World Bank Group Strategy October 2013 Contents Executive Summary 1 World Bank Group Strategy 5 1. Introduction 5 A. The Development Agenda for Reducing Poverty and Sharing Prosperity 6 B. Focusing the WBG on the Goals 6 2. Global Context 8 A. Shifts in the Global Economy 8 B. The Changing Face of Poverty and Prosperity 9 C. A Globally Connected World 10 D. The Challenge of Climate Change 11 E. Global Risks and Volatility 12 3. Repositioning the WBG 13 A. WBG Value Proposition 13 B. WBG Strengths 13 C. Delivering on the Value Proposition 15 4. Meeting Development Challenges 17 A. Development Challenges Countries Face 17 B. Responding to Country Demands 18 C. Supporting the Private Sector 19 D. Regional and Global Engagement 20 5. Becoming a “Solutions WBG” 21 A. Using Knowledge for Solutions 21 B. Achieving Results through the Science of Delivery 21 C. Seeking Transformational Engagements 23 D. Taking Smart Risks 23 6. Operationalizing the Goals at the Country Level 25 A. Improving the Focus of Country Programs 25 B. Strengthening WBG Regional Coordination 26 world bank group strategy iii 7. Working with Partners toward the Goals 27 A. Working with Partners 27 B. Aligning Partnerships with the Goals 27 C. Partnering with the Private Sector 29 8. Working as One World Bank Group 30 A. Scaling Up Collaboration 30 B. Joint Learning and Collaboration 31 9. Outcome of the Strategy 32 A. Key Outcomes of the Strategy 32 B. Implementing the Strategy 33 Figures Figure 1 Patterns of Global Growth and GDP 8 Figure 2 Global Extreme Poverty and Inequality 10 Figure 3 Extreme Poverty, Poverty, and GDP per Capita 11 Figure 4 Natural Disasters and CO2 Emissions 12 Figure 5 IBRD and IDA Commitments 16 Boxes Box 1 Previous World Bank Group Strategic Exercises 7 Box 2 The Evolving Structure of Development Assistance 9 Box 3 International Development Association 15 Box 4 Africa’s Development Challenges 17 Box 5 The Challenge of Gender Equality 19 Box 6 Sector Expertise across WBG Agencies 22 Box 7 Examples of Transformational Engagements 24 Box 8 Partnering in the Great Lakes Region of Africa 28 Box 9 Initiatives to Improve WBG Collaboration 30 Box 10 Potential Areas for WBG Strategy Results Framework 33 Abbreviations and Acronyms AU African Union IDA International Development Association CAS Country Assistance Strategy IFC International Finance Corporation CO2 Carbon Dioxide IT Information technology CPF Country Partnership Framework MDB Multilateral development bank CPS Country Partnership Strategy MDG Millennium Development Goal CSO Civil society organization MIC Middle-income countries ESMID Efficient Securities Markets Institutional MIGA Multilateral Investment Guarantee Agency Development ODA Official development assistance EU European Union RCM Regional Coordinating Mechanism FCS Fragile and conflict-affected situation SADC Southern African Development Community GAVI Global Alliance for Vaccines and Immunisation SCD Systematic Country Diagnostic GDP Gross domestic product SMEs Small and medium enterprises GEF Global Environment Facility UN United Nations GFATM Global Fund to Fight AIDS, TB and Malaria VPU Vice presidential unit IBRD International Bank for Reconstruction and WBG World Bank Group Development ICSID International Centre for the Settlement of Investment Disputes iv world bank group strategy Executive Summary 1. This Strategy outlines how the World Bank Group not flag in the future. This broad agenda requires actions at will work in partnership to help countries end extreme the country, regional, and global levels. poverty and promote shared prosperity in a sustainable manner. The World Bank Group (WBG) has set two ambi- A. Global Context tious goals: 3. Important global trends underscore the need for a n End extreme poverty: reduce the percentage of people new WBG strategy to adapt to fast-moving challenges and living on less than $1.25 a day to 3 percent by 2030. opportunities. n Promote shared prosperity: foster income growth of the n Although the global extreme poverty rate has fallen by bottom 40 percent of the population in every country. half since 1990, progress in the developing world has been uneven. Extreme poverty remains widespread in most Securing the long-term future of the planet and its resources, low-income countries. Roughly half of low-income coun- ensuring social inclusion, and limiting the economic bur- tries are classified as fragile and conflict-affected (FCS), dens on future generations will underpin efforts. The goals, posing particular challenges. Many middle-income coun- and the partnerships needed to achieve them, are well tries continue to have substantial levels of extreme pov- aligned with the international community’s efforts to reach erty, and many people who have escaped extreme poverty the MDGs and establish an ambitious post-2015 agenda. remain poor and vulnerable. Furthermore, progress in sharing prosperity is decidedly mixed: in many countries 2. The two goals emphasize the importance of eco- growth is accompanied by rising inequality. nomic growth, inclusion and sustainability—including strong concerns for equity. Economic growth that creates n Developing countries’ strong economic performance good jobs requires action to strengthen both the private and is shifting the world’s economic center of gravity, the public sectors. Inclusion entails empowering all citizens to private sector is driving employment growth and trans- participate in, and benefit from, the development process, forming living standards, private investment has become removing barriers against those who are often excluded. the dominant mode of capital transfer worldwide, and Sustainability ensures that today’s development progress is financing for development is coming from more diverse not reversed tomorrow and that the pace of progress does sources. 1 n A truly global community has emerged through major form, break down silos, focus on multi-sector approaches, increases in connectivity. and increase flexibility and speed up delivery. The WBG needs to crowd in resources, experience, and ideas more n Climate change threatens the sustainability of poverty effectively through partnerships and to deepen global reduction and shared prosperity. Managing risks and engagements that are aligned with the two goals. It needs volatility is increasingly critical in a globally intercon- to strengthen its country engagement model and support nected world that is dependent on international markets. evidence-based public policy. It also needs to develop a new framework for medium-term financial sustainability to B. Repositioning the WBG ensure that its resources are commensurate with the roles and responsibilities it carries out on behalf of the interna- 4. The WBG Strategy builds on a strong foundation; tional community. what is new is the singular focus on the two goals in a ­ rapidly changing global context. The WBG offers a plat- form where the perspectives of all countries and citizens C. Meeting Development Challenges can be brought to bear. The WBG’s global reach can help 7. As a global multilateral institution, the WBG will shape the international community’s response to crisis and customize its support to member countries’ needs to volatility and to complex threats like climate change, which end poverty and promote shared prosperity sustainably. require concerted action at all levels. In a world where the As the traditional grouping of developing countries into private sector is driving growth and capital flows, the WBG income categories becomes less relevant, more attention can help the public and private sector work together, using is needed to the multiple facets of fragility and resilience official development assistance to leverage private invest- across the income spectrum. While meeting the needs of ment. To ensure that citizens are empowered, the WBG can poor countries will remain a high priority for the WBG, build on its open data, open knowledge, and social media it will also continue to help middle- and upper-middle- initiatives to make knowledge more accessible. Finally, income countries sustain progress toward the goals and to the WBG can offer solutions that integrate finance with support higher-income countries, notably during times of knowledge enriched through global networks, world-class distress. The specific challenges of countries struggling with research, and hands-on implementation experience. fragility, and the particular needs of small and island states, will receive critical attention. 5. Operating as One Group, the WBG intends to work with the public and private sectors in partnership to end 8. The WBG will use evidence to align all its activi- extreme poverty and boost shared prosperity sustainably ties with the two goals, maximize development impact, through a value proposition to: and draw on its comparative advantages. The WBG will support country-specific policies and investments that n Contribute to the global development agenda through strengthen growth, inclusion, and sustainability—includ- dialogue and action on ongoing and emerging devel- ing support for job creation, good governance and anti- opment challenges, bringing the perspectives of all its corruption, gender equality, environmental sustainability, member countries. and crisis response. It will emphasize drawing in multiple stakeholders. The WBG will also continue to help countries n Support clients in delivering customized development improve the business environment, and to support the solutions backed by finance, knowledge, and convening private sector in overcoming constraints to investment and services. growth—to create jobs; promote innovation, technology, n Help advance knowledge about what works, combining and skills transfer; and develop supply chains and export the world’s leading development research and practi- markets. With its ability to work with both public and tioner experience with a commitment to transparency, private sector clients, the WBG will increasingly promote open data, global outreach, and knowledge dissemination. public-private partnerships. 6. To deliver on the value proposition, the WBG needs 9. The WBG will strengthen the strategic alignment of to reposition itself. It needs to invest in knowledge, techni- its regional and global engagements with the two goals. cal skills, information technology, and the “solutions” plat- The WBG faces growing demands for engagement at the 2 world bank group strategy regional and global levels, and demands for services rang- countries, regions, or even the entire developing world shift ing from international standard-setting to convening on to a higher and/or more sustainable development path. global agendas. Global and regional engagements represent an important opportunity to enhance development impact, E. Operationalizing the Goals but this rapidly growing role also places additional demands on the WBG that it must ensure are aligned with the goals. 12. The WBG will strengthen the focus of its country programs by developing a more evidence-based and selec- tive country engagement model in the context of country D. Becoming a “Solutions WBG” ownership and national priorities, and in coordination 10. Helping accelerate progress toward the two goals with other development partners. A Systematic Country demands a new form of problem-solving engagement Diagnostic (SCD) will use data and analytic methods to by the WBG—one that moves definitively from a project support country clients and WBG teams in identifying the mentality to a development solutions culture embedded in most critical constraints to, and opportunities for, reducing widely disseminated knowledge and evidence of what works poverty and building shared prosperity sustainably, while and how to deliver it. Systematically supporting clients in explicitly considering the voices of the poor and the views delivering customized solutions that integrate knowledge of the private sector. The Country Partnership Framework and financial services and encompass the complete cycle (CPF) will describe focus areas for WBG support, aligned from policy design through implementation to evaluation with the country’s own development agenda and selected of results lies at the heart of the WBG’s value proposition. primarily to address the key constraints and opportunities identified in the SCD. Performance and Learning Reviews n To increase development impact, delivery speed, and will identify and capture lessons; determine midcourse agility, the WBG will manage risk better, focusing on corrections, end-of-cycle learning, and accountability; and smart risk-taking while preserving its internationally help build the WBG’s knowledge base, including effective respected fiduciary, integrity, and safeguards norms. approaches for integrating inclusion and sustainability dimensions (including gender and environmental sustain- n It will establish global practices, which will combine the ability) into the SCD and CPF. A new Regional Coordinat- established strengths of local delivery support with the ing Mechanism will formalize country-and regional-level ability to generate, share, and deploy knowledge from coordination among the Bank, IFC, and MIGA. The RCM inside and outside the WBG—facilitating rapid response will help the WBG with its regional engagements. to client demands for support in tackling complex devel- opment challenges. F. Working with Partners n Building on its existing results orientation, the WBG will focus on how its engagements contribute concretely to 13. Meeting the goals demands deepening partnerships the sustainable achievement of the two goals, as well as across the development spectrum. Successfully overcom- ing the toughest development challenges requires concerted how to monitor and measure results as One WBG. action at all levels. The WBG cannot do it alone. It will n In partnership with others, the WBG will help to build build on existing collaborative relationships and develop the science of delivery—evaluating whether an inter- new partnerships to help address key development issues in vention is having the intended outcomes, adapting or a way that no single agency or country can. It will also step altering it, and fostering the generation and exchange of back where others have clear comparative advantage and knowledge about what works. will actively support leadership roles for partner organiza- tions. The WBG will ensure that its partnerships are well 11. The WBG will identify and support engagements aligned with the goals and will draw on its comparative with the potential for transformational impact. Transfor- advantages; to this end, the Bank has launched the next mational engagements produce demonstration effects that phase of trust fund reform and developed a management can be replicated or scaled up; generate spillover effects on framework to strengthen the strategic alignment of its part- multiple sectors of the economy, including broader changes nership engagements. Private sector resources and expertise that increase government effectiveness or stimulate private are critical to achieve the two goals. The WBG has long- investment; result in far-reaching impacts; or help client standing experience in mobilizing private partners and will world bank group strategy 3 expand those efforts, including through IFC’s new client n Promote scaled-up partnerships that are strategically relationship model. aligned with the goals, and crowd in public and private resources, expertise, and ideas. G. Working as One World Bank Group n Work as One World Bank Group committed to achiev- ing the goals. 14. Working as One WBG is central to the WBG Strat- egy. Collaboration across the WBG will be increased sys- 16. The Strategy will be carried out through implementa- tematically, and planning and budgeting processes will be tion plans that support an effective and efficient WBG. The better coordinated at the corporate level. This will take repositioned WBG will be supported by a realigned financial time, concerted effort, and a continual change process. The strategy based on the principle of financial sustainability and new CPF will mainstream joint business planning as the supported by a One WBG approach that will better serve backbone for strengthening operational collaboration. The clients. Resources will be aligned to the Strategy, and WBG WBG will increase the number of joint projects and review efficiency will be improved. Steps will be taken to strengthen its portfolio of products and services to improve synergies WBG leadership, values, and culture. Human resource man- and eliminate overlap. These initiatives will be reinforced agement will be improved to nurture and sustain the WBG’s by stepped-up efforts to align policies and practices and greatest asset—its dedicated and experienced staff. Imple- promote changes to the operational cultures of each agency. mentation of the Strategy and the change process will be The WBG will develop metrics for institutional collabora- monitored regularly and reflected in the Corporate Scorecard tion; move to harmonized policies for the WBG in a man- as it is revised. Periodic client surveys will gauge the degree of ner that is consistent with the Bank’s Articles of Agreement client satisfaction as the ultimate measure of success. and that recognizes the different needs of public and private sector clients; address conflict-of-interest issues; and step 17. The opportunity is historic, but bold steps will be up training. needed, and the risks are multifold. The WBG faces signifi- cant risks to delivering on its commitment to the two goals, H. Outcome of the Strategy particularly if it falters in implementing the actions identi- fied in the Strategy. Management will need to meet its com- 15. The Strategy envisages a repositioned WBG that has mitment to keep the WBG relentlessly focused on the goals, catalyzed the development community to seize the oppor- to offer clients world-class development solutions, and to tunity to win the age-old struggle against poverty and operate truly as One World Bank Group, as well as to move exclusion. The repositioned WBG will: ahead with changes to make the organization more efficient and stronger. Continued strong engagement with the Board n Align all WBG activities and resources to the two goals, of Executive Directors and the Governors will be decisive maximize development impact, and emphasize WBG to address key areas such as the budget and financial sus- comparative advantage. tainability, and to support the shift to a “Solutions WBG”. n Operationalize the goals through the new country Achieving the goals depends on each member government engagement model to help country clients identify and and the international community as a whole demonstrating tackle the toughest development challenges. the political will to focus on the poor and disadvantaged, and to act in partnership with the private sector and civil n Be recognized as a Solutions WBG, offering world-class society. Effective global action requires that all countries and knowledge services and customized development solu- multilateral institutions demonstrate a renewed capacity to tions grounded in evidence and focused on results. collaborate. Together, we can do what it takes to end poverty n Seek transformational engagements and take smart risks. and build shared prosperity in our time. 4 world bank group strategy World Bank Group Strategy 1 .  i n t rod u c t io n 1. At the World Bank Group’s 2013 Spring Meetings, a is essential to achieve the goals in a world of finite planetary milestone was reached in the effort to achieve a world free boundaries and natural resources. of poverty. The Development Committee endorsed two goals to guide World Bank Group (WBG) action: 3. The gains made in the fight against poverty over recent decades create the opportunity to realize the two n To end extreme poverty: reduce the percentage of people goals and underscore the feasibility of doing so. The world living on less than $1.25 a day to 3 percent by 2030. met the first Millennium Development Goal (MDG)—to halve extreme poverty—five years ahead of schedule. Still, n To promote shared prosperity: foster income growth more than one-half of the world’s people live in poverty for the bottom 40 percent of the population in every and deprivation. Some 1.2 billion people (18 percent of the country. world’s population) live in extreme poverty—on less than $1.25 per day. Another 2.7 billion living on $1.25-$4 per day 2. The WBG is committed to supporting countries in are poor, and are vulnerable to falling into extreme poverty. reducing poverty and building shared prosperity in a sus- An era of unprecedented economic progress and abundance tainable manner. Environmental, social, and economic sus- for the privileged has created the means for ending extreme tainability require action to secure the future of the planet, poverty and building shared prosperity for all. ensure social inclusion, and set a solid foundation for the well-being of future generations. A global commitment to 4. Reducing extreme poverty and sharing prosperity are environmental sustainability—including stronger collective ultimately about enriching the life and enabling the poten- action to support climate change mitigation and adaptation— tial of every human being. Income is a simple, transparent measure of progress toward the goals. However, ending Note: The World Bank Group Strategy covers the International Bank for poverty and promoting shared prosperity are unequivocally Reconstruction and Development (IBRD), the International Develop- about the full dimensions of well-being—including human ment Association (IDA), the International Finance Corporation (IFC), capital development, gender equality, empowerment, voice and the Multilateral Investment Guarantee Agency (MIGA). It does not and participation, and freedom from violence. The two goals apply to the International Centre for the Settlement of Investment Dis- putes (ICSID). IBRD, IDA, IFC, and MIGA are referred to as the “agencies match the importance of economic growth with strong con- of the World Bank Group” in this paper. cerns for equity. 5 5. The WBG will work through partnership to mobilize as banks and capital markets, are critical to improve the the international community behind the goals. The goals private sector’s capacity to generate growth. are ambitious, but they are achievable if all countries, and their development partners, have a sustained commitment 9. Inclusion entails empowering all citizens to par- to focus on improving the welfare of poor and disadvan- ticipate in, and benefit from, the development process. taged citizens. The resources of any one institution—the Progress in building shared prosperity is incompatible with World Bank Group included—are entirely inadequate to increasing inequality; high levels of inequality are likely to meet the challenge. Partnerships focused on the goals— constrain the rise in prosperity for the bottom 40 percent. partnerships with governments, the UN system, multilateral Inclusion encompasses policies to promote equality of institutions including the IMF and multilateral develop- opportunity by improving the access of poor and disad- ment banks (MDBs), bilateral organizations, new and vantaged people to education, health, infrastructure, finan- emerging donors, the private sector, and civil society—can cial services, and productive assets. It embraces action to make the difference through collective action at the local, remove barriers against those who are often excluded, such regional, and global levels. as women, youth, and minorities; to protect fundamental human rights and dignity; and to ensure that the voice 6. The two goals, and the partnerships needed to of all citizens can be heard. Only responsive, accountable achieve them, are well aligned with the international public institutions can design and deliver inclusive policies. community’s efforts to reach the MDGs and establish Inclusive policies in turn promote economic growth—for an ambitious post-2015 agenda. The WBG is actively example, strong growth cannot be sustained without gen- participating in setting a collective post-2015 agenda that der equality to ensure the empowerment of one half of the is ambitious and transformational, and that encompasses world’s population. ending extreme poverty and building prosperity for all in a sustainable manner. 10. Sustainability ensures that today’s development pro- gress is not reversed tomorrow and that the pace of pro- gress does not flag in the future. Sustainability permeates A. The Development Agenda for Reducing all elements of the policy agenda—from greening economic Poverty and Sharing Prosperity growth, to strengthening social consensus through inclu- 7. The development agenda to reduce poverty and sion, to safeguarding jobs through sound macroeconomic build shared prosperity focuses on enriching livelihoods management that keeps public finances on a sustainable through economic growth, inclusion, and sustainability. path. Fragility, violence, and environmental degradation This policy agenda is informed by decades of development pose particularly urgent challenges to sustainability. Pro- experience, knowledge, and research. It encompasses both gress in reducing poverty in some developing countries national policies and global action, and it combines com- could be reversed if they relapse into conflict and violence; mon elements across developing countries with country- and such relapses can have regional implications. Envi- specific actions tailored to diverse country circumstances. ronmental constraints are already affecting the progress of poverty reduction, and promoting shared prosperity 8. Economic growth that creates good jobs fuels devel- is impossible without stepping up action to address such opment. Strong job creation hinges on mobilizing private environmental challenges as climate change, investment in investment and developing effective public institutions. green technologies, and reforms to improve the efficiency Including the informal sector and self-employment, the of use of natural resources, including reform of regressive private sector accounts for almost 9 out of every 10 jobs energy subsidies. Institutional strengthening is critical to in the world. Good governance is central to strong eco- ensure sustainable development and address the risks that nomic growth. Effective public institutions carry out the could undermine progress. policies and investments that mobilize domestic resources efficiently, fight corruption, promote competitiveness, B. Focusing the WBG on the Goals strengthen human capital and improve infrastructure— thereby stimulating private investment, job creation, and 11. The WBG needs a new strategy to ensure that it productivity gains. Robust private sector institutions, such focuses relentlessly on the goals in the development 6 world bank group strategy Box 1  Previous World Bank Group Strategic Exercises The WBG has undertaken a series of strategy efforts IFC’s annual “Road Map” and MIGA’s FY12-14 over the past two decades. The most recent strategy Strategy have been different in character. These exer- documents have been the Post-Crisis Directions (2010), cises have developed a set of longer-term focus areas, Meeting the Challenges of Global Development (2007), complemented by incremental annual adjustments. The Strategic Framework (2001), and the Strategic Com- The exercises are informed by ongoing tracking of pro- pact (1997). While the three most recent documents gress to articulate priority areas for operational focus. were nominally WBG documents, in practice they A number of lessons learned from these exercises spoke mainly to the Bank, not IFC and MIGA. have informed the WBG Strategy: the need for clarity These exercises had varying objectives—from tight- on goals, specific actions for implementation, a moni- ening business processes to underpinning requests toring framework, and enabling conditions, includ- for budget and capital increases. While they generally ing human resources and financial sustainability. To succeeded in articulating overall goals, development ensure that the Strategy truly reflects the WBG, it needs challenges, and institutional strengths, only the 1997 to identify areas for common effort while respecting Compact was followed up with meaningful monitor- the distinct mandates and strengths of each agency. ing of implementation progress and an assessment of achievements. context of today and tomorrow. Under the new strategy, accountable, laying the groundwork for the Strategy and the the WBG will support member countries in addressing the related change process. most critical national, regional and global development pri- orities to reduce extreme poverty and build shared prosper- 13. This paper is organized as follows. Chapter 2 analyzes ity in a sustainable manner. The WBG will: the global context, identifying major trends that are reshap- ing the development landscape. Chapter 3 draws conclu- n Align all WBG activities and resources to the two goals, sions for repositioning the WBG in this changing landscape, seeking to maximize development impact and drawing identifying a value proposition for the WBG as a whole that on the WBG’s comparative advantages. draws on the specific strengths of each agency. Chapter 4 then discusses development challenges to meeting the two n Use its strengths as a global institution by supporting goals, describing what clients want from the WBG and how clients in delivering development solutions; working the WBG will respond. Chapter 5 presents how the WBG with public and private partners who bring resources, will support clients in delivering solutions that maximize expertise, and ideas; and advancing knowledge about progress toward the goals, in particular by strengthening what works. the focus on knowledge and evidence in its products and n Work as One World Bank Group by leveraging the services, as part of becoming a “solutions WBG.” Chapter 6 strengths of each agency. then turns attention to how the WBG intends to operation- alize its approach to the goals by exercising greater selectiv- 12. The Strategy draws on lessons from past WBG strat- ity at the country level. Chapter 7 discusses the types of egies (Box 1). It builds on comprehensive diagnostic work partnerships that are needed to meet the goals and how the as well as the important foundation set by recent reform WBG will ensure the strategic alignment of its partnership efforts: the ambitious Modernization Agenda the Bank engagements. Chapter 8 deepens the discussion on operat- launched in 2010, which contributed to improvements ing as One WBG. Chapter 9 concludes with a discussion in openness, accountability, and efficiency; and the IFC of the outcome of the Strategy and describes the process 2013 initiative and MIGA’s strategy review, which resulted to support implementation in the context of the broader in greater focus and improved client engagement. These change process, which will be elaborated in a subsequent efforts have made the WBG more results-oriented and Implementation Paper. world bank group strategy 7 2 .  global co n t e x t 14. Important global trends underscore the need for a support to poorer countries reflect the new, multipolar new WBG strategy to adapt to fast-moving challenges and world economy. opportunities. Tremendous progress over the past two dec- ades has reshaped the development landscape. It has created 16. The shift in the global economy has been driven by new opportunities to reduce poverty and promote shared the rapid evolution of the private sector and the emer- prosperity, but has also introduced new risks to sustaining gence of a middle class in the developing world. In coun- progress in the future. While the transformation cuts across tries as diverse as China, Ghana, and Turkey, the private many dimensions, a few mega-trends are leading the way. sector is driving employment growth and transforming liv- ing standards. The combination of population growth, a ris- ing middle class, and urbanization in the developing world A. Shifts in the Global Economy is fueling demand for infrastructure, manufactured goods, 15. Developing countries’ strong economic performance housing, and services. Strong growth of final consumption over the past two decades is shifting the world’s economic in emerging markets is contributing to a move toward more center of gravity to the south and east. Several large regionally-based production, which is opening up opportu- middle-income countries are now economic powers in nities for manufacturing in new countries—a trend that is their own right. Developing countries, in aggregate, have likely to accelerate in the next decade to offset rising labor consistently outpaced the growth of developed countries and transportation costs, and in response to concerns about over the past decade, continuing to grow even during the traceability and environmental impacts. global financial crisis, and they will soon account for half of global GDP (Figure 1). The rise of the G-20 as a lead- 17. The transformation in the global economy is mir- ing forum for global economic cooperation and the rise of rored in the changing nature of financing for development, emerging market countries as providers of development including private capital. Domestic resource mobilization Figure 1  Patterns of Global Growth and GDP Source: World Development Indicators. Note: HIC = high-income country, LIC = low-income country, MIC = medium-income country. 8 world bank group strategy has become increasingly important, particularly in middle- rise as emerging market populations become, on average, income countries, but for many developing countries exter- older and more affluent. New products are also likely to nal inflows remain a key source of financing for investment emerge to meet the needs of the 2.5 billion people who still and growth. Private investment has become the dominant do not have access to formal financial services. mode of capital transfer worldwide. Net private capital flows to developing countries are now on the order of $1 trillion B. The Changing Face of Poverty and Prosperity per year, with an increasing share representing South-South investment; worker remittances are also increasing rapidly 19. Although the global extreme poverty rate has fallen and are projected to reach $500 billion by 2015. Together, by half since 1990 (Figure 2a), progress within the devel- these private flows dwarf official development assistance oping world has been highly uneven. Extreme poverty (ODA) of about $125 billion annually (Box 2). However, remains widespread in most low-income countries. As a both foreign private investment and remittances remain group, lower-income countries have been growing more highly concentrated. Foreign direct investment targets a slowly than middle-income countries, and growth perfor- small number of largely middle-income countries and sec- mance among the lower-income countries has varied widely: tors, and access to private credit in lower-income and some are on the way to middle-income status, while others lower-middle-income countries is often still difficult. ODA have stagnated or regressed. The vast majority of the world’s continues to play a critical role, especially in countries where poor people continue to live in rural areas; however, migra- private inflows are less abundant, and it is now comple- tion patterns are driving the rapid urbanization of poverty. mented by substantial flows from private foundations and philanthropies. 20. Roughly half of the low-income countries are classi- fied as fragile and conflict-affected situations, which pose 18. Emerging market banks and capital markets are particular challenges. Fragile and conflict-affected situations taking on a greater role in local finance. Development of (FCS) are home to a growing share of the world’s extremely contractual savings and local currency capital markets is poor people. Poverty rates in FCS are on average 20 percent- becoming critical to finance the growth in private busi- age points higher than in non-FCS countries. Populations in nesses, infrastructure, and housing as countries shift toward FCS account for a third of the deaths from HIV/AIDS in poor middle-income status. Demand for new types of products countries, a third of the people who lack access to clean water, and services, such as pensions and insurance products, will a third of children who do not complete primary school, and Box 2  The Evolving Structure of Development Assistance As international development assistance has in­creased— exchanges. Multilateral and bilateral development from approximately $85 billion to $130 billion between institution investments to finance the private sector 1990 and 2011—so too has its complexity. Aid was have grown substantially over the last 10 years to reach traditionally provided through bilateral aid agencies some $40 billion annually, but this remains relatively and a small number of multilaterals (largely UN agen- small compared to global private flows. For the WBG, cies and international financial institutions). The past the evolution of development assistance offers both decade has seen the emergence of large global funds new partnership opportunities, and possibilities to that pool resources to tackle issues in specific develop- recast its role in areas where other actors are taking the ment areas (e.g., GAVI for vaccines; GFATM for AIDS, lead. The WBG’s role in knowledge, convening, and tuberculosis, and malaria; and GEF for the environ- global advocacy has increased relative to its role in pro- ment). In addition, private aid and philanthropy has viding finance. The WBG also plays a greater role in the skyrocketed to equal 15-20 percent of ODA. As mid- coordination and transparency of ODA, as well as in dle-income countries engage in the global arena, they assisting developing countries to manage the risks to too are providing development support to poorer economic sustainability that both ODA and private countries in the form of aid, investment, and technical inflows can pose. world bank group strategy 9 Figure 2  Global Extreme Poverty and Inequality Source: PovCalNet for (a); “Global Income Inequality by the Numbers: in History and Now”; Milanovic, (2012) for (b). Note: For (b), Concepts 1 and 2 represent inequality in income per capita across countries— for 1, each country has equal weight and for 2, countries are weighted by population, Concept 3 takes into consideration inequality between national averages and within-country inequality. half of all child deaths. Although there have been notable suc- developing countries for 2005–2010. On the positive side, cesses, persistent fragility has been the norm for most FCS. in about one-third of these countries the per capita income growth of the bottom 40 percent exceeded 4 percent, and 21. In many developing countries, growth has been this growth was faster than the national average. However, accompanied by rising inequality and disparities, often in about one-quarter of the countries in the sample, the per with a geographic dimension in the form of lagging capita income growth of the bottom 40 percent was below 4 regions. Strong overall growth in developing countries has percent per year and below the national average. Sustained narrowed the income gap between rich and poor countries, progress in building shared prosperity is incompatible with but the growing inequality within many countries has offset a steady increase in inequality, which may eventually choke the impact of this convergence on global inequality among off growth by causing political instability, distorting incen- all people in the world (Figure 2b). tives, and reducing upward mobility. Over the longer term, sharing prosperity across generations requires progress 22. Transitioning to middle-income status does not at both the country and global levels on all three dimen- mean the end of poverty or deprivation. Rising inequality sions of the development agenda: growth, inclusion, and in many middle-income countries reflects the reality that sustainability. many continue to have substantial levels of extreme poverty (Figure 3a). In addition, most people who have escaped C. A Globally Connected World extreme deprivation remain poor, subsisting on less than $4 per day (Figure 3b). Many middle-income countries 24. In recent years, significant increases in connectivity have national poverty lines in the $4 range, and people in have led to the emergence of a truly global community. this income bracket would be considered extremely poor in Worldwide nearly 6 billion mobile cellular subscriptions any high-income country. In fact, as countries move up the and nearly 600 million broadband Internet subscriptions national income spectrum and extreme poverty declines, are supporting explosive growth in social media. The the share of the population living in the zone of poverty growth in connectivity has led to the rise of global voices between $1.25 and $4 per day often increases sharply. and the emergence of think-tanks and other sources of knowledge generation in the developing world. Ordinary 23. Progress in sharing prosperity has been mixed citizens have become powerful constituents who can make among developing countries. Data are available for 71 direct demands on government and bring about changes to 10 world bank group strategy Figure 3  Extreme Poverty, Poverty, and GDP per Capita (a) Extreme Poverty (less than $1.25) (b) Poverty ($1.25-$4.00) Extreme Poverty rate at $1.25 per day (PPP) Poverty rate $1.25-$4.00 per day (PPP) (% of population) (% of population) Log GDP per capita, PPP constant 2005 international $ Log GDP per capita, PPP constant 2005 international $ Source: POVCALNET and World Development Indicators for the World Bank Atlas method. Note: Low income = $1,025 or less; lower-middle income = $1,026 –$4,035; upper-middle income = $4,036–$12,475; high income = $12,476 or more; PPP = purchasing power parity. legislation, constitutions, and even regimes—as in the Arab lights the importance of stronger national and international Spring and elsewhere. Concurrently, civil society organiza- coordination of policies, regulation, and oversight. tions (CSOs) are gaining influence as advocates for a host of issues—from government transparency and accountability D. The Challenge of Climate Change for public service delivery to demands for social justice and for action to address critical issues like climate change, cor- 26. Climate change threatens both future poverty reduc- ruption, and freedom of information. tion and the sustainability of past gains, achieved through decades of efforts. The international community’s collec- 25. Other forms of connectivity are having an impact as tive response to the fundamental threat posed by climate well, stimulating knowledge and innovation for develop- change will shape not only the global fight against poverty, ment. Technological innovations are improving access to but also the world’s overall development trajectory for public services and financial services, while reducing oppor- generations to come. Average world temperatures are on tunities for fraud and corruption. Increased connectivity is track to rise at least two degrees Celsius and rainfall patterns also contributing to the changing nature of trade, business, are changing. Increasingly, these changes are resulting in and finance bringing the location of production closer to more severe and frequent extreme weather events—storms, consumers, fueling the demand for customization, and droughts, heat waves, and floods. The impact of these shortening the lifecycle of many products. Financial and events is exacerbated by environmental degradation and economic connectivity bring great benefits, but they also other socio-economic factors. The adverse effects of climate entail substantial risks as demonstrated by the 2008 global change fall disproportionately on the poorest countries and, crisis and recurring concerns with food safety. This high- within countries, on the poorest people, who are already world bank group strategy 11 seriously affected by environmental degradation and lack For low-income countries whose growth has been based adequate capacity to adapt. on natural resource booms, their economies remain highly susceptible to commodity price shocks. Public health risks loom large as diseases travel faster across a connected E. Global Risks and Volatility world. A growing risk is posed by the vulnerabilities of the 27. Global risks and volatility are growing concerns communications and computing infrastructure on which in an interconnected world that is dependent on inter- so much depends. national markets for goods, services, and finance. The global economy faces substantial risks from the long-term 28. The turbulent world events of the past decade illus- impact of the global economic crisis, the fragile economies trate the impact of social and political instability. Instabil- in certain high-income countries, and the situation in ity can derail development; conversely, development that the Middle East. There is the potential for slower global fails to be inclusive may itself promote instability. Several growth in the future. New economic, environmental, Arab Spring countries had made notable development social, and political crises are likely; they will often be of progress, but sustainability was undermined by deep-seated local origin, but will have the potential for regional or inequality of opportunity, manifested in part through high global impact. Even short-lived, localized crises can gener- levels of youth unemployment and a pervasive sense of a ate major losses in employment and welfare that can have lack of social justice and voice among the citizenry. This dire consequences for the poor and bottom 40 percent. experience demonstrates how the sustainability of develop- Natural disasters and shocks related to natural resource ment depends critically on social cohesion and on meeting scarcity can destabilize the development progress of indi- the rising expectations of a better educated and connected, vidual countries, regions, or the entire world; and the fre- more urban, and more middle-class population for effective quency and scale of such events may be increasing with cli- delivery of higher-quality public services. Some resource- mate change. Economic losses from natural disasters have rich developing countries are not managing to generate jobs been trending upwards for decades, in line with the steady or to share the wealth adequately, potentially sowing the increase in CO2 concentrations from emissions (Figure 4). seeds of social protest in the future. Figure 4  Natural Disasters and CO2 Emissions Sources: US Geologic Survey for (a) and Turn Down the Heat, World Bank, 2012 for (b). 12 world bank group strategy 3 .  reposi t io n i n g t h e wbg 29. The new Strategy builds on the strong foundation parency, open data, global outreach, and knowledge and continuous adaptation of the WBG; what is new is the dissemination. singular focus on the two goals in a rapidly changing global context. The WBG will do more to work with the develop- In doing all of this, the WBG will work together with public ment community to seize opportunities and manage risks in and private partners who bring resources, experience, and a sustained drive to end poverty and build shared prosperity. ideas to tackle key development challenges. In a multipolar world, the WBG, with its universal mem- bership and global footprint, offers a platform where the B. WBG Strengths perspectives of all countries and all citizens can be brought to bear on the toughest development challenges, which 31. The WBG will deliver on its value proposition by increasingly affect all countries, developed and developing taking full advantage of its strengths and addressing alike. The WBG’s global reach can help shape and contrib- its weaknesses, as identified by diagnostic work, client ute to the international community’s response to crisis and surveys and external assessments. The scope and depth volatility, and to complex threats like climate change that of the WBG—its reach, human resources, and volume of require concerted action at the global, regional, and local finance—position it to focus its strengths, individually or levels. In a world where the private sector is driving growth in combination, to have particularly significant impact in and dominating capital flows, the WBG can help the pub- tackling the most difficult development challenges. lic and private sectors work together more effectively and systematically. To ensure that citizens are empowered and n With its global multilateral membership and ownership well informed, the WBG can build on its open data, open structure, the WBG can synthesize perspectives on devel- knowledge, and social media initiatives to make knowledge opment issues from around the world. more accessible. Finally, in a globally connected world where n Its long-standing country engagement allows the WBG governments, citizens, and private investors have broad to help clients tackle those complex development issues, access to online knowledge and to alternative sources of such as building strong institutions and undertaking funds, the WBG can offer solutions that integrate finance structural reforms, that can only be addressed over the with knowledge enriched through global networks, world- long term. class research, and hands-on implementation experience. n With decades of work on the full range of develop- ment issues, the WBG has broad operational experi- A. WBG Value Proposition ence; expertise on policy dialogue, implementation, and capacity building; knowledge of the private sector; ability 30. The WBG, operating as One Group, intends to to blend public and private finance; and capacity to bun- strengthen its capabilities and work in partnership toward dle knowledge, finance, and convening services. the two goals through a value proposition to: n The WBG has a strong track record helping countries n Contribute to the global development agenda through respond to crisis and strengthen resilience, as exempli- dialogue and action on ongoing and emerging devel- fied by its multifaceted response to the 2008 global crisis opment challenges, bringing the perspectives of all its and global reputation for disaster risk management. member countries. n Widely recognized as a strong, AAA-rated financial insti- n Support clients in delivering customized development tution, the WBG mobilizes and manages large amounts solutions backed by finance, knowledge, and convening of resources for development on a global basis, and services. offers a wide range of innovative financial products and services to clients. n Help advance knowledge about what works, com- bining the world’s leading development research and n Its globally linked presence (over 200 field offices) gives practitioner experience with a commitment to trans- the WBG the capability to respond to client demands world bank group strategy 13 and draw on the experience gained in one part of the and results-based approach are more empirically based world to help clients elsewhere. than those of many development actors, and the Bank invests significantly in evidence and evaluation. The Bank n The WBG’s global convening power allows it to bring is increasingly called upon to steer global agendas and together diverse actors to solve local and regional prob- deliver public goods. Its development leadership serves as lems and catalyze action to influence global agendas and a platform for global and regional partnerships. The Bank’s help set international standards, bringing in the views of treasury functions are highly sought to mobilize and man- developing countries. age investible resources and to serve as a fiduciary agent to n The WBG offers a valued reputation for integrity and channel external funding. safeguards. Governments, CSOs, and other stakeholders place a high value on WBG environmental and social 35. While IBRD and IDA share the same country-based safeguards, viewing them as important to preventing business model and operational policies, they are separate social conflict and promoting accountability, informed legal entities. They serve different client segments and have decision-making, and stakeholder engagement. distinct funding models with different funding constraints. IBRD provides non-concessional financing to creditworthy 32. There is a need for improvements across the WBG in countries, while IDA provides concessional resources to several areas. A critical area is for the WBG to strengthen poor and non-creditworthy countries (Box 3). IDA con- its ability to work on multi-stakeholder solutions through cessional terms and IBRD loan pricing are attractive, and engagement with the public sector, private sector, and surveys indicate that countries across the income spectrum citizens. A change in WBG culture and in the currently pre- value the array of products and services the Bank offers. dominant mode of operating in sector silos will be required to increase the use of multi-sectoral approaches. It will also 36. Clients perceive the Bank as falling short in several be necessary to revamp the client engagement model into areas: (a) long lead times and procedural complexity, which a more problem-driven solutions approach, systematically are reported to stifle demand; (b) the constraints on the bringing together multiple disciplines, stakeholders, and flow of knowledge and the Bank’s ability to apply it on the WBG agencies. This new WBG model needs to be adapted ground in a timely manner; and (c) more recently, the qual- as well to operate more effectively in fragile and unsta- ity of technical expertise in areas with considerable compe- ble contexts. The WBG also needs to further examine its tition, and in countries with sophisticated counterparts and resource base to ensure maximum efficienc complex development challenges. 33. The agencies of the WBG have individual strengths 37. IFC: Operating principally in competitive, private and advantages that they will continue to hone, while sector markets, IFC is recognized for its ability to provide focusing on working better as One WBG. Strengthening a unique suite of financing and advisory services. This the advantages that clients and partners have identified will advantage derives from the combination of (a) its global help each WBG agency to contribute more to the WBG and decentralized operation; (b) its packaged services value proposition by delivering on its mandates with respect of investment, advisory, and asset management services; to distinct client groups, reflecting its markets, products, (c) synergies across the WBG; and (d) a commitment to and “competitors.” Each agency also recognizes that it has sustainable development impact. IFC ensures additionality areas of weaknesses that it needs to address. in four areas: risk mitigation, standard-setting, knowledge and innovation, and policy-setting. It has been recognized 34. IBRD and IDA: The Bank’s business model, based as a standard-setter in environmental and social standards on client country demand, gives it a major comparative through the Equator Principles, and in corporate govern- advantage. Countries value the support of the Bank to help ance through the Corporate Governance Development design and implement national development programs. Framework. IFC’s technical expertise is rated highly for The Bank’s technical breadth across sectors, worldwide both investment and advisory services, and it gains particu- experience in projects, and global array of partnerships give lar advantage from working with the Bank to help countries it the capacity to blend expertise in designing and support- set policies and regulations. IFC’s private sector client base, ing countries’ delivery of multi-sectoral, multi-stakeholder the largest among development institutions, represents solutions. The Bank’s extensive research and knowledge a strategic asset. Clients are generally satisfied with IFC’s 14 world bank group strategy Box 3  International Development Association IDA supports the poorest. IDA, the WBG’s main con- Response Mechanism to enhance its response to crises cessional instrument to support poor countries, is and natural disasters. To increase its financing capacity, one of the largest sources of concessional resources IDA has introduced measures such as increased price for the world’s 82 poorest and least creditworthy differentiation and accelerated repayments from IDA countries. IDA has a diverse client base ranging graduates, and it plans to include limited debt financ- from low-income countries (of which many are FCS) ing in the form of partner concessional loans in the to lower- and upper-middle-income countries. IDA IDA17 financing framework. plays a leadership role in the effectiveness and results IDA17 will support implementation of the WBG agenda, including through its Results Measurement Strategy. IDA will be a primary vehicle to imple- System, which tracks IDA’s contribution to develop- ment and reinforce the WBG Strategy in the poor- ment outcomes and its operational and organizational est countries through IDA17’s overarching theme of effectiveness. Several external assessments rank IDA Maximizing Development Impact, as well as the special among the most effective and efficient development themes of Inclusive Growth, Gender, FCS, and Climate assistance agencies. Change. Under IDA17, IDA will focus more on lever- IDA’s policy and financing framework is reviewed aging knowledge and financial resources. every three years. IDA is funded primarily by grant As countries move up the income spectrum and contributions and credit reflows. Through the replen- become more creditworthy, they may attain “blend” ishment process, IDA continuously adapts to new status (and receive support from both IDA and IBRD) challenges. It has been instrumental in advancing the before they gain full IBRD-only status. Stronger col- development agenda on frontier issues such as FCS, laboration between IBRD and IDA in managing the gender, and climate change resilience. IDA has estab- transition from “blend” to IBRD-only will be increas- lished the Crisis Response Window and the Immediate ingly important over time. overall service and choose IFC for its ability to provide base to inform underwriting, the extensive network of long-term partnerships, financing not readily available else- global offices to support business development and project where, loan maturity, product pricing, ability to bring in monitoring, and the relationship with host countries to other sources of finance, and perceived stamp of approval, allow it to take on riskier projects. Like other multilaterals particularly with regard to sustainability requirements. and the other WBG agencies, MIGA’s perceived weakness However, clients perceive IFC, like the Bank, to be behind is having heavy information requirements, especially in the peers in timeliness and speed of processing. areas of environmental, social, and integrity due diligence. 38. MIGA: In the competitive market for political risk C. Delivering on the Value Proposition insurance, MIGA is considered the strongest multilateral provider in terms of its business results, global reach, 39. To deliver on the value proposition the WBG needs to and market reputation. It is recognized for (a) its expert improve many aspects of its work. In working with clients underwriting, (b) its strong balance sheet, enabling large on the ground to deliver development impact, it needs to: long-term guarantees, (c) its willingness to guarantee com- n Invest in knowledge, technical skills, information tech- plex projects in high-risk markets, and (d) its unparalleled nology, and the “solutions” platform (knowledge, sci- record in resolving investment disputes. MIGA, too, has a ence of delivery, results, and learning) to keep its devel- broad array of clients representing a range of industries, opment expertise from eroding. sectors, and geographic areas. Much of MIGA’s compara- tive advantage is derived from its affiliation with the WBG, n Break down silos and focus on multi-sector approaches which enables it to draw on the research and knowledge as One WBG. world bank group strategy 15 Figure 5  IBRD and IDA Commitments n Increase flexibility and speed up delivery—while preserv- IBRD), the scale of its operations is currently well below one ing its internationally respected fiduciary, safeguard, and percent of the combined GDP of borrowing countries, and integrity norms—redoubling efforts to streamline bureau- falling (Figure 5). Maintaining a minimum scale of opera- cracy, cut red tape, and exploit back-office synergies. tions is important if the WBG is to influence the policy agenda and support clients in delivering effective develop- n Crowd in resources, experience, and ideas more effec- ment solutions. For Bank operations in the poorer coun- tively through partnerships by selectively deepening its tries, limits on the volume of IDA funds and their allocation engagement across the broad spectrum of potential pri- can constrain potentially high-impact engagement with vate, public, multilateral, and nonprofit partners. public clients, especially with respect to critical investments n Leverage its global role by deepening global engagements in capacity building and infrastructure. Responding to the that are aligned with the two goals and structuring global increasing demands of countries at the center of the income services and programs into a well-defined business line. spectrum—as poor countries transition to middle-income status, and demand in middle-income countries shifts to a n Strengthen its country engagement model to better subnational client base—will be constrained by complica- deploy its strategy-setting and diagnostic capabilities, tions with national government guarantees and limits on including supporting developing countries in collecting IBRD funding availability, including factors related to capi- statistics and using them in evidence-based public policy. tal, the single borrower limit, and country creditworthiness. n Ensure that, now and in the future, its resources are com- mensurate with the roles and responsibilities it carries out 41. In addition, the Bank faces serious constraints on behalf of the international community by developing from growing demands in areas typically financed by the a new framework for medium-term financial sustain- administrative budget: for example, more global work; ability—increasing revenues, building financial capacity, funding offices, staffing, and activities in FCS; and track- cutting costs, and aligning its resources with the goals. ing the global goals through expanded data initiatives. The Bank will need to be selective about which activities it takes 40. Financial considerations will influence, and some- on, in the context of a right-sized budget. As part of this, times constrain, the WBG’s choices. First, as agencies the Bank will need to consider such new revenue generation operating without sovereign guarantees, IFC and MIGA measures as increased engagement in reimbursable advisory must take on a certain number of low-risk, profitable cli- services and increased use of trust funds to finance knowl- ents to balance their portfolios. For the World Bank (IDA/ edge and other non-lending services. 16 world bank group strategy 4 .  mee t i n g de v elopme n t c h alle n ges 42. To focus on the two goals while working in diverse well educated, and productive labor force, as well as on provi- settings, the repositioned WBG will exercise greater selec- sion of and access to infrastructure, including reliable and tivity and collaborate more with the international com- affordable energy. Physical investments are essential—the munity. The overall picture of development needs and estimated sums needed for infrastructure alone are stagger- the corresponding demands on the WBG have become ing (up to $1.5 trillion per year). However, investment is not increasingly complex as country circumstances become enough: countries need help with analysis, policy dialogue, and more diverse. The traditional grouping of developing coun- program design, as well as technical expertise for implementa- tries into low-, middle-, and upper-income categories is tion and capacity building. They need support for improving becoming less relevant as countries at all income levels seek the business climate to stimulate private sector investment support to sustain development progress. In a connected and jobs, and for improving governance and public services world, the WBG also faces growing demands for engage- through institutional strengthening. Many countries are plac- ment at the regional and global levels. In responding to ing more emphasis on policy action to promote inclusion, and these demands, the WBG will rigorously use data and evi- sustainability is gaining prominence, particularly given rising dence to align all its activities with the two goals, maximize social demands and increasing stress on the environment in development impact, and draw on the WBG’s comparative many countries. Countries also need help building resilience advantages. This implies recognizing the strengths of, and to shocks and support in responding to crises. They want working closely with, other development partners—mul- solutions that produce results and are grounded in evidence tilateral organizations and development banks, bilateral of what works. Above all, they want speed and agility; support development agencies, the private sector, and national and that arrives late cannot deliver results. international CSOs. 44. Reducing the global extreme poverty rate to 3 percent by 2030 will require accelerating the pace of poverty reduc- A. Development Challenges Countries Face tion in many countries—particularly in South Asia and Sub- 43. Ending extreme poverty and promoting shared pros- Saharan Africa (Box 4), and in FCS. Each percentage point perity sustainably will require persistent and concerted of poverty reduction will involve progressively more people effort. Progress depends critically on developing human capi- as the world’s population expands from today’s seven billion tal and expanding access to social services to produce a healthy, to over eight billion by 2030—with almost all this increase Box 4  Africa’s Development Challenges Africa has made significant progress . . . Between 1996 and half of the world’s FCS countries are in the Region. Simu- 2010, the percentage of people living on less than $1.25 lations suggest that even if the world meets the 3 percent a day in Sub-Saharan Africa declined from an estimated global target by 2030, many African countries could well 58 percent to 48.5 percent. Economic growth has picked be left with substantial rates of extreme poverty, and the up since the mid-1990s. African countries have gener- Region would likely account for the vast majority of the ally maintained prudent economic policies, as evidenced remaining extremely poor people. by Country Policy and Institutional Assessment scores. Given the scope of the challenges, there is a need for Despite increased borrowing by many African countries, specific attention to Africa. The WBG will assist the debt burdens remain moderate and broadly manageable. Region to build on the progress it has made, including The investment climate continues to improve. by helping to address the structural problems and risk . . . but continues to face daunting challenges. The Africa perceptions that are constraints to private investment, Region lags behind on achievement of the MDGs, with employment, and growth. substantial heterogeneity in country-level progress. About world bank group strategy 17 in the developing countries and disproportionately among sion. FCS represent a special type of institutional fragility, the poor. However, sustaining strong economic growth may one that requires combining support for developing basic prove difficult in the post-crisis global context, and it will public institutions—often from scratch—with economic hinge on structural transformations in many developing and social development and, in some cases, with peace- countries. If inequality rises, achieving the poverty target will keeping and security efforts. Small and island states often require higher growth rates than have historically occurred. have particular needs as well: their small size, at times com- As extreme poverty falls, more targeted policies will be bined with geographic vulnerability or isolation, constrains needed to reach those remaining in deprivation—including institutional capacity, the development of private firms, programs that help reduce the risks that poor households and economic diversification, posing important risks to and communities face. sustainability. 45. Building shared prosperity will require countries to 47. Private companies operating in developing countries address inclusion and sustainability more vigorously. With seek to overcome constraints to investment and growth. the focus on jobs, policy action is urgently needed in coun- The private sector needs to flourish—to create jobs; promote tries where women are excluded from opportunities in paid innovation, technology, and skills transfer; and develop employment and entrepreneurship. Developing countries supply chain linkages and export markets. In countries must manage spatial transformation well to increase prosper- at all income levels, top obstacles include problems with ity sustainably. Across the developing world, growing popu- infrastructure, investment climate, access to finance, and lations and economies are putting significant strain on the worker skills. In the poorest countries and FCS, where capi- natural resource base—land, water, forests—and countries tal is scarce and financial systems underdeveloped, access to are struggling with the impact of climate change, environ- finance and access to electricity are particular problems; the mental degradation, and ecosystem changes. Most countries informal sector will remain an important source of employ- that have successfully transitioned to high-income status ment, propagating concerns about low productivity and followed a path of urbanization and concentrated industrial wages. In countries higher up the income spectrum, where development that enhanced productivity, expanded service firms tend to be more sophisticated in their operations and delivery and generated broad-based gains in social welfare. In to enjoy greater access to external capital, they often have tackling these complex challenges, developing countries can financing and advisory needs in such areas as innovation, benefit from the pace and breadth of technological change, inclusive business, investment in low-income states, climate which will continue to reshape development in myriad, often change, South-South investments, and regional integration. unforeseen ways—but this in turn will require robust poli- Global private finance and risk mitigation instruments are cies to promote innovation, entrepreneurship, and the free needed to meet growing investment needs, and countries flow of information. across the income spectrum need assistance to raise finance and structure deals. 46. More attention is needed to the multiple facets of fragility and resilience, as moving up the income spec- B. Responding to Country Demands trum provides countries no guarantee of future progress. Many countries, mainly in Africa, are moving rapidly up the 48. As a global multilateral institution, the WBG will income ladder as they exploit their natural resources. How- work with all member countries in the push to end ever, some of Africa’s richer countries are similar to poor- poverty and promote shared prosperity in a sustainable performing lower-income countries in terms of inequal- manner. Applying knowledge and evidence to the most ity, employment challenges, undiversified economies, low complex development challenges, the WBG will custom- human development outcomes, and weak institutions. The ize its support to countries as their development needs sustainability of development remains fragile in countries evolve—including support for job creation, good govern- and/or lagging regions where institutional capacity, inclu- ance and anticorruption, gender equality (Box 5), and sion, and economic diversification fail to keep pace with environmental sustainability. Meeting the needs of poor income growth. To withstand or forestall shocks—from countries will remain a high priority; the WBG will con- conflict, violence, vulnerabilities to the impacts of climate tinue to work closely with IDA clients to fight poverty, change and natural disasters, or economic crisis—countries build institutional capacity, strengthen creditworthiness, need strengthened resilience, inclusion, and social cohe- and improve resource mobilization. It will continue to help 18 world bank group strategy Box 5  The Challenge of Gender Equality Gender equality remains a complex and long-term across most Regions, with gender-informed analysis, challenge that requires continued investments to actions, and monitoring and evaluation. The IFC has expand women’s empowerment and opportunities, adopted a new gender strategy, and MIGA will update alongside measures to tackle deep-seated structural its sustainability policy to strengthen its commitment inequalities, norms, and discrimination. to gender. Supported by the 2012 WDR on Gender, recent While there has been major progress in integrat- progress builds on growing attention to the impor- ing gender, much remains to be done to achieve and tance of gender equality among clients and stakehold- sustain results on the ground. The WBG will continue ers, strong commitments from WBG management, to focus on addressing gender equality at the country and increasing awareness among WBG staff. The level. In the medium term, a renewed gender strategy share of gender-informed lending has increased sig- will frame the WBG’s efforts to promote gender equal- nificantly and the extent of integration has deepened ity as central to achieving the two goals. middle- and upper-middle-income countries address issues has been shifting its engagement to subnational govern- that are critical to sustaining their development progress, ments that face pressing demands. In middle-income coun- including escaping the “MIC trap”—that is, stagnation tries IFC and MIGA engage more frequently with larger caused by rapid growth unaccompanied by structural domestic firms that often have growing investment needs changes to address such issues as social inclusion and rapid and broader interests in contributing to development. A urbanization. This support will include a fresh look at the substantial share of these clients has expanded into invest- political economy of second-generation structural reforms ments outside their home country, and IFC’s South-South in the context of building shared prosperity. The WBG will investment program is organized to address their needs. also assist middle-income countries in becoming emerging MIGA is positioned to support domestic companies looking donors and will support broader engagement by countries to diversify abroad, very often into neighboring countries, in the development dialogue. The WBG will continue to bringing benefit to both the investor and the host country. support FCS in addressing their highly specific challenges In much of its work, the WBG provides services to govern- to overcoming fragility, to pay attention to the particular ments or other clients—such as private companies—that in needs of small and island states, and to support higher- turn provide goods and services to support the poor and/ income countries, particularly during times of distress. or the bottom 40 percent. In some contexts, the WBG is Providing support to individual countries and to the inter- able to engage directly with the beneficiaries as active cli- national community as a whole in responding to crisis and ents and partners, with a particular emphasis on women, volatility, in building resilience, and in carrying out prudent youth, and vulnerable groups; this is direct empowerment countercyclical policies will remain a priority for the WBG. of citizen-beneficiaries. 49. The WBG will continue to work with a broad range C. Supporting the Private Sector of clients and stakeholders. In many of the poorest coun- tries and FCS, while working to build up government 50. The WBG will continue to help countries improve capacity, the Bank focuses increasingly on helping local the business environment through institutions and regu- communities and citizen-beneficiaries become active stake- lations that are conducive to a vibrant private sector. The holders in reducing poverty. In the poorer countries, small WBG contributes to an improved business climate through and medium enterprises (SMEs) predominate as private cli- policy dialogue and advisory and knowledge work, some- ents, served primarily through financial intermediaries, and times with associated funding to government. It helps build IFC and MIGA often support foreign investors for direct governments’ capacity to engage with the private sector investment. In many middle-income countries, the Bank and implement policies (such as tax reforms and financial world bank group strategy 19 transparency) to reduce informality and discourage illicit As new issues have emerged that require collective action activity. The WBG also contributes by helping increase by the international community, the WBG has increasingly access to finance through capital market development, engaged at the regional and global levels. It has entered into including through bond issuances in local markets. Market many regional and global partnerships on a wide variety of development may require coordinated roles for both the issues, including global public goods or issues with significant public and private sectors—for example, extending finan- regional or global implications (e.g., climate change, financial cial intermediation to traditionally underserved market seg- sector standards, health epidemics, food security, anticorrup- ments (i.e., households and SMEs) may require government tion, and data and transparency). Regional engagements have actions in regulations, financial infrastructure, and payment gained in importance, as the international community looks programs, as well as private sector investments to support to the WBG to step in and encourage others to do so as well. innovative business models. Partners have called on the WBG for a range of regional and global services: to provide intellectual leadership and foster 51. The WBG will continue to play an important role in collective action; develop ideas, international standards, and directly supporting the private sector through financing global indicators; generate knowledge and operational solu- and risk mitigation, often with accompanying advisory tions; convene or develop governance structures; influence services. The first priority is to allow the commercial mar- agendas; and finance specific initiatives. These engagements ket to provide the finance, so as not to undermine the pri- represent an important opportunity for the WBG to make vate sector through subsidies and other distortions. How- an impact on development, but this rapidly growing role also ever, in many cases—particularly in such difficult markets places additional demands on the WBG that it must ensure as low-income countries and FCS, and for innovative pro- are aligned with the goals. jects in middle-income countries—IFC, MIGA, and other private-sector-oriented multilateral or bilateral financing 54. The WBG must make provisions to continue its role institutions can have a significant role. In other cases—for as a major source of global development knowledge and example, in particularly risky markets or segments—direct data as a public service to the international community. financing or risk mitigation from public-sector-oriented The WBG is increasingly providing a global public service agencies such as the IBRD, channeled through govern- by producing development data, such as statistics and ments, is needed. indicators, and making them available. It is well regarded as a producer and disseminator of development research, 52. The WBG, with its ability to work across the public knowledge, and data. The need for knowledge, research, and private sectors, will increasingly promote public- and data is expected to grow as the international com- private partnerships. Such partnerships can contribute to munity demands more evidence to support a results-based improved basic service provision in areas—such as health, approach to development. The WBG is well placed to education, sanitation, and housing—that are essential for provide these services, and has been rapidly increasing reducing poverty and boosting shared prosperity. Another the content that it makes available, without charge, to the area in which public and private partnerships can be general public. Downloads from the WBG’s databases have expanded is climate change, where there is a clear justifica- quadrupled in the past year; there are millions of users every tion for policy action to address a public good. year. Demand for these WBG services will likely grow as work in global commons areas increases. As an example, there will be greater efforts by partners to work together to D. Regional and Global Engagement improve the quality and coverage of indicators related to 53. The WBG will strengthen the strategic alignment of environmental sustainability and to support improvements its regional and global engagements with the two goals. in country systems that produce the underlying data. 20 world bank group strategy 5 .  becomi n g a “ sol u t io n s wbg ” 55. Helping accelerate progress towards the two goals mobilization, flow, and sharing of expertise and knowl- demands a new form of problem-solving engagement edge that is presently fragmented across geographic and by the WBG—one that moves definitively from a project sector units. Front-line teams will be supported by IT mentality to a development solutions culture embedded platforms and other tools needed for evidence-based in widely disseminated knowledge of what works and how decision-making and implementation. Global practices to deliver it. Systematically supporting clients in delivering will also foster learning and career development for customized solutions that integrate knowledge and finan- staff through greater mobility, stronger talent manage- cial services and encompass the complete cycle from policy ment, and better-connected professional communities. design through implementation to evaluation of results lies Certain global practices may be WBG-wide, if there is a at the heart of the WBG’s value proposition. Focusing on business case. As the global practices are designed over results and the science of delivery, seeking transformational the coming months, management structures and staff engagements, and taking informed risks are all part of the incentives will need to ensure a strong focus on multi- development solutions culture. These will require steps to sector approaches to equip the WBG to address complex strengthen WBG leadership, organizational changes and development challenges. shifts in incentives to facilitate the flow of knowledge and deployment of staff expertise, and improvements in the 58. The new global practices will be selected to reflect quality and management of the WBG’s talent pool. WBG comparative advantages, client demand, and evolv- ing development challenges. Maintaining the capacity to engage in sectors across the development agenda (Box 6) A. Using Knowledge for Solutions is essential to supporting clients in delivering customized, 56. More effective use of knowledge is the key to help- multi-sector solutions to critical development challenges. ing clients deliver multi-sector, multi-stakeholder solu- The organization of technical expertise into global practices tions to the toughest development challenges. The WBG will signal selectivity and an emphasis on multi-sector solu- has deep experience in tailoring its services to the needs tions. The choice of areas in which to build the practices of public and private clients, and integrating financial and will be based on evidence of alignment with the goals, the nonfinancial services. However, making the shift to a sys- likely development impact, and comparative advantage, tematic and rigorous development solutions approach will taking into account client feedback. The choice will also require the WBG to sharpen its use of knowledge, includ- be guided by global trends, to keep the WBG at the cutting ing in support of policy dialogue. Building on changes that edge of development challenges. The global practices will have already been made (such as the reorganization of the evolve to reflect changes in development challenges, with IFC global industry practices in May 2013), the WBG will the potential for dynamic entry and exit. The practices will organize to facilitate the generation, sharing, and applica- sharpen decision-making about developing WBG technical tion of knowledge—from inside and outside the WBG—to expertise and staffing, identifying areas for investment in ensure that clients benefit from the findings of worldwide knowledge and learning in shaping the future of the WBG, research and experience, and to help build up local capacity and building partnerships with other actors that are based to generate and use knowledge for development. on complementary strengths. 57. The Bank will create global practices as the corner- B. Achieving Results through the Science of stone of an agile global knowledge and talent organization. Delivery n Global practices will combine the established strengths 59. Development solutions are about achieving results. of local delivery support with the ability to generate, Over the last decade, the development community, includ- share, and deploy knowledge globally, facilitating rapid ing the WBG, has made significant progress in helping response to client demands and focusing on cutting- clients focus on results—developing new methods for edge development challenges. They will strengthen the measuring outcomes, rigorous evaluations of program world bank group strategy 21 Box 6  Sector Expertise across WBG Agencies Helping clients deliver development solutions to com- with such factors as evolving development needs, shifts plex, multidimensional problems like urbanization by other development actors and the emergence of new hinges on the ability to draw in expertise from different actors, and changes in the Bank’s global role. sectors in an integrated manner. IFC and MIGA also intentionally shift their business For the Bank, maintaining capacity across multiple in sectors, in line with the guidance provided by IFC technical areas is important; withdrawing from entire areas of strategic focus and MIGA priorities—shifts sectors is not an option. Indeed, agriculture and infra- that are monitored in annual business reviews. IFC’s structure offer cautionary tales: the World Bank nearly regional focus has shifted substantially; and on the exited the agriculture sector, only to scramble to ramp sector side, decisions to focus on agribusiness, climate up in response to food crises and global food security change, and micro, small, and medium-sized enter- concerns; and its engagement in infrastructure plum- prises led to significant increases in program share. In meted on the assumption that private sector solutions manufacturing, IFC has increased its focus on areas could fill the gap, only to be reinvigorated later. For the where it had critical mass and more successful opera- Bank, the focus within each sector changes continually tions and reduced its focus on other areas. impacts, and new results-oriented instruments—and As practitioners document delivery and measure outcomes, advancing evidence-based policymaking. Yet more needs they will feed experience back to the global level, enabling to be done to refine these tools, enable real-time learning others to learn and adapt their approaches. Over time, these and midcourse corrections, and generalize their effective cycles of learning and action can accelerate to help reduce use. The WBG needs to focus more specifically on how its poverty and build shared prosperity. The use of evidence engagements contribute concretely to reducing poverty and metrics to measure, learn, and adapt stands at the and boosting shared prosperity, as well as how to monitor core of the science of delivery as a more rigorous, scientific and measure results as a Group. One way will be by engag- approach to development. This implies rebalancing incen- ing more systematically with citizen-beneficiaries to gain tives toward deeper client engagement on implementation, insights on the results ordinary people most value, sug- monitoring and evaluation, and learning. gestions about potential risks and ways to address them, and feedback on the effectiveness of WBG-supported 61. To further the science of delivery and the results cul- programs. The WBG is in a strong position to integrate ture, the WBG will: citizen voice in development programs as a key accelerator for achieving results. n Continue the move that has been under way for several years to develop a body of knowledge and practice that 60. The science of delivery centers on ensuring that the recognizes the importance of local conditions and tacit intended benefits of development solutions are realized knowledge to support “adaptive” practitioners who in practice. The science of delivery entails interacting with know that effective delivery is as much about the local clients to help them deliver, sustain, and measure results; and institutional dimensions of delivery as it is about the clients can then scale up the lessons learned from this technical design of development solutions. experience. There are three facets to effective and efficient n Encourage institutions and partners worldwide—includ- delivery: (a) ensuring that the goods and services promised ing through South-South exchanges—to capture and do in fact materialize and are in line with expected costs, share tacit and implicit knowledge, as well as evidence (b) evaluating whether these goods and services benefit the from research and evaluation, and facilitate its migration targeted citizens and result in the intended outcomes, and from and to front-line implementers. (c) adapting iteratively the chosen intervention as needed, or dropping it in favor of alternative approaches, until the n Mobilize support for local implementation strategies via desired impact (including cost-effectiveness) is achieved. knowledge hubs, learning and research, innovation in 22 world bank group strategy impact evaluation, and a variety of approaches to diffu- sequence of incremental steps might appear not to be trans- sion of innovation and knowledge exchange. formational at first, but eventually leads to transformational results when carried out consistently over time. Most trans- n Actively engage with civil society and listen system- formational engagements entail partnerships in which the atically to citizen-beneficiaries to enhance the impact of WBG may play a leading or supporting role. For a growing development programs, provide insights on the results number of client countries, transformational engagements ordinary people most value, and collect feedback on the are about regional integration, involving both game-chang- effectiveness of WBG-supported programs. ing investments and action to address policy constraints n Establish a WBG results measurement community that require a coordinated response by several countries. of practice, strengthen incentives to foster a culture In many instances, transformational activities originate of results, adapt results measurement systems to the from outside the WBG—that is, the WBG is not the source requirements of multi-sector approaches, and address of the transformation but helps scale up success or play a the challenge of measuring the impact of knowledge connector role, communicating a successful experience to activities. other clients. The WBG can expand its role as a platform to disseminate and/or scale up the impact of external develop- n Develop an internal WBG results framework, with the ment innovations with transformational potential. WBG Scorecard at the apex, and with the key elements being reflected down into the VPU/business unit and 64. Greater emphasis on transformational engagements staff performance agreements, as appropriate, while will increase development impact. The WBG will: allowing for VPU/business unit specificities. This frame- work is intended to strengthen the accountability for n Undertake measures based on pilot work already under results throughout the WBG. way to help identify engagements with potentially trans- formational impact. C. Seeking Transformational Engagements n Establish guidelines for planning and budgeting for 62. The WBG will increase its emphasis on engagements potentially transformational engagements, identifying that have the potential to have a transformational effect— and monitoring their risks, and tracking and learn- that is, to improve fundamentally the lives of poor and ing more systematically from the outcome of these disadvantaged people. Transformational engagements may engagements. produce demonstration effects with potential for replication n Review how the WBG’s products can better support or scaling up; generate spillover effects on multiple sectors potentially transformational engagements. of the economy, including broader changes that increase government effectiveness or stimulate private investment; n Provide staff with the resources and incentives to work result in far-reaching, sometimes unanticipated, impacts; or on these (often long-term) engagements, and develop help client countries, regions, or even the entire developing mechanisms to monitor their progress and outcome. world shift to a higher and/or more sustainable develop- This will involve commitment and clear signaling by ment path (Box 7). These engagements are often multi-sec- WBG Senior Management. tor in design and often involve a mix of knowledge services, policy reform, and investment. Typically, such engagements D. Taking Smart Risks involve very strong client ownership. 65. In shifting to a “solutions” culture, the WBG needs 63. There is clearly scope to be more ambitious in seek- to focus on smart operational risk-taking while preserv- ing transformational engagements while recognizing the ing its internationally respected fiduciary, integrity, and added costs, longer time horizons, and risks of failure. safeguards norms. Risk aversion leads to missed oppor- Transformational engagements generally involve greater tunities and limits the ability to maximize development risks and require longer time horizons to realize results. impact, including by carrying out experimentation and Indeed, some transformational engagements are not iden- innovation in the search for optimal development solu- tifiable ex ante, as the true transformation is not apparent tions. The WBG’s complex operational risk management until after completion of the activity. In certain cases, a structure, time-consuming compliance, and inadequate world bank group strategy 23 Box 7  Examples of Transformational Engagements Over the years, the WBG agencies, individually or Regional Impact. The Efficient Securities Markets jointly, have supported a wide range of activities that Institutional Development (ESMID) program is a are now considered to have been transformational— multi-Region, joint WB/IFC effort to develop securities from eradicating river blindness, to helping reform markets to provide financing for infrastructure, hous- public procurement in China, to facilitating the scale- ing, and private sector growth. To date, ESMID has up of conditional cash transfer programs in Latin facilitated $950 million in bond issues in East Africa America and the adaptation of the model to other and has supported the development of a regional bond regional contexts. As the following additional examples issuance framework. The time needed to approve bond illustrate, such activities have taken place in countries, issues in Kenya and Tanzania has dropped to 45 and across regions, and even globally. 60 days, respectively, from about 270 days. ESMID has also supported the establishment of a regional institute Country Impact. Turkey’s Decade of Energy Sector that has trained over 2000 participants. Reform Program improved energy security through regulatory reforms, electricity market development, Global Impact. The Equator Principles are a set of vol- private investment, renewable energy, and natural gas untary standards, based on IFC’s Performance Stand- development. The Bank has engaged since the 1990s ards, that the banking industry uses to address environ- with investment, advisory services, and policy lend- mental and social risks in project finance. Introduced ing; IFC has leveraged private sector investors. The in 2003, the Principles have become the de facto gold program has resulted in billions of dollars of private standard in the project finance marketplace. investment for power generation and distribution, and The Bank’s path-breaking initiatives on informa- transformed Turkey into a major regional transit hub tion disclosure have served to increase transparency in for natural gas. development finance worldwide, spurring other devel- The Bujagali Power Project, approved in 2007, dou- opment agencies to publish more operational data. The bled Uganda’s electricity generation capacity. The joint WB’s landmark policy on Access to Information (2010) engagement of IDA, IFC, and MIGA crowded in one makes public information about project activities, of the largest private financings in the power sector in financial flows, analytic and advisory activities, and Sub-Saharan Africa. Partnering with the Government Board proceedings. The Open Data Initiative ensures of Uganda and other aid agencies, the WBG provided free and open access to development statistics. Bank $800 million in financing and guarantees, while ensur- adherence to the International Aid Transparency Ini- ing environmental, social, and economic due diligence. tiative provides users with access to data in a machine- Bujagali established a model for WBG collaboration in readable and globally comparable format—data that the power sector that is being replicated in other IDA country clients have used in macroeconomic policy, countries. fiscal planning, and budget management. support to teams for risk management reduce operational n A unified operations risk management framework will efficiency and limit the institution’s comparative advantage. be established that is focused on client systems and The WBG needs to manage risk better to focus on develop- results. The unified approach will shift the focus to the ment impact, increase delivery speed, and improve agility. risk to development results, with client risks and the use The key is to change the risk culture for operations and of client systems and institutions at the center. It will reduce the costs of doing business. IFC is ahead of the Bank deepen and expand the new accountability framework, in this area; because IFC and MIGA clients and products are establish clear risk tolerances at the portfolio level with different, the institutions approach risk differently. Smart clear escalation protocols for decision-making, and risk-taking will help clients to strengthen their capacity, and introduce a simplified tool focused on key risks to devel- it will require an accountability mechanism that comple- opment objectives that are mapped to a consistent set of ments compliance with a focus on outcomes. risk categories. 24 world bank group strategy n The WBG will take actions to instill and nurture a culture formulation and interpretation) that supports informed of informed risk-taking: develop a common set of values risk management and moves resources to work directly and behaviors, implement a culture change process, step with clients. It will also work to improve the effectiveness up peer learning, and cut churning on high-risk activi- of WBG management interaction with such oversight ties with potentially transformational impact. It will entities as the Inspection Panel and the Integrity Vice put in place an institutional structure (including policy Presidency. 6 .  opera t io n ali z i n g t h e goals a t t h e co u n t r y le v el 66. Operationalizing the goals means working with supply pressures to carry out specific programs and estab- clients to help them identify and address the biggest lish an effective mechanism to reconcile country demands challenges and opportunities to reducing poverty and with the goals. Better planning and execution are essential, building shared prosperity in a sustainable manner. The with more attention devoted to appraising evidence, using emphasis is on working as One WBG, with each agency knowledge, and applying midcourse corrections as needed. adapting its specific business model to ensure alignment Finally, improved quality control and monitoring are criti- with the goals, maximum development impact, and com- cal to enhance accountability and learning—in this context, parative advantage. For the Bank, this means improving greater attention needs to be paid earlier on to ensuring the the focus of country programs within the existing model, evaluability of programs, and to strengthening capacity for based on country demand and international principles monitoring and evaluation. of aid effectiveness. For IFC and MIGA, it means guiding decisions about investment and advisory services by the 68. The WBG will establish a more evidence-based and two goals and exercising selectivity within their strategic selective country engagement model. At its core, the new focus areas. For private sector clients, alignment with the engagement model seeks to maximize the use of evidence goals through selectivity will be based on the principles of and analysis to help country clients focus on the challenges development impact, financial sustainability, leverage, and of meeting the two goals in the context of country owner- additionality. For the WBG as a whole, it means stepping ship and national priorities, and in coordination with other up regional coordination to enhance collaboration at the development partners at the country level. The model com- country and regional level. Operationalizing the goals will prises three main elements: be a difficult challenge involving extensive stakeholder par- ticipation, learning by doing, and adapting the approaches n A Systematic Country Diagnostic (SCD) that uses data over time. and analytic methods to support country clients and WBG teams in identifying the most critical constraints to, and opportunities for, reducing poverty and pro- A. Improving the Focus of Country Programs moting shared prosperity sustainably, while explicitly 67. To help country clients accelerate progress toward considering the voices of the poor and the views of the the goals in the context of their national development private sector. The SCD will build on available analysis programs, the WBG will improve the focus of its country and diagnostic work—including government studies, programs. A strength of the WBG is supporting countries WBG reports such as Country Economic Memoranda with strategy and advice. While today’s country strate- and Poverty Assessments, and studies by other develop- gies are broadly aligned with the WBG’s mission, it needs ment partners—a key distinction being that SCDs will to provide clients with more coordinated and focused focus on the two goals, and on identifying the most criti- programs: activities and interventions need to be better cal, pressing actions, not a comprehensive list of policy prioritized according to their expected impact on the goals. recommendations. The SCD’s findings will guide policy In particular, the WBG needs to move away from internal dialogue with country authorities, and can be widely dis- world bank group strategy 25 seminated to encourage coordination with development and data to assess progress in poverty reduction and shared partners and dialogue with domestic stakeholders. prosperity, and to account for sustainable development. Working with development partners, the WBG will launch n A Country Partnership Framework (CPF) that will describe a new initiative under which member countries will be focus areas for WBG support, aligned with the country’s requested to gather relevant data and improve access to and own development agenda and selected primarily to dissemination of these data through a global database. address the key constraints and opportunities identified in the SCD, bearing in mind client demand as well as 70. The new CPF will be accompanied by action to the comparative advantages of each WBG agency and enhance its effectiveness in practice: other development partners. For each focus area, the framework will outline the most promising interven- n A clearly defined monitoring and incentive framework tions, the underlying working hypotheses and supporting will be established for each CPF to set targets, assess pro- evidence, expected outcomes, and lead indicators. This gress, and reward selectivity, results, and learning. more rigorous emphasis on the analytical framework and evidence-based alignment with the goals distinguishes n New planning and budgeting guidelines will support the CPF from the current Country Partnership Strat- selectivity and provide for cost-effective implementation egy/Country Assistance Strategy (CPS/CAS) that it will of the CPF. replace. Implementation plans supporting the CPF will n A new support and review process will be introduced to guide how country teams aim to achieve the results set provide necessary quality control for the SCD and CPF. out in the CPF, including the broad mix of anticipated WBG services. These plans will facilitate collaboration n Priority will be accorded to building staff capacity and within and across sectors and WBG institutions. skills to use the new instruments (SCD, CPF, and Per- formance and Learning Reviews) effectively. n Performance and Learning Reviews will identify and capture lessons from implementation to determine mid- n Initial funding has been allocated in the FY14 budget for course corrections, end-of-cycle learning, and account- the global initiative to improve country data on poverty, ability, as well as to help build the WBG’s knowledge shared prosperity, and sustainability. base, including effective approaches for integrating inclusion and sustainability dimensions (including gen- B. Strengthening WBG Regional Coordination der and environmental sustainability) into the SCD and CPF. They will replace Country Portfolio Performance 71. The WBG will strengthen regional level coordina- Reviews and CPS/CAS completion reports, and will pro- tion among the Bank, IFC, and MIGA. Improved WBG vide inputs for subsequent diagnostics. coordination is a key issue: currently, priorities are rarely set by and for One WBG, and coordination of activities at 69. Implementing the CPF will be challenging, and there the country and regional level is often ad hoc. To address will be a need to adapt it to specific country circum- this, a new Regional Coordinating Mechanism (RCM) stances. First, country ownership will remain critical. In sit- will be introduced to complement the CPF. The RCM will uations where the alignment between country demands and recognize that the Bank operates primarily at the country the goals remains unclear, the WBG will work with country level, while IFC sets priorities, programs, and results at the clients to deepen the analysis, understand the political regional level and MIGA determines its operational focus at economy, and pursue dialogue in an effort to help clarify the sector level. The RCM will also help the WBG improve the most appropriate and promising pathways toward the its engagement with regional institutions and enhance the goals and build social consensus. Second, partnerships focus on regional projects with potentially transformational will be essential. WBG country teams will work with key impact. It will build on the successful attempts to improve partners at the country level, including the IMF and MDBs, coordination of activities that have been emerging in certain encouraging them to engage in the SCD process and seeking Regions. Under the RCM, Bank and IFC Regional Vice- their input into the formulation of CPFs where appropriate. Presidents and the MIGA Vice-President will meet quar- Third, data availability will be a limiting factor, particularly terly to agree in which countries to carry out joint SCDs/ in countries with weak country statistical systems: only one- CPFs, and in which focus areas to have joint implementa- quarter of WBG member countries have adequate capacity tion plans. 26 world bank group strategy 7 .   wor k i n g wi t h par t n ers t oward t h e goals 72. Meeting the goals demands deepening partnerships n Engaging in institutional partnerships (e.g., the UN for that bring together the resources, expertise, and ideas of FCS and the EU for accession countries) that focus on actors across the development spectrum. No one agency specific development issues for certain client segments. alone can help countries reach the goals, and the WBG will n Partnering with international bodies and other actors to promote a call to action for all development actors to work advance issues such as governance and anticorruption, in concert. Partnerships need to operate on every scale, from SME finance, capital markets, finance for women, road multibillion dollar programs with global constituencies to safety, food security, urban development, and inclusive village cooperatives. The WBG’s engagement with constitu- business. encies on issues across the development spectrum allows it to help bring together the development community to sup- n Partnering with development finance institutions, port transformational development solutions and focus on including by participating in, and sometimes managing, results. However, this requires the WBG to deepen its role investment vehicles. in promoting partnership, ensuring strategic alignment of n Collaborating with the IMF and other MDBs to share its partnerships with the goals, and making provisions for standards, cofinance projects, and together influence the partnerships to be adequately resourced and managed. broader development agenda. n Entering into partnerships with foundations to share A. Working with Partners good practice, convene key stakeholders, and develop 73. The Bank, IFC, and MIGA have participated in a wide programs. variety of partnerships for development. Partnerships pro- vide an opportunity to engage with diverse actors, including 74. There has been a surge in partnership programs in CSOs, multilateral and bilateral agencies, academic institu- the WBG over the past decade. In 2011, some 186 Bank tions and think tanks, foundations, and the private sector. programs received close to $7.5 billion in donor contribu- They provide a way to harmonize development policies tions and disbursed $6 billion. This substantial role illus- and practices—at the country level around country priori- trates that development partners have confidence in the ties, and at the regional and global levels. Partnerships help WBG to provide fiduciary oversight, entrée into country shape the global development agenda (e.g., gender, climate, programs, and support for global agendas and international green growth, global health, governance and transparency) standard-setting. Trust funds—with funding from donors, and help ensure that the development community speaks other multilaterals, and increasingly from private founda- with one voice. They foster collective action, develop ideas, tions/philanthropy—account for one out of every 10 dollars and promote international standards. Partnerships repre- the Bank disburses to client countries today. They support sent a broad range of collaborative relationships. For exam- nearly one-quarter of the Bank’s administrative spend- ple, the WBG is: ing and are now solidly embedded in the Bank’s fiduciary controls and operational systems. Trust funds are also an n Working with better-off developing countries that are important instrument for IFC, particularly for helping cli- increasingly providing knowledge, experience, and, in ents prepare and manage investments. some cases, finance to the poorest countries. The WBG supports these emerging partners, encouraging South- B. Aligning Partnerships with the Goals South exchanges. 75. Achieving the goals entails new partnership efforts n Working at the country level with governments and to mobilize the international community. Successfully partners to ensure that approaches are well coordinated overcoming the toughest development challenges to ending and contribute to national development priorities; and poverty and building shared prosperity requires collective collaborating with CSOs, local communities, nongov- action at all levels. The WBG will lead or follow others, ernmental organizations, and grassroots organizations to as appropriate. Particular emphasis needs to be placed on foster ownership, delivery, and feedback. relationships with other multilateral organizations, notably world bank group strategy 27 Box 8  Partnering in the Great Lakes Region of Africa The Peace, Security and Cooperation Framework bro- n Generate 80 MW to be equally shared among kered by the AU, SADC, and the UN was signed in Feb- Burundi, Rwanda, and Tanzania and develop the ruary 2013 under the auspices of the UN and the AU. transmission network that will enable power inter- The United Nations Secretary-General appointed a changes in the region. Special Envoy for the Great Lakes Region to work with n Be the first of its kind in East Africa that involves the parties to the Framework to deliver on their com- three countries with major energy deficits. mitments. The European Union is a long-term supporter of n Save on expensive thermal power with considerable regional institutions and programs in the region. economic, social, and environmental benefits. The African Development Bank is pursuing a strategy of regional infrastructure and capacity. n Feature an agreement to structure the project as a The European Investment Bank is supporting infra- publicly owned but privately managed operation. structure. n Support regional integration that will help build The WBG has proposed a comprehensive package of confidence for the region’s peace, stability, security, support of about $1 billion, including the potentially and development. transformational Rusumo hydropower plant for which US$340 million in IDA funds was approved in August. The project will: the UN agencies and the other international financial insti- to contribute to and align with the WBG’s country-based tutions. An encouraging example of such engagement is the work and global program initiatives, whether by facilitat- regional partnership to promote peace and security in the ing innovation, scaling up operations, or enhancing donor Great Lakes Region of Africa, which can serve as a model harmonization. for other FCS (Box 8). 77. The Bank has launched the next phase of trust 76. The WBG needs to ensure that its partnerships are fund reform and developed a management framework well aligned with the goals and that they draw on its that will strengthen the strategic focus for partnership comparative advantages. To date, fund-raising has been engagements. largely decentralized, and there has been little focus on corporate management of partnership programs. There is n The new management framework for partnership pro- a need for more strategic decision-making around which grams provides for more consistent decision-making partnerships to take on, what partnership programs to based on greater clarity about the Bank’s roles and host, what roles the WBG should play, what type(s) of accountabilities and about the choice of financing mech- financing mechanism(s) to use, and when and how exits anism, with special attention to financial intermediary should be considered. Partnerships need to be able to funds. It takes a “life-cycle” approach based on three demonstrate clear impact on global agendas and country phases: (a) identification, preparation, and approval; programs. The WBG also needs to ensure that its global (b) operational and portfolio management of ongoing engagements complement country programs and that any partnership programs, including robust results frame- conflicts are productively reconciled. The decision-making works and ongoing risk management; and (c) planning process for partnership programs—regional or global ini- and managing possible exits. The framework emphasizes tiatives financed through trust funds—needs an explicit strategic alignment, oversight, and risk management. strategic focus, and institutional responsibilities for over- sight of partnership programs across the WBG need to be n The next phase of trust fund reform will center on ensur- clarified. Trust funds and partnerships must be managed ing that trust funds support progress toward the two 28 world bank group strategy goals. A more coordinated fund-raising approach and opment finance institutions are investing side-by-side with the new strategy-driven budgeting process will provide IFC. MIGA works intensively with other insurers to create opportunities for integrated revenue and expenditure capacity and manage risk, especially in large and long-term planning, thereby strengthening the strategic alignment projects. MIGA also frequently works alongside other of trust funds. development institutions—especially national export credit agencies—to help structure projects and catalyze produc- 78. Reforms to strengthen the strategic alignment of tive investment, and it is significantly expanding its efforts trust funds and partnership programs will set the stage to mobilize capital through insurance products. for managing WBG global engagements as more explicit business lines. This involves establishing clear policies for 81. The WBG will strive to further leverage resources budgeting, cost recovery, and results monitoring of WBG and partnerships in the private sector. global engagements. Ensuring that global engagements are managed as well-defined business lines will enhance their n The WBG is expanding its activities in capital market development impact and sustainability. development and financial products, exploring innova- tive ways of financing infrastructure and other projects. It is also exploring scaling up its work on financial access C. Partnering with the Private Sector by firms and households, and increasing support across 79. Private sector resources and expertise are critical the WBG through the new Financial Development to achieve the goals. Given the scope of the development Council. challenge and the limited resources of its agencies, the WBG must crowd in the private sector on a much greater n IFC is launching a client relationship model to develop scale than in the past. In addition to increasing financial long-term partnerships with clients according to their resources, partnership with the private sector can create potential for development impact and their contribution jobs, transfer technology, build skills, and promote innova- to IFC profitability. Many IFC clients are now actively tion and entrepreneurialism. The WBG is using multiple involved in programs to enhance the development mechanisms to help scale up impact in the private sector: impact of their operations. Under the new model, key (a) mobilizing international and local capital, (b) leveraging partners will be mobilized for each industry group and partnerships, (c) setting global standards, (d) supporting type of advisory service. This presents an opportunity improvements in the investment climate, and (e) seeking for IFC to engage more deeply with clients to share projects with potential to promote innovation, generate knowledge on development and results, and potentially demonstration effects, and/or have transformational impact. to work with them in a partnership to invest in and grow their businesses with a focus on development impact. 80. The WBG has long-standing experience in mobiliz- n Working with partners is an essential part of MIGA’s ing private partners, and plans to expand these efforts. All business model. MIGA has set up arrangements to WBG agencies partner with the private sector. For example, expand its business development reach through such IBRD’s pioneering of green bonds, followed by IFC and methods as a formal cross-marketing agreement with the other issuers, has catalyzed the new green bond market IFC and World Bank Treasury. Given the nature of the that helps mobilize increased private capital for climate- guarantee business, which revolves around leveraging, smart projects. Through the syndication program, the Asset MIGA will continue developing such partnerships to Management Company, and other initiatives, IFC is work- scale up new business and increase impact. ing to extend its cofinancing platforms to sizable pools of alternative investors such as sovereign wealth, institutional, n There is scope for expanding the use of guarantees across pension, and philanthropic funds. Increasingly, other devel- the WBG, particularly for large infrastructure projects. world bank group strategy 29 8 .   wor k i n g as o n e world ba n k gro u p 82. Working as One World Bank Group focused on the (a) Management signals for collaboration at all staff levels goals is vital to the WBG Strategy. Building on recent must be strong; (b) collaboration at the management level actions to integrate corporate support functions, collabo- needs to clearly established and exercised; (c) constructive ration across the WBG will be increased systematically, and relationships and trust must be fostered among staff work- planning and budgeting processes will be better coordi- ing across the WBG; (d) greater effort is needed on aligning nated at the corporate level. The WBG has identified spe- strategy and planning to complement alignment at the pro- cific areas for greater collaboration—from business plan- ject level; and (e) compatible systems, such as IT and knowl- ning to transformational projects to joint corporate focus edge management, are required to enable collaboration. on key emerging development issues. These initiatives will be reinforced by stepped-up efforts to align policies and A. Scaling Up Collaboration practices and promote changes to the operational cultures of each agency to recognize and appreciate how working 84. Working as One WBG means scaling up collabora- together will benefit the world’s poor and disadvantaged tion. Enhanced collaboration will better exploit synergies people. and will also ensure uniform messaging to governments with respect to the appropriate mix of private and public 83. It will take time, concerted effort, and a continual provision, particularly for sectors such as social and physical change process to realize the full potential of working as infrastructure, the financial sector, and rural/agricultural One WBG. There is a solid basis for deepening collabora- development. tion significantly while maintaining the individual identi- ties, distinct client focus, and particular strengths of the 85. The new CPF will mainstream joint business plan- Bank, IFC, and MIGA. The lessons learned from earlier ning as the backbone for strengthening operational col- initiatives to improve collaboration at the institutional level laboration. Better operational collaboration will reinforce guide current efforts (Box 9). These lessons suggest that the impact of WBG activities on the two goals. The Regional Box 9  Initiatives to Improve WBG Collaboration Past attempts to increase collaboration among the MIGA and IFC have also attempted to increase incen- Bank, IFC, and MIGA have met with varying degrees tives to collaborate. In FY10, MIGA and IFC established of success. Senior Management Committees existed in a formal business development partnership through various forms between 1989 and 1999. A number of which both institutions leverage their strengths to offer joint departments have been set up and subsequently more seamless service to private sector clients and pro- disbanded over the past two decades: global industry vide innovative solutions to countries. IFC brings its departments, Private Sector Development and SME global presence, extensive client base, and wide range Departments, and the Privatization Advisory Depart- of investment products, while MIGA brings its unique ment. A few business units are currently joint, includ- set of political risk guarantees and understanding of the ing the Investment Climate Department, the Global dynamics and management of political risk. Indicators and Analysis Department, the Financial and In December 2012, the decision was taken to inte- Private Sector Development Vice-Presidency, and the grate corporate support functions—Human Resources, IFC-MIGA Business Development Unit. Between 2008 External and Corporate Relations, and Information and 2011, the IDA-IFC Secretariat made progress on Technology Solutions—across the WBG to make the a number of specific initiatives to improve WBG col- best use of resources, professional skills, and institu- laboration, but many of them were stalled when the tional knowledge. The new WBG Integrated Services Department was disbanded. organizational structure was launched in July 2013. 30 world bank group strategy Coordinating Mechanism under the CPF will provide the n As a start, the WBG has launched a review of its range of key platform for strengthening joint planning. Regions, advisory services to governments related to private sector with East Asia and Pacific in the lead, have begun carry- development, with a view to clarifying and rationalizing ing out joint planning efforts focused on prioritizing joint responsibilities, maximizing effectiveness, and bringing country-level activities. Joint business planning will also high value and timely service to clients. build on ongoing efforts at the sector level. For instance, in 2009, a Bank-IFC team developed a joint strategy and action 88. Efforts at the regional, country, and project levels to plan for development of Lao PDR’s hydropower resources. scale up collaboration must be complemented by changes in More recently, a joint IDA-IFC-MIGA team developed a incentives, enabling policies, and practices, and by training. comprehensive Energy Business Plan for Nigeria. MIGA has moved toward collaborative planning, primarily through n WBG management intends to set objectives and measure alignment with Bank and country priorities. MIGA’s under- collaborative behavior, and to reward staff for it. Cor- writers consult with Bank colleagues to ensure that pro- porate metrics will be developed, such as an indicator posed projects are fully consistent with the country strategy that captures inter-institutional mobilization among the and policy dialogue with the government. Bank, IFC, and MIGA that can be tracked and reported in the WBG Corporate Scorecard. 86. The WBG will increase the number of joint projects. n WBG safeguards are highly valued by many clients and At present, the level of collaboration is low: out of over 400 stakeholders, but different environmental and social IFC projects annually, approximately 20 are joint projects, policies (the Bank’s Safeguards and IFC’s Performance representing only about one percent of Bank lending. There Standards, which MIGA also uses) hinder the ability to is somewhat more collaboration on advisory services: 15-20 work effectively as One WBG. Moving to harmonized percent of IFC’s advisory projects involve collaboration policies for the WBG, following IFC’s performance- with the Bank. Broadly speaking, there are two types of based approach—in a manner that is consistent with joint WBG projects: (a) joint financing of a single project, a the Bank’s Articles of Agreement and recognizes the recent example of which is the Kenya Private Sector Power different needs of public and private sector clients—will Generation Support Project (2012), which uses IFC’s long- promote better coordination. This process will take into term debt, IDA partial risk guarantees, and complimentary account the results of the Bank’s ongoing safeguards MIGA guarantees for commercial financiers to mobilize review and consultations process. private sector financing as a key element of the risk miti- gation framework to support the country’s independent n WBG management has recently issued inter-institutional power producer program; and (b) a sequence of projects with guidelines for managing operational conflicts of interest a shared objective and strategy, utilizing a range of WBG as part of its broader push to promote collaboration and products and services—for example, development of the in response to perceptions of conflict of interest as a rea- water sector in St. Lucia over the course of 2001 to 2010. son to not engage with the other agencies. Both types of joint projects need to be scaled up. n WBG management will launch an initiative to develop training modules on WBG products and services and n Given the vast needs for infrastructure in client coun- embed them in existing training programs to address the tries, the WBG will explore mechanisms to promote a broad lack of knowledge and understanding at almost stronger pipeline of joint infrastructure projects. all levels of staff about what each agency does and what products and services are offered. 87. To support scaling up, the WBG will review its port- folio of products and services to improve synergies and B. Joint Learning and Collaboration eliminate overlap. The extensive portfolio of products and services across the WBG has greatly facilitated customiza- 89. The WBG has an established track record of invest- tion to different clients and filled a variety of development ing in thinking and learning around key development gaps. However, as the WBG agencies have often undertaken issues to equip the institution to pursue its mission. Yet product development in isolation of each other, there are this has been accomplished primarily at the agency level; inevitable overlaps in some products and services. only infrequently have the WBG agencies joined forces at world bank group strategy 31 the corporate level to focus on a particular development of stepped-up learning and collaboration may be reflected issue or to promote innovation. As the WBG now focuses in operations, although not in every country program. on well-defined goals, its agencies enhance collaboration, Management intends to develop a governance framework and global practices are established, this is an opportune for these issues, and to review them regularly as part of the time to consider important issues emerging on the develop- corporate planning process. ment horizon in which the WBG can make a difference by shaping thinking about how best to promote growth, inclu- 91. Management is currently considering four issues for siveness, and sustainability. joint WBG learning and collaboration. The first is fragility and violence: joint learning and collaboration would focus on 90. In support of the goals, Management is considering ideas to improve social sustainability and build safer commu- a small number of development issues for which to step nities and enhanced livelihoods, including through citizen/ up joint learning and collaboration. These are issues on community security, slum upgrading, reducing urban vio- which work may be ongoing within each agency, but for lence, and improving the lives of and creating jobs for margin- which enhanced joint collaboration is expected to support alized groups. The second is connectivity, for which joint work achieving the goals. The issues will be selected because they would look at ideas to link poor and disadvantaged people will position the institution to respond to global trends and with opportunities, including through trade, infrastructure, could have potentially transformational impact on the two and financial networks—linking households and businesses to goals. Internally, they will further collaboration and learn- services, markets, and economic activity at the local, national, ing across the institution and help build institutional com- and global levels, and increasing the resilience of these net- parative advantage. Stepped-up learning and collaboration works. The third issue is climate change, which would focus are expected to result in improved evidence of impact on on scaling up action on low-carbon climate-resilient cities, poverty and shared prosperity; new products (e.g., toolkits climate-smart agriculture and sustainable energy; building and innovation); enhanced core capabilities; changes in capacity and evidence to shape climate-resilient development; systems and processes; and/or improved ways of working improving financing flows and pricing; and global advocacy across the WBG. These areas have the potential to influ- for climate action. The fourth issue is gender, which could ence global discourse and could position the WBG to take address such topics as gender-based violence, inequality at leadership on key development issues. Over time, the results work, and discrimination under law. 9 .   o u t come of t h e s t ra t eg y 92. The Strategy envisages a WBG that has catalyzed the A. Key Outcomes of the Strategy development community to seize the opportunity to win 93. The Strategy sets out the vision for a repositioned the age-old struggle against poverty and exclusion. The WBG that helps clients address the most difficult chal- repositioned WBG will have adapted to the mega-shifts in lenges to reducing poverty and building shared prosper- the global development landscape. Working with partners, ity. The repositioned WBG will: and working with a renewed spirit of internal cohesion and efficiency, the repositioned WBG will systematically n Align all WBG activities and resources to the two goals, support countries in identifying and implementing tailored maximize development impact, and emphasize WBG development solutions that serve poor and vulnerable comparative advantage. people as they build a better future for themselves and their children. It will have demonstrated its enduring value n Operationalize the goals through the new country as the world’s unique global multilateral development engagement model to help country clients identify and institution. tackle the toughest development challenges. 32 world bank group strategy n Be recognized as a Solutions WBG offering world-class porate Scorecard. The apex of the revised Corporate Score- knowledge services and customized development solu- card will measure joint WBG results. It is envisaged that tions grounded in evidence and focused on results. this apex will comprise (a) country-level progress toward the two goals in the context of environmental, social, and n Seek transformational engagements and take smart risks. economic sustainability, (b) WBG contributions to these n Promote scaled-up partnerships that are strategically goals, and (c) internal WBG effectiveness indicators that aligned with the goals, and crowd in public and private will track strategy implementation and the ongoing change resources, expertise, and ideas. process (Box 10). The indicators in this WBG apex will cascade down into indicators for each of the WBG agencies n Work as One World Bank Group committed to achiev- in their individual scorecards. As a living document, the ing the goals. revised Corporate Scorecard will be improved and refined over time. The WBG will also use the annual Global Moni- B. Implementing the Strategy toring Report to report on global and country-level progress 94. The Strategy will be carried out through implemen- in ending extreme poverty and promoting shared prosper- tation plans that support an effective and efficient WBG. ity sustainably. Finally, the WBG will continue to conduct The forthcoming Implementation Paper will describe the regular client surveys to gauge the degree of client satisfac- needed changes in structures, systems, and business pro- tion as the ultimate measure of success. cesses, as well as the timetable and actions for carrying them out. It will build on the earlier Bank modernization effort 96. The repositioned WBG will be supported by a rea- and the progress made by IFC and MIGA in recent years, ligned financial strategy based on the principle of financial and cover the ongoing change process across the institution. sustainability and supported by a One WBG approach that Many of the change elements underpinning the Strategy will will better serve clients. A significant scaling up of the finan- be rolled out in the coming months, but some may not be cial strength of the WBG is vital to effective implementation of fully implemented for 1–2 years. the WBG Strategy and the institution’s ability to play a leader- ship role. The magnitude of the resource needs will require 95. Implementation of the Strategy and the change pro- the WBG to work closely with other partners, both public and cess will be monitored regularly through the revised Cor- private. Accordingly, although the WBG does not face imme- Box 10  Potential Areas for WBG Strategy Results Framework Tier One (country-level data) Tiers Three and Four n Poverty goal Possible areas for monitoring could include: n Shared prosperity goal n Leveraged resources Sustainability indicators—environmental, social n  n Transformational projects and economic One WBG—joint projects and regional business n  planning Tier Two n Improved knowledge flows Draw on existing Tier Two indicators common to all n Systematic country diagnostics agencies, e.g. Greater strategic alignment of partnership n  n Private capital mobilized by WBG programs Number of people reached by infrastructure n  services Additional indicators will be inserted n  (to be updated and refined by new global practices) world bank group strategy 33 diate financial concerns, its financial capacity will need to be 98. Steps to strengthen WBG leadership, values, and strengthened. To this end, the WBG’s financial model will be culture will help drive implementation, together with realigned to strengthen financial sustainability and expand improvements to human resource management and the financial capacity. Efforts to achieve these two interrelated WBG’s global footprint. A leadership vision and revised and mutually reinforcing objectives will be underpinned by values charter will guide all staff in implementing the Strat- a collaborative One WBG approach that draws on the com- egy. Dedicated and experienced staff represent the WBG’s parative advantages of each of the WBG institutions, so that most important asset. While WBG staff are generally highly together the WBG is able to do more than when each agency motivated, there is a need to improve the management of works separately. Accomplishing this realignment will require this global talent pool. Reforms will focus on (a) improving consideration of measures on revenues, costs, and financial managerial effectiveness; (b) proactively managing careers capacity, to increase financial resilience as well as grow the and talent; (c) rewarding and recognizing staff differentially WBG’s ability to do more. Some measures can be imple- on the basis of their performance, skills, and market valua- mented immediately, while others will require more work and tions; and (d) leveraging the WBG’s global workforce. The consensus-building among shareholders. Over time, these aim is to move the WBG toward a performance-based cul- efforts will result in a leaner, more efficient, and financially ture and world-class talent management to ensure that the stronger WBG that is better positioned to serve its clients. right people are in the right place at the right time, and doing the right things in support of the two goals. These reforms 97. Resources will be aligned to the Strategy, and WBG will be complemented by action to support increased mobil- efficiency will be improved. A new budget process will ity of staff and improve connectivity and knowledge flows align resources with the Strategy and goals. It will capture through investments in technology. Decisions on optimizing all revenues and expenses; support increased coordination WBG field offices will follow the design of global practices across the WBG; focus on results; strengthen incentives for and development of the realigned financial strategy. cost savings, revenue enhancement, and selectivity; and provide more flexibility. It will be simplified and stream- 99. While the opportunity is historic, bold steps will be lined. Efficiency will be improved using a three-pronged needed by all stakeholders and the risks are multifold. The approach: (a) a right-sizing exercise will reduce costs and WBG faces significant risks to delivering on its commitment complexity, enhancing the WBG’s ability to target resources to the two goals, particularly if it falters in implementing to areas of strategic focus; (b) the WBG will aim for greater the actions identified in the Strategy. Management will (or full) cost recovery on stand-alone fee-based businesses need to meet its commitment to keep the WBG relentlessly and trust funded programs; and (c) consideration will be focused on the goals, to offer clients world-class develop- given to rationalizing budget-funded grants. The right-siz- ment solutions, and to operate truly as One World Bank ing exercise will use objective benchmarks to tie the size and Group, as well as to move ahead with changes to make the composition of units across the WBG to the Strategy. The organization more efficient and stronger. Continued strong overall goal of the initiative is a net reduction in costs while engagement with the Board of Executive Directors and the retaining or expanding the capacity to deliver value to WBG Governors will be decisive to address key areas such as the clients (this may require some targeted reinvestment). The budget and financial sustainability, and to support the shift scope will cover all activities: core operational functions as to a “Solutions WBG.” Achieving the goals will depend on well as finance, administrative, and corporate functions. each member government and the international commu- The work will be closely integrated with the development nity as a whole demonstrating the political will to focus on of the global practices to ensure that the implementation is the poor and disadvantaged, and to act in partnership with cost-effective. The FY15 budget will reflect the prioritiza- the private sector and civil society. Effective global action tion and sequencing to be outlined in the Implementation will require that all countries and multilateral institutions Paper, and will bring together the right-sizing exercise, the demonstrate a renewed capacity to collaborate. Together, work on global practices, and the other elements of the we can do what it takes to end poverty and build shared change agenda. prosperity in our time. 34 world bank group strategy © 2014 The World Bank Group 1818 H Street NW, Washington, DC 20433 Telephone: 202-473-1000; Internet: www.worldbank.org Some rights reserved 1 2 3 4 16 15 14 13 This work is a product of the staff of The World Bank Group. “The World Bank Group” refers to the legally separate organizations of the Inter- national Bank for Reconstruction and Development (IBRD), the International Development Association (IDA), the International Finance Corporation (IFC), and the Multilateral Investment Guarantee Agency (MIGA). 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