World Bank warns on donor agencies fighting over development projects 

President of the World Bank Group, Jim Yong Kim on Thursday urged donor agencies to stop fighting each other over what he called “low hanging fruit projects”, but work in a more coordinated approach to effectively deliver assistance to countries that need it.

Kim was speaking in Washington at a press meeting which officially opened the 2017 spring meetings of the World Bank and International Monetary Fund (IMF).

“If there’s some project that looks like it could be commercially viable, meaning it could be financed by the private sector, all the development agencies run after it and fight over it, and try to get their money in the door so that they can get the money out of their door, right?

“So, we’ve been competing with each other for the low hanging fruit projects as opposed to stepping back and saying for the low hanging fruit projects, let the private sector fund that. Then we should work on the higher hanging fruits that will boost the economies even more,” Kim stated.

“So, on corruption, on misuse of loans and grants that don’t give any outcomes, we have been following that for a long time. But I think the big question now for us in terms of aid effectiveness is we have got to stop fighting each other for the low hanging fruit projects.  This is what is actually happening right now.”

Kim was responding to concerns around the measures being put in place to ensure aid to developing countries is effective, particularly as donor agencies are seen competing and duplicating assistance in a manner that defeats development purpose.

“This is a complex and difficult conversation that we’re having right now, but it’s critical for us to have it.  I think if we don’t have it and if we don’t move forward in a much more coordinated way, we will begin to lose credibility,” the World Bank president pointed out.

“One of the things that we found is that foreign direct investment often has a much higher impact, much stronger impact on improving institutions and government than aid by itself.

“This is why we’re trying to bring together the financing we provide to governments and also the financing that comes from the private sector to create better institutions, more investment, more jobs, more economic growth, in a much more synergistic way.

“I think that’s the one thing we need to do much more effectively than we have in the past, because even inside the World Bank Group, the public sector side of the organization and the private sector side of the organization, for the most part, worked almost independently.

He said the world bank is working out a way to help institutions evolve so that “we can talk about de-risking entire countries with policy reform, improving the business environment, and at the same time facilitate the movement of private capital in a way that will lead to, we hope, more economic growth throughout the developing world.”

In his opening remarks, the World Bank President said it was encouraging to see stronger economic prospects after years of disappointing global growth.

“There are still many downside risks, however, and countries that have the fiscal space need to continue with structural reforms,” he advised. “This is vital to accelerating the sustainable and inclusive economic growth needed to end extreme poverty by 2030.”

He said the spring meetings were being held at a time when the world is facing several overlapping crises, both natural and man-made, all of which add urgency to our mission, including ; Conflict; Climate shocks; worst refugee crisis since World War II; and Famine in parts of East Africa and Yemen, which the UN has called the worst in 70 years.

He said with the famine in particular, the world was caught unprepared. “Too often, we forget about crises as soon as they abate – leading to a cycle of panic and neglect.” He announced the bank is already working with the affected countries and partners to respond to the famine…”On Saturday, I will convene a meeting co-chaired with the United Nations-Secretary General to ensure a coordinated, effective, and well-resourced response,” he told reporters.

Kim added that at this time, it was critical to find new and innovative ways to reach the poor, and make the world more secure and stable. “Here’s the good news: There’s never been a better time to find those win-win solutions. There are trillions of dollars sitting on the sidelines, earning little interest, and investors are looking for better returns. That capital should be mobilized to help us meet the exploding aspirations of people all over the world. And with the crises we face, our task is much more urgent than we ever thought,” he added.