Helping countries gather data on poverty trends
Despite tremendous global progress in reducing extreme poverty, rates remain stubbornly high in low-income countries and those affected by conflict and political upheaval. The total number of poor people has been increasing in Sub-Saharan Africa, where more of the world’s extreme poor lived in 2015 than in the rest of the world combined. By 2030, under all but the most optimistic scenarios, poverty in the region will remain in double digits.
Tackling this challenge starts with more and better data. In 2015, the Bank committed to helping the world’s poorest countries conduct household surveys every three years, an increase in frequency that is crucial to understanding progress against poverty. With our support, 41 countries in Sub-Saharan Africa conducted household surveys between 2015 and 2018, versus just 18 between 2012 and 2015. Between 2018 and 2020, an estimated 34 countries—with 76 percent of the region’s population—will conduct a survey. We will keep up this momentum in Africa and elsewhere.
Promoting debt transparency
Debt financing is critical for development. Used wisely, it can help countries finance investments and achieve sustained and inclusive growth. But indebtedness is resurfacing as a risk across emerging and developing economies, underscoring the need for prudent management of public debt through sound institutions, processes, and capacity.
Our work on public debt management is aimed at enhancing three main aspects. By promoting debt transparency, sovereign borrowers will be able to make informed borrowing decisions, while creditors and rating agencies will be able to assess sovereign creditworthiness and price debt instruments properly. Through effective debt and fiscal risk management, countries can reduce their financial vulnerabilities, contribute to macroeconomic stability, preserve debt sustainability, and protect their reputation among investors. By better monitoring and managing the fiscal risks from contingent liabilities, countries can ensure that their debt levels do not reach unsustainable levels.
In 2018, the Bank and the IMF announced a new collaborative work program, the Bank-Fund Multipronged Approach for Addressing Emerging Debt Vulnerabilities. This work is taking place in the context of the global development agenda—including the SDGs—and supports better monitoring of debt vulnerabilities, structural reforms to help reduce debt vulnerabilities, greater debt transparency, and scaled-up capacity building on debt management. Key elements of this effort and other aspects of sustainable financing were laid out in recent IMF-Bank notes for the G-20.
Working with the IMF, we also implemented the revised Debt Sustainability Framework for low-income countries. It allows creditors to tailor their financing terms in anticipation of future risks and helps countries balance the need for funds with the ability to repay their debts. The framework guides countries in supporting the SDGs when their ability to service debt is limited.
The Bank Group’s signature Debt Management Facility provides advisory support, training, analytical tools, and peer-to-peer learning that strengthen countries’ ability to manage debt. Since its inception in 2008, it has supported capacity building and reforms in over 75 countries and implemented more than 290 technical assistance missions. In 2019, the Bank launched the third phase of the facility to scale up support on debt management and transparency.
Promoting a vision of global trade that benefits all
Trade is an important engine of growth that creates jobs, reduces poverty, and increases economic opportunity. Since 1990, growth underpinned by open trade has helped over 1 billion people escape poverty. Trade can also improve women’s economic inclusion. Exporters in developing countries employ more women than non-exporters, with women comprising up to 90 percent of the workforce in export processing zones.
To ensure that every member of society can reap the benefits of trade, the Bank Group promotes a broad range of reforms and investments, including more resilient economies with strong safety nets; education that prepares students for the jobs of the future; and retraining, job search assistance, and relocation benefits that help workers transition to new jobs.
Global value chains are an integral part of open trade and a key contributor to job creation. They help less diversified and smaller economies find niches in the global economy. Many countries have managed to see substantial growth gains through this approach, including Bangladesh, Costa Rica, Lesotho, Vietnam, and, most recently, Ethiopia. Value chains are the focus of the 2020 World Development Report.
Leveraging economic transformation to create more, better, and inclusive jobs
Economic growth has the power to transform societies, boost incomes, and help citizens thrive, but growth alone is not enough. To reduce poverty and ensure shared prosperity, growth needs to create more, better, and inclusive jobs. Improving financial access, strengthening skills training, supporting a strong private sector, and building sustainable infrastructure all connect people to job opportunities that can help end extreme poverty in the poorest countries.
Close to 600 million people will be looking for jobs over the next decade, mostly in the world’s poorest countries. South Asia alone will need to create more than 13 million jobs a year to keep pace with its expanding population. In Sub-Saharan Africa, despite a smaller population, the challenge will be even greater—15 million new jobs will be needed annually. And with 60 percent of its population under the age of 24, the Middle East and North Africa will need to create 10 million jobs each year. Most developing countries face three challenges: creating more jobs in the formal sector, increasing the quality of informal jobs, and connecting vulnerable groups to jobs or to better jobs.
The Bank helps developing countries design and implement integrated, multisectoral job strategies. First, Jobs Diagnostics help client countries identify key jobs challenges at the macro, firm, and household levels; the diagnostics are an integral part of our Systematic Country Diagnostics and Country Partnership Frameworks. Second, we help mobilize global knowledge to identify solutions to common jobs challenges. Third, we help countries implement job strategies through lending and investment operations and policy reforms. In addition, we design monitoring and evaluation tools to standardize how jobs outcomes are measured in projects.
IDA has been at the forefront in supporting countries’ efforts to create jobs, with jobs and economic transformation identified as one of the special themes under our current three-year funding cycle for IDA, known as IDA18. We are funding innovative projects, using financial instruments and enhanced analytics and applying new tools to evaluate and measure jobs impact. As of June 2019, the Bank has 579 active jobs-related projects, representing investments of about $78 billion.
In Jordan, a Program for Results provides a holistic approach to the influx of Syrian refugees, helping both host communities and refugees. It seeks to attract new investments and facilitate easier access to the EU market with simplified rules of origin, helping create jobs for Jordanians and Syrian refugees while supporting the post-conflict Syrian economy. The project has issued almost 43,000 work permits for refugees, with a target of 130,000 by December 2019.
Building effective and accountable institutions that serve all citizens
The Bank’s country opinion surveys consistently show that corruption and governance issues are among the top concerns of our client countries. We help them tackle corruption to improve institutional quality and capacity and strengthen the social contract. In Indonesia, we carried out three phases of a Public Expenditure Review. The result was greater budget allocation to pro-growth and pro-poor programs, as well as more effective program design and implementation in sectors as diverse as social protection, education, health, and water.
In Liberia, we supported improvements in pay and performance through the strengthening of payroll management in the public sector. The project helped improve the transparency and predictability of salaries and human resources issues such as career tracks, grade, recruitment, and promotion. It also helped improve management of the wage bill.
Revenue shortfalls pose challenges for the ability of poorer and fragile countries to fund development priorities and ensure macroeconomic stability. In addition to offering diagnostic assessments, the Bank works with governments to raise additional resources through policy reforms to broaden tax bases, as well as to improve compliance, enforcement, and collection through technology.
Ensuring that markets can spur private sector growth
The Bank Group is helping countries mobilize more resources for development, with a focus on deeper involvement from private investors. Our approach combines upstream help in implementing market enabling reforms with downstream financial and technical support to projects. Through our lending and advisory services, we help lower public sector risks and barriers to entry for the private sector. The focus includes supporting sound fiscal policy and macroeconomic management, promoting micro-reforms, and improving the ease of doing business in a country.
The Country Private Sector Diagnostic is a new Bank Group product that aims to assess a country’s economy-wide and sector-specific constraints to private sector investment and identify policy recommendations to address them. We now have diagnostics underway in more than 25 countries. In Nepal, for example, a development policy operation is addressing the cross-cutting recommendations made by the diagnostic. The country has set up a Better Regulation Unit in the Prime Minister’s office, and the Bank Group is advising on a transport master plan. We will also help increase financial access, improve skills, and aid the energy, tourism, and agribusiness sectors.
The Joint Capital Markets Program is a Bank Group approach focusing on eight countries and one subregion to develop markets through joint diagnostics and sector initiatives that are reinforced by transformative demonstration transactions. It aims to strengthen government efforts to crowd in private sector investments for development and support our G-20 commitment on local capital markets and financial resilience. It mobilizes experts from across the Bank Group and client countries to create markets, unlock synergies, and encourage systemic impact.
Establishing and maintaining financial stability is also a key driver of growth. The Financial Sector Assessment Program, a joint initiative with the IMF, has promoted policy dialogue and financial sector reforms for 20 years. Eight assessments have been completed, with another 10 ongoing or initiated this year. The program is evolving to cover topics such as fintech, cybersecurity, and climate risk, reflecting its flexibility and changes in the financial policy landscape.
Providing financing and solutions for infrastructure
Helping countries meet the basic service and infrastructure needs articulated in the SDGs—while meeting the rising aspirations of billions around the globe—is an enduring challenge. We take an integrated approach to improving and financing infrastructure in developing countries, focusing on broader access, higher quality services, greater affordability, and sustainability.
Underpinning this work is the Bank Group’s commitment to crowding in all sources of finance, innovation, and expertise to deliver infrastructure. The aim is to preserve scarce public resources for areas where private sector financing is not optimal or available. This also means intensified collaboration among the World Bank, IFC, and MIGA. At the project level, Bank Group staff determine whether there is a sustainable and affordable private solution for an infrastructure challenge. If not, we look at how reforming policy and addressing risks—including solutions to lower risks that are made possible by the IDA18 IFC-MIGA Private Sector Window—could advance this result. We ground our project work in a shared vision with client countries on sectoral transformation to improve financial viability and service delivery.
At the country level, the Bank Group has developed a standardized approach for assessing a country’s potential to leverage private sector finance and expertise to deliver on priority infrastructure investments and performance improvements. This approach, called an infrastructure sector assessment program (InfraSAP), provides a coordinated package of policy reforms, advisory services, and investment to find the right mix of public and private solutions.
Several partnerships and funding mechanisms support this work. The Global Infrastructure Facility (GIF) supports project preparation, structuring, and advisory to clients in developing countries. As of June 30, 2019, GIF’s portfolio of 70 projects is expected to mobilize over $66 billion in total investments. In 2019, the Public-Private Infrastructure Advisory Facility celebrated 20 years of supporting stronger developing-country investment climates. The Quality Infrastructure Investment Partnership, established by the Bank and the Japanese government, scales up the design of projects with a focus on efficiency, sustainability, and resilience against natural disasters.
Expanding access to electricity and scaling up clean energy
The Bank is one of the largest providers of finance for renewable energy and energy efficiency projects in developing countries. We are also helping countries transition to clean energy through financing, risk mitigation measures, and guarantees, as well as technical and policy advice.
Globally, 840 million people have no access to electricity, with over 570 million of them living in Sub-Saharan Africa. Between fiscal 2014 and 2018, the Bank helped provide new electricity connections for more than 52 million people and significantly expanded support to energy access. During IDA18, we will contribute more than $1 billion to grid and off-grid solutions for electricity access in countries with the highest deficits, including Cameroon, Ethiopia, Kenya, Lesotho, Madagascar, Mozambique, and Zambia. We also manage a clean cooking and heating portfolio of more than $350 million; our programs in 37 countries have reached nearly 20 million people.
In 2018, the Bank announced a $1 billion program to accelerate investments in battery storage for energy systems in developing countries, with the aim of attracting another $4 billion in public and private financing. In South Africa, we are working to develop 1,440 megawatt hours of battery storage capacity to enable the integration of current and future variable renewable energy capacity. In India, the Innovation in Solar Power and Hybrid Technologies Project will help strengthen institutional capacity to facilitate scale-up of innovative renewable energy technologies, including battery storage solutions.
Coupled with our support for an enabling policy environment and sector reforms, our energy financing is designed to advance public-private partnerships and mobilize private investments. In Armenia, for example, we supported the country’s first competitively tendered solar project, which attracted a competitive tariff. In Cameroon, the Nachtigal Hydropower Project benefited from Bank guarantees and will allow the country to increase installed generation capacity by 30 percent.
In May 2019, we launched a Climate-Smart Mining Facility dedicated to improving the sustainability of mining for minerals and metals that are essential to the clean energy transition. It helps emerging economies benefit from the increasing demand for these strategic minerals and metals.
Connecting people to services and opportunities
Transport is critical to social and economic development and ending extreme poverty. Mobility solutions connect billions of people to jobs, education, and health services; help make cities and countries competitive and inclusive; and promote global trade and growth. In rural Morocco, better access to roads tripled girls’ school enrollment. In Thailand, reducing traffic fatalities by 50 percent could add 22 percent to the country’s GDP over two decades.
To be sustainable, transport must meet four essential goals. It should be accessible for all, including the poor, women, and vulnerable populations. It should be green; transport generates 23 percent of energy-related greenhouse gas emissions. It should be safe; road crashes claim the lives of 1.3 million people annually. And it should be efficient; traffic congestion costs cities millions of dollars every day, which technology could help reduce.
In fiscal 2019, the World Bank–led Sustainable Mobility for All Initiative developed the Global Roadmap of Action toward Sustainable Mobility, the first-ever look across the four goals for policy measures that could help countries address transport challenges holistically. We also launched a ground-breaking report that lays out principles for electric mobility programs around the world. In addition, we pushed for partnerships between African academic institutions and those in developed economies to boost capacity building for transport professionals. Promoting connectivity and climate resilience in small island countries, a vital development priority, was also a focus in fiscal 2019, with eight approved projects totaling almost $240 million from Africa and the Pacific.
Managing natural resources at the tipping point
The world’s natural resources are under intense strain, with polluted oceans, unhealthy air, degraded landscapes, and dwindling fish stocks. We are helping countries value their natural capital so that they can make policy and investment choices that support sustainable development. Our Blue Economy Program and the new PROBLUE Trust Fund help address the threat posed by marine pollution, supporting better management of fisheries and aquaculture and more sustainable coastal development. Another new initiative, the Global Program on Sustainability, is working with 18 countries to value and measure the economic contribution of natural assets like forests, land, and water.
Tackling air pollution is also a priority: in 2016, it cost the global economy $5.7 trillion—4.8 percent of global GDP. We are helping the countries hit hardest, including the Arab Republic of Egypt, India, and Nigeria. In China’s Hebei province, we are supporting efforts to control emissions from industry, agriculture, mobile sources, area pollution and dust, and energy generation. From 2013 to 2017, China’s three regions with the worst air quality averaged a 36 percent decrease in concentrations of particle pollution, partly through interventions supported by the Bank.
We are bringing innovative approaches to forest conservation, including payments for reducing carbon emissions from deforestation. The Democratic Republic of Congo and Mozambique, for example, signed landmark Emission Reductions Payment Agreements with the Bank in 2018, unlocking results-based payments and rewarding communities that are working to protect forests.
Transforming food systems for farmers, consumers, and the planet
Some 79 percent of the extreme poor live in rural areas, with about 500 million smallholder farmers among the world’s poorest groups. About one in three people is not eating enough or eating unhealthy food, contributing to food insecurity, anemia, obesity, and non-communicable diseases. Food systems currently account for a quarter of greenhouse gas emissions, 70 percent of freshwater withdrawal, and many forms of pollution.
The Bank is working to help realign incentives and reward farmers for sustainably producing safe, healthy, and affordable food; partners include the World Resources Institute, EAT, and the Food and Land Use Coalition. We are also helping countries transform food systems through a range of tools and programs. These include diagnostic work to understand what drives food loss and waste; new technology such as the Ag Observatory, which provides real-time analysis of weather anomalies affecting agriculture; inputs and technical assistance that support a shift to climate-smart practices; and public-private partnerships to revitalize valuable food supply chains and create jobs. For example, in Uruguay, we are supporting government efforts to help farmers adopt more climate-smart practices by deploying new technologies. By 2021, around 25 percent of the country’s arable land will be under sustainable land management, strengthening resilience and productivity while reducing emissions.
Achieving a water-secure world for all
Water touches every aspect of development. But a host of challenges—gaps in access to water supply and sanitation, rapid urbanization and population growth, pollution, climate impacts, and more water-intensive patterns of growth—are making water insecurity one of the greatest threats to economic progress, poverty alleviation, and sustainable development.
To achieve a water-secure world for all, we are working with countries and partners to improve resource management, facilitate universal access to water and sanitation, and optimize water use in agriculture. This also helps build resilience through systems that can better withstand climate extremes while addressing fragility in water-stressed countries.
In Angola, we helped create and strengthen six water supply utilities that are providing household services to over 800,000 new customers; the project also helped establish a new regulator and a water resources management institution. In Vietnam’s Mekong Delta, we supported investments in water infrastructure to mitigate the impacts of flooding and saline intrusion exacerbated by climate change; helping protect and enhance the use of water resources bolsters gains in agricultural productivity, benefiting 215,000 farmers’ households.
By bringing innovation, new knowledge and evidence, and flexibility to Bank lending operations, the Global Water Security and Sanitation Partnership, a multidonor trust fund launched in 2017, helps client countries build capacity and strengthen the institutions, infrastructure, and inventiveness needed to adequately supply current and future generations with water, food, and energy. The 2030 Water Resources Group—a public-private–civil society partnership—supports government-accelerated reforms with the aim of ensuring sustainable water resources management for the long-term development and economic growth of their countries.
Harnessing digital innovation for greater access and opportunity
Digital technologies can help address some of the toughest development challenges by connecting people to services and opportunities. But technology trends also pose risks that include disruption of labor markets and livelihoods. Many developing countries lack the skills, firms, and legal and regulatory frameworks to harness technology’s potential. The Bank helps countries create the economic framework for digital transformation, identify new determinants of competitiveness and growth, and enable new business models brought about by technological change. We also work with governments to identify constraints to technology-led development. The Public Expenditure Review for Science, Technology, and Innovation, for example, is a new diagnostic tool that helps governments formulate policies, adopt good practices, and improve coordination. It has been piloted in Chile, Colombia, and Ukraine.
Today, about 4 billion people are still not connected to broadband internet, and in the least developed countries, only one in seven people has access. This digital divide can worsen existing inequalities and leave parts of the world behind. To help bridge this gap, the Bank has enabled 20 African countries to connect to broadband submarine cables and is committed to doubling broadband connectivity across Africa by 2021. This is a key milestone of our support to the ambitious Digital Transformation Agenda launched by the African Union in 2019, which aims to digitally enable all people, businesses, and governments across the continent by 2030. This will help turn the opportunities provided by the digital economy into new pathways for growth, economic mobility, innovation, job creation, and access to affordable services. The focus includes promoting digital infrastructure, platforms, financial services, entrepreneurship, and skills.
Digital technology is also driving growth in the so-called “gig economy,” where organizations and individuals contract with independent workers for short-term engagements. These new forms of work blur the line between formal and casual employment, challenging social protection models that assume most people are in stable employer-employee contracts. The digital era is also shifting the demand for skills. Adaptability is increasingly valued by the labor market, while the changing nature of work means that skills acquisition must be a matter of lifelong learning. For societies to benefit from the potential that technology offers, they need a new social contract centered on larger investments to protect those at risk.
Despite decades of efforts to broaden the formal economy, informality still averages 65 percent globally. The changing nature of work intensifies the need to focus on human capital and rethink social protection. To fund these critical investments, the World Development Report 2019: The Changing Nature of Work offers suggestions on how governments can mobilize more revenues. Property taxes in large cities, excise taxes on sugar or tobacco, and carbon taxes are among the ways to increase a government’s revenue, along with elimination of tax avoidance strategies that many firms use to increase their profits.
Digital technology also presents opportunities to improve access to public services and promote more inclusive development. About 1 billion people worldwide have no way of proving their identity and are thus excluded from crucial services and opportunities. In 2019, our Identification for Development (ID4D) initiative launched the “Mission Billion” global challenge to help find innovative ways to provide digital identification that is secure and protects privacy.
Meanwhile, fintech continues to have global impact on financial services. Mobile payment services have been among the key early developers, with broad implications for inclusion. New entrants to the market are challenging incumbents, who are responding. This evolution could boost competition and efficiency, while raising new risks to financial stability and integrity. Balancing competing policy priorities is also a key challenge. In response to calls from countries for greater cooperation and guidance to address these issues, the Bank Group and the IMF published the Bali Fintech Agenda in October 2018. The agenda is comprised of 12 high-level considerations for policymakers and the international community to harness the opportunities and manage the potential risks posed by fintech.
To promote the use of technology in making public services more efficient, transparent, and accountable, the Bank launched the GovTech Global Initiative in 2019. This partnership convenes key stakeholders in digital governance, including governments, technology companies, IT experts, development partners, and civil society organizations. It aims to ensure that developing countries are not left behind by digital innovation.