Fiscal Year 2016 Highlights

Ending Extreme Poverty and Promoting Shared Prosperity in a Sustainable Manner

The work of the World Bank is anchored in its goals: to end extreme poverty—reducing the share of the global population living in extreme poverty to 3 percent by the year 2030—and to promote shared prosperity—increasing the income of the bottom 40 percent of the population. Both of these goals must be met in a sustainable manner. World Bank projections suggest that for the first time in history, the number of people living in extreme poverty has fallen below 10 percent of the global population.

Despite this good news, hundreds of millions of people still live on less than $1.90 a day, the current benchmark for extreme poverty. The work is far from over, and a number of challenges remain if the comprehensive vision for global development—as articulated by the Sustainable Development Goals (SDGs), the 2030 Agenda for Sustainable Development, and the World Bank’s own goals—is to be met.

Click the headings to navigate the chapter:
Promoting inclusive and equitable economic growth »
Improving infrastructure quality through public-private partnerships »
Ensuring sustainability in key drivers of development »
Helping countries to adapt to a changing climate »
Promoting opportunity through investments in human capital »
Closing gender gaps for greater economic opportunity »
Confronting the causes and consequences of conflict and fragility »

The economic growth that drives reductions in extreme poverty continues to disappoint, and substantial downside risks to the global economy remain, such as weak demand, tighter financial markets, softening trade, persistently low prices for oil and other commodities, and volatile capital flows. The world also faces complex and critical threats to long-term prosperity, including regional conflicts and localized fragility that have forcibly displaced millions of people; pandemics and other health risks across regions; and the effects of climate change, which may bring extreme weather shocks and disruptions to food security in many countries. All of these risks will most affect the poor and vulnerable.

At the same time, global development trends have changed dramatically. The world is much more prosperous, and its center of economic gravity is shifting toward emerging economies. Private investment now dominates capital transfers worldwide, and domestic resource mobilization is increasingly important relative to official development assistance, particularly in middle-income countries. The world is much more interconnected, and the economic, social, and environmental dimensions of development will require much more integrated, multisectoral approaches to succeed.

The World Bank is uniquely suited to support the global development agenda in the face of these unprecedented challenges and changes to the global environment. The Bank remains a committed partner to help countries over the long term, and works to develop strategies, operations, and innovative financing that are tailored to each country’s unique needs. The institution is organized to work across the entire development spectrum—at the country, regional, and global levels—to facilitate coordinated action for solutions that support poverty reduction and promote inclusive prosperity.

Promoting inclusive and equitable economic growth

Equitable policies and institutions help every country’s poorest people to benefit from economic growth. The World Bank supports policy makers to reach well-informed, evidence-based decisions that promote equity and inclusion, sustainable macroeconomics, public sector transparency and efficiency, productivity, and financial sector deepening and stability—all foundational elements for reducing poverty and promoting inclusive growth.

Access to economic opportunities and high-quality basic services is fundamental to eliminating extreme poverty and building shared prosperity. Through a combination of strong analysis and advice, financial services, lending, and convening power, the Bank helps clients to address challenges to equity and inclusion. This support can help clients to strengthen their evidence base for making informed policy decisions, and can target interventions that are equitable, efficient, and reach the poor. For example, a grant from the International Development Association (IDA) supporting the Regional Program to Harmonize and Modernize Living Conditions Surveys is helping the eight member countries of the West African Economic and Monetary Union to improve the quality and frequency of the data they collect. In Chile, a Bank operation supports reforms that focus on improving access to and the quality of education, as well as enhancing the measuring of poverty and targeting of social programs.

Sustainable macroeconomic and fiscal policies create a supportive enabling environment for private sector–led growth, and they provide the basis for effective development planning and public spending. The Bank helps clients to gauge the right mix of fiscal management, debt policies, and growth. For example, the Mexico Public Expenditure Review (PER) identified a menu of efficiency options to inform the short- and medium-term fiscal consolidation efforts of the Mexican government. Like PERs conducted for other countries, the Mexico initiative will help to sustain a continuing policy dialogue to strengthen fiscal management and overall public sector effectiveness.

More efficient public resource mobilization and spending allows governments to improve service delivery. The Bank assists clients in improving public sector efficiency, such as the prioritization of spending, better budget management and control, and the elimination of constraints on the efficient use of domestic resources. These efforts include helping client countries to build fair and efficient tax systems and increase revenues to government treasuries. This year the Bank launched a Global Tax Team to bolster cutting-edge work on taxes, liaise with other global institutions, and build a more coordinated dialogue on international tax issues. In addition, the recently launched Platform for Cooperation on Tax will formalize collaboration between the Bank, International Monetary Fund (IMF), Organisation for Economic Cooperation and Development (OECD), and United Nations (UN), and aims to boost the ability of developing countries to build stronger tax systems and ensure that their interests are heard.

Integrated economies help to promote sustained economic growth with strong contributions from the private sector, which help to raise the incomes of the poor and create more and better-paying jobs. The Bank, in collaboration with the International Finance Corporation (IFC), helps to promote open and competitive markets and foster an enabling environment for private investment. Among recent efforts, the Bank provided programmatic advice on productivity-led growth in Brazil, a competition assessment in Kenya, and a policy analysis of the implications of the Trans-Pacific Partnership for Vietnam. In addition, Bank financing is supporting the development of export-oriented sectors in the former Yugoslav Republic of Macedonia through broad-investment climate reforms and incentives for investment and manufacturing upgrades. Multicountry operations include the Burkina Faso and Côte d’Ivoire Regional Trade Facilitation and Competitiveness Credit, which aims to reduce transaction costs between these countries by reforming the transport and customs sectors. The Bank’s convening services have also facilitated the development of a new investment law in Myanmar.

Inclusive, efficient, and stable financial systems contribute to faster growth and poverty reduction. Removing impediments—such as financing gaps for firms, the poor, infrastructure, and housing—is a critical part of the Bank’s work. For example, the Bank serves as a technical partner to help countries shape their National Financial Inclusion Strategies by coordinating stakeholders’ efforts and prioritizing resources, as in Pakistan, where the Bank and IFC have been working with the State Bank of Pakistan. The Bank is also actively working with countries to strengthen transparency and accountability and to reduce illicit financial flows, as part of a global effort. It is working to improve access to information on the beneficial owners of assets for public authorities, to strengthen the exchange of tax information, and to help governments detect money laundering. These efforts also aim to ensure that clean public officials and businesses are recognized, while corrupt and criminal ones are sanctioned.

The Bank also partners with member countries to strengthen key financial institutions to support financial stability and economic growth. Through the Reserves Advisory and Management Program (RAMP), the Bank is working with over 60 member institutions—central banks, national pension funds, and sovereign wealth funds—to improve the management of foreign reserves and other financial assets. A stable and liquid foreign reserves portfolio is critical to a central bank’s financial soundness. The Bank works with member governments at the national and subnational levels to build capacity to develop and implement debt management strategies according to best practice. Effective public debt management is a cornerstone of financial stability and sustainable fiscal policy.

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Improving infrastructure quality through public-private partnerships

The World Bank aims to help governments make informed decisions about improving access to and the quality of infrastructure services, which can include, where appropriate, using public-private partnerships (PPPs). This approach involves strengthening data collection, building capacity, developing and testing tools, promoting disclosure, and encouraging engagement with all relevant stakeholders.

During fiscal 2016, several tools were developed—often in collaboration with other multilateral development banks or development partners—to support good decision making by policy makers on infrastructure projects. These include an 80-country survey on PPP procurement, a country diagnostic tool, a tool developed with the IMF to assess the potential fiscal impact of PPPs, a prioritization tool, a disclosure framework for PPPs, an analysis of how gender can be incorporated into PPP contracts, and a French-language version of a PPP Massive Open Online Course (MOOC).

In April 2016, the World Bank helped to organize with the other multilateral development banks, and in partnership with the United Nations, the first Global Infrastructure Forum. This was the first time that the heads of all of the multilateral banks came together to discuss infrastructure, reflecting the topic’s importance and the commitment to multilateral collaboration. Other key participants included development partners and representatives of the Group of Twenty (G-20), Group of Twenty-Four (G-24), and Group of Seventy-Seven (G-77); the OECD; and the Global Infrastructure Hub. The meeting set out actions that the participants will take over the next year to leverage more—and better—public and private investment in infrastructure. The next Global Infrastructure Forum will be held in 2017.

This year the Global Infrastructure Facility approved its first project (hydropower in the Solomon Islands) and four planning grants in Brazil, Côte d’Ivoire, the Arab Republic of Egypt, and Georgia. Support by the Public-Private Infrastructure Advisory Facility to building capacity and knowledge increased by over 60 percent during the year, with a strong focus on Sub-Saharan Africa and the poorest countries.

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Ensuring sustainability in key drivers of development

Together, the adoption of the SDGs in September 2015 and the signing of the Paris Agreement on climate change in April 2016 mark a clear recognition by the international community that economic growth, poverty reduction, and environmental sustainability are inextricably linked and essential for achieving sustainable development.

With 78 percent of the world’s poor people living in rural areas and most depending on agriculture for their livelihoods, increasing farm productivity and resilience, strengthening farmers’ links to markets, and providing affordable food are proven ways to end poverty and boost shared prosperity. The Bank’s agriculture program is focusing on these areas, giving more attention to climate-smart agriculture, improving nutrition, strengthening agricultural value chains, and creating jobs. For example, support in Senegal is facilitating the adoption of 14 new, high-yielding, drought- tolerant varieties of grains. A project in Uganda supports the production of micronutrient-rich crops that are adapted to local preferences and growing conditions, as well as a seed bank for bio-fortified crops. In Nepal, a project supports labor-saving technologies, such as improved solar dryers to preserve vegetables and fruits.

In the energy sector, the Bank’s work is aligned with Sustainable Energy for All, an initiative that aims to achieve three goals by 2030: universal energy access, doubling the rate of improvement in energy efficiency, and doubling the share of renewable energy in the global energy mix. In Bangladesh, for example, a successful solar home systems project has reached people in rural communities, with 3.5 million households now receiving electricity from their rooftops. With the fall in oil and other commodity prices, many resource-rich countries have sought Bank assistance in the extractives sector to help address price volatility, diversify their economies, strengthen sector governance, increase benefit sharing, and ensure environmental and social sustainability.

The World Bank also helps countries to factor in to their development plans the value and job-creating potential of natural resources—from ocean wealth to forests and watersheds—along with the associated costs of environmental degradation, pollution, and resource scarcity. In Morocco, for example, a green growth development policy operation supports measures to improve the sustainability of sectors including fisheries, agriculture, and tourism—all of which are critical sources of employment in poor, rural communities and significantly affected by the depletion of natural resources. In agriculture, for instance, the program supports better groundwater management practices, soil conservation, and more-effective meteorological information for farmers. In fiscal 2016, the Bank launched a five-year Forest Action Plan for the World Bank Group aimed at making the sustainable management of forests an integral part of development and climate action. The plan introduces the concept of “forest-smart” interventions, and takes a holistic look at forest landscapes to avoid the erosion of forest capital.

Transportation and information and communication technologies connect people to jobs, markets, and social services, and are at the core of global discussions on the SDGs, climate change, and road safety. Yet accessibility, efficiency, and safety remain critical challenges to realizing the full potential of sustainable mobility. Today 1 billion people, for example, still lack access to an all-weather road, and 3 billion, to the Internet. Efforts to build safer, cleaner, and more-efficient transportation systems include expanding bus ridership by 40 percent in Wuhan, China, and improving road safety in India. Technology and data management are also helping to better map travel patterns and users’ needs, engage citizens, and improve the quality of mass transit systems. Expanding access to broadband service is also essential.

In developing countries—which account for 90 percent of urban growth—there is a window of opportunity to build climate-smart cities. The Bank’s Urbanization Reviews offer a framework for city leaders to make tough decisions on development in their cities by providing diagnostic tools to identify policy distortions and analyze investment priorities. Coordinated by the World Bank and supported by multilateral development banks, UN organizations, think tanks, and various city networks, the Global Platform for Sustainable Cities, launched this year, is a knowledge-sharing program that provides access to cutting-edge tools and promotes an integrated approach to sustainable urban planning and financing.

In the water sector, the Bank continues to pursue the vision of a Water-Secure World for All, with a focus on advancing universal access to sanitation and water security. Working across sectors, for example, the Bank’s new approach to rural sanitation in Egypt, Haiti, India, and Vietnam focuses on helping governments to leverage national programs for more local and accountable delivery, as well as behavior change. Further, a new action plan, developed by the Lake Chad Basin Commission, aims to empower Lake Chad communities to adapt to the urgent challenges exacerbated by climate change, and to consolidate Lake Chad’s contribution to regional food security.

This work was supported by reports such as High and Dry: Water, Climate Change, and the Economy, which projects potentially significant economic impacts from changes to the water cycle. The report is a call for better policies, which recognize the fundamental importance of this resource, highlighting the fact that health, energy, food, cities, and jobs depend heavily on water. The Bank, in partnership with the United Nations, also launched a heads-of-state panel on water tasked with mobilizing action and financing toward the goal of ensuring access for all to sanitation and water.

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Helping countries to adapt to a changing climate

The World Bank Group has aggressively stepped up its climate action, given the intrinsic link between climate change and poverty. The threat to poor people posed by climate change is sharply illustrated in the publication Shock Waves: Managing the Impacts of Climate Change on Poverty, released ahead of the 21st Conference of Parties (COP 21) climate change talks in Paris. The report warns that without rapid action, climate change could push more than 100 million people into poverty by 2030.

In the wake of the Paris Agreement, the World Bank Group developed a Climate Change Action Plan, marking a fundamental shift by integrating climate change as a priority across all of the Bank’s strategies and operations. The plan lays out ambitious targets and accelerated actions to tackle climate change over the next five years. Among the targets are assisting developing countries in adding 30 gigawatts of renewable energy—enough to power 150 million homes—to the world’s energy capacity, and bringing early-warning systems to 100 million people.

A key focus of the plan is to do more to help countries adapt to a changing climate: For example, by developing climate-smart agriculture investment plans for at least 40 countries by 2020 and expanding the use of climate and disaster risk screening tools beyond projects funded by IDA. The Climate Change Action Plan reinforces the pledge for a one-third increase in climate financing across the World Bank Group, potentially to $29 billion each year, with the support of its members.

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Promoting opportunity through investments in human capital

No society can achieve its potential or meet the challenges of the 21st century without the full and equal participation of all its people—which requires investments in human capital through education, health care, social protection, and jobs. The World Bank works to support equal chances for people to live healthy, prosperous, and longer lives; secure productive and inclusive jobs; and create opportunities and be resilient in the face of economic, health, and climatic shocks, and other risks. All of these conditions are necessary to break the intergenerational transmission of poverty and to take advantage of the demographic trends in many countries where poverty is concentrated.

The overall goal of the Bank’s work in health, nutrition, and population is to support developing countries in building strong and resilient health care systems; achieving universal health care coverage; and ensuring that all people have access to quality, essential health services and are not pushed into poverty because of health care costs. Key areas of focus include ending preventable maternal and child mortality by 2030; ending childhood stunting caused by chronic malnutrition; halting the spread of preventable communicable and noncommunicable diseases; and increasing outbreak preparedness.

This year, drawing from the lessons of the Ebola crisis in West Africa, the World Bank Group partnered with the World Health Organization, the private sector, and development partners to develop the Pandemic Emergency Financing Facility (PEF), launched during the 2016 Group of Seven (G-7) Ise-Shima Summit. The PEF will enable a timely surge of money and support to the poorest countries to help stop an outbreak from becoming another deadly and costly pandemic like Ebola. Through the PEF, the World Bank will issue the first pandemic bonds and create a new market for pandemic risk insurance.

Through the Global Financing Facility (GFF) in support of Every Woman Every Child—launched at the Third International Conference on Financing for Development, Addis Ababa, Ethiopia, in July 2015—the Bank is supporting country-led efforts to improve the health of women, children, and adolescents. The GFF unites resources from the countries themselves with those from international donors and the private sector, and thus helps to scale up support for evidence-based interventions and ensure sustainable financing as the countries transition from low- to middle-income status. In its first year of operation, the GFF Trust Fund supported a dozen countries representing nearly half of the worldwide financing gap for universal women’s, children’s, and adolescent health care.

The Bank is also scaling up investments in the early years of life—across nutrition, early stimulation, and safe environments—with more than $3 billion in financing during the past two years alone and $6 billion since 2000. Recent scientific and economic studies show that early childhood nutrition and stimulation can have a profound impact on brain development and on health, learning, and future earnings. Underscoring a commitment to invest in young children, the Bank has also launched innovative partnerships over the past year, including the Power of Nutrition and the Early Childhood Development Action Network with UNICEF, foundations, and other development partners.

As the world’s leading international financier of education in developing countries, the Bank is committed to helping achieve inclusive and quality education for all. The Bank is building on a successful track record in health care by increasingly using results-based financing to help countries construct educational systems with the incentives necessary for reaching the most marginalized children and youth. Recognizing the importance of empowering girls and women, the Bank announced in April 2016 that it would provide $2.5 billion over five years in education programs that will directly benefit adolescent girls.

The Bank also plays a leading role in efforts to expand social protection programs and build the resilience of the poorest and most vulnerable people in the face of shocks. A joint statement by the World Bank Group and the International Labour Organization laid out a shared vision of social protection for all—a world where anyone who needs social protection can access it at any time. The Bank Group’s investments in social safety nets—more than $1.7 billion over the past five years—are having direct, positive impacts on poor families worldwide through the use of cash transfers, labor-intensive public works, and school feeding programs. Cash transfers are increasingly seen as an important safety net tool for forcibly displaced people living in fragile, conflict, or violent situations. As of 2015, every country in the world has at least one social safety net program in place, benefiting more than 1.9 billion people.

At the South-South Learning Forum in Beijing, November 2015, around 250 policy makers from 75 countries gathered to discuss, share, and learn from emerging knowledge and practical innovations on social protection in urban areas, which are home to an increasing share of the world’s poorest people. Safety nets can play a key role in identifying and supporting the urban poor, connecting them to social services and job opportunities.

More than 200 million people worldwide—many of them youth—are currently unemployed and looking for work. To accelerate progress toward good jobs and economic growth, the Bank is conducting in-depth Jobs Diagnostics in at least 15 countries aimed at helping them to create more, better, and more inclusive jobs through skills building, work incentives, greater labor mobility, and other labor market reforms.

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Closing gender gaps for greater economic opportunity

Gender biases can constrain both males and females, but they have historically disadvantaged girls and women more. Notably, women lag behind on most measures of economic opportunity, and this holds back not just individuals but entire economies. Closing gender gaps can help countries to increase productivity and improve prospects for the next generation. The World Bank works with public and private sector clients to close these gaps.

Progress in key indicators—such as girls’ school enrollment and completion rates, maternal mortality, labor force participation, asset ownership, and access to financial services—depends on investment in multiple sectors, including water and sanitation, transportation, and finance. This requirement is reflected in the new World Bank Group Gender Strategy (FY16–23): Gender Equality, Poverty Reduction, and Inclusive Growth, which focuses on approaches and interventions that achieve meaningful results. The strategy prioritizes four key objectives: improving human endowments through health care, education, and social protection; removing constraints to more and better jobs, including tackling skills gaps and occupational sex segregation, and addressing issues related to unpaid care; removing barriers to women’s ownership and control of land, housing, technology, and finance; and enhancing women’s voice and agency while engaging men and boys in that effort.

The Bank continues to scale up commitments and partnerships in order to collect and distill more and better sex-disaggregated data. It is working with UN agencies and others to gather such data, including those on vital statistics, asset ownership, time use, labor, health care, and the use of financial services. Gender data dissemination is supported through the Bank’s newly updated and expanded Gender Data Portal.

To help countries identify what works and what does not in order to close economic gender gaps, four regional Gender Innovation Labs are building the evidence base across different contexts. Seventy-five impact evaluations are under way on skills, land rights, access to infrastructure, labor force participation, entrepreneurship, youth employment, gender-based violence, and teenage pregnancy. The Bank is also working to close the credit gap, estimated at about $300 billion globally, for formal, women-owned, small and medium enterprises, as well as the gender gap in financial account ownership.

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Confronting the causes and consequences of conflict and fragility

Some 2 billion people—more than one-quarter of the global population—live in countries where development outcomes are affected by fragility, conflict, and violence. The challenge is widespread and complex, including protracted forced displacement, violent extremism, and citizen security. Building on its experience in conflict-sensitive development, the World Bank’s approach aims to address these issues in the broader context. Activities in fiscal 2016 also focused on developing innovative financing solutions, including those with private sector involvement, to ensure rapid response to global crises, and on reinforcing strategic partnerships between humanitarian and development actors.

World Bank operations are supported by analytical work to address fragility, conflict, and violence. Diagnostic tools for conflict-sensitive programming are included, with 46 risk and resilience assessments conducted to inform the Bank Group’s Systematic Country Diagnostics and Country Partnership Frameworks. A priority for fiscal 2016 was to strengthen the development response to forced displacement by conducting analytical work to establish a framework for operational engagement as well as develop a joint approach among seven multilateral development banks. To promote dialogue and knowledge sharing, the World Bank hosted the global Fragility Forum in early 2016, engaging with more than 100 organizations. Collaboration with the following partners supports effective delivery: the Global Program on Forced Displacement, the UN–World Bank Fragility and Conflict Partnership Trust Fund, the State and Peace-Building Fund, and the Korea Trust Fund for Economic and Peacebuilding Transitions.

The Bank supports operations that aim to address the drivers of fragility, including more assistance for the vulnerable who are displaced by conflict. In Africa, the Bank provided IDA credits totaling almost $250 million to forcibly displaced people and host communities in the Democratic Republic of Congo, Djibouti, Ethiopia, Uganda, and Zambia. The increased funding in the region recognizes that forced displacement is a global challenge. With this funding, the Bank has delivered on promises made by President Jim Yong Kim and UN Secretary-General Ban Ki-moon during a joint mission to Africa’s Great Lakes region in May 2013, and to the Horn of Africa in October 2014. The two leaders have continued their collaboration this fiscal year, traveling together in March 2016 to Jordan, Lebanon, and Tunisia to promote peace and development in the Middle East and North Africa.

Strengthening engagement and support for transitional processes during peaceful transfers of political power and other “turnaround” moments is critical to ensure that countries do not return to conflict. IDA’s turnaround regime provides a higher level of financing to countries with significant opportunities for building stability and resilience to accelerate their transition out of fragility. In fiscal 2016, Guinea-Bissau and Madagascar were determined to be eligible, based on the evidence of government commitment to a reform agenda and shared understanding among key development partners on increasing support to the country, and $20 million and $230 million were allocated, respectively.

The World Bank Global Platform on Addressing Sexual and Gender-Based Violence (SGBV) was launched in March 2015 to provide services to survivors of SGBV, contribute to prevention, raise public awareness, and build the capacity of client countries through South-South knowledge sharing. The platform includes innovative pilots in the Democratic Republic of Congo, Georgia, Nepal, and Papua New Guinea. After a global learning tour in 2015 with representatives of all projects, the platform is organizing regional learning tours in 2016 for clients to learn from regional best practice.

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