to transform fragile and conflict-affected states. Even if the World Bank overcomes its risk-averse lending approach in order to fund more countries it will probably continue compelling the government to decrease public spending and instead, rely on market mechanisms including financial and trade liberalisation, to overcome poverty and achieve growth. Yet, unless there is a shift in its lingering obsession with the free market orthodoxy as the primary solution to all forms of deprivation and inequalities, which it continues to advocate, no matter what it claims its new strategic approach to be, the World Bank’s impact on poverty alleviation will remain dubious.

Published in The Express Tribune, October 11th, 2013.

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