Still Waiting - World Bank failes to alleviate poverty

Ecologist, The, Sept, 2000 by Bruce Rich

Yet, as the Bank works through its sixth decade of trying to promote something called 'development', the poor in most of its borrowing countries are in worse shape than they were a decade and a half before. According to the United Nations Development Programme (UNDP), since 1980, "economic decline or stagnation has affected 100 countries, reducing the incomes of 1.6 billion people". For 70 of these countries, average incomes are less in the mid 1990s than in 1980, and for 43, less than in 1970. In the early 1990s incomes fell by 20 per cent or more in 21 countries, mainly in the former Soviet Empire. The poorest fifth of the world's population has seen its share of global income fall from 2.3 per cent to 1.4 percent over the past 30 years.

Even according to the Bank's Operations Evaluation Department's latest Annual Review of Development Effectiveness 1999, "poverty trends have worsened... The number of poor people living on less than US $1 a day rose from 1,197 million in 1987 to 1,214 million in 1997. Excluding China, there are 100 million more poor people in developing countries than a decade ago". Furthermore, since 1990 life expectancy has declined in 33 countries.

What difference then, has the World Bank made? The Bank now claims a higher overall success rate for its projects (up to 72 per cent from 64 per cent in 1991), but part of the reason for that is that the Bank's evaluation process for projects is not very credible. In Bank evaluation of what it calls "successful outcomes", very little importance (five per cent) is attached to a project's likelihood of maintaining its results over its intended useful life, which is central to progress in the developing world. This is a serious omission given that the Bank's own internal audits reveal an astonishing 51 per cent failure rate to achieve sustainable results in fiscal years (Fy) 1998-99, a performance that has not changed appreciably in the last decade. This failure rate is even more acute in the poorest countries and in the developmentally most critical sectors. In Africa, for Fy 1998-99 only 34 per cent of evaluated projects are of likely sustainability, and only 26 per cent of likely "institutional development i mpact". In the Social Sector the OED found sustainability declined from 25 per cent in 1994-97 to 20 per cent in 1998-99. For Population, Health and Nutrition lending, sustainability declined from 55 per cent in 1994-97 to 50 per cent in 1998-99. In the Environment Sector, sustainability declined from 55 per cent in 1994-97 to 50 per cent in 1998-99.

Hence, under Wolfensohn, an already abysmally low performance in the social and environment sectors has become even worse, according to the Bank's very latest publicly released figures. This is particularly significant because if a project doesn't produce lasting benefits beyond or even during its lifetime, the increased debt burden that borrowing from the Bank incurs is nothing more than a drag on the economies of poor countries. From the borrowers' standpoint, the Bank thus becomes as much a contributor to their problems as a solution.