1. THE WORLD BANK GROUP: AN INTRODUCTION TO ITS COMPOSITION, FUNCTIONS, SUCCESSES AND FAILURES Professor Aregai Tecle FOR THE INTERNATIONAL SEMINAR ON FOREST ADMINSTRATION AND MANAGEMENT (ISFAM) NORTTHERN ARIZONA UNIVERSITY FLAGSTAFF, ARIZONA

2. WHAT IS THE WORLD BANK? World Bank (often referred to by employees and others as simply "the Bank") is an internationally supported bank that provides financial and technical assistance to developing countries for development programs (e.g. bridges, roads, schools, etc.) with the stated goal of reducing poverty. It was formally established on December 27, 1945.

4. WORLD BANK ADMINISTRATIVE STRUCTURE The World Bank is governed by several bodies: Board of governors Executive Directors President

5. MISSION OF THE WORLD BANK The central mission of the World Bank is the alleviation of poverty, defined as 1) lack of resources, 2) sense of powerlessness and 3) the absence of basic security. The central mission of the World Bank is the alleviation of poverty, defined as 1) lack of resources, 2) sense of powerlessness and 3) the absence of basic security. The latter two are exacerbated when a nation's law and justice institutions perform poorly and the rule of law is weak or nonexistent. In this regard, the elite can often use wealth or connections to cushion themselves from the impact of a poorly performing legal system. But, these alternatives are not open to the poor. They are rather the ones most vulnerable when the rule of law is absent. Another mission is to provide loans, policy advice, technical assistance and knowledge sharing

6. FUNCTIONS OR ACTIVITIES OF THE WORLD BANK Build capacity – Strengthening governments and educating government officialsBuild capacity – Strengthening governments and educating government officials Infrastructure creation – implementation of legal and judicial systems for the encouragement of business, the protection of individual and property rights and the honoring of contractsInfrastructure creation – implementation of legal and judicial systems for the encouragement of business, the protection of individual and property rights and the honoring of contracts Development of Financial Systems – the establishment of strong systems capable of supporting endeavors from micro credit – Support for countries' efforts at eradicating corruptionDevelopment of Financial Systems – the establishment of strong systems capable of supporting endeavors from micro credit – Support for countries' efforts at eradicating corruption Research, Consultancy and Training - the World Bank provides platform for research on development issues, consultancy and conduct training programsResearch, Consultancy and Training - the World Bank provides platform for research on development issues, consultancy and conduct training programs

7. AREAS OF OPERATION The World Bank is active in the following areas The World Bank is active in the following areas Agriculture and Rural Development Macroeconomic and Economic Growth Conflict and Development Mining Development Operations and Activities Poverty Reduction Economic Policy Poverty Education Private Sector Energy Public Sector Governance Environment Rural Development Financial Sector Social Development Gender Social Protection Governance Trade Health, Nutrition and Population Transport Industry Urban Development Information and Communication Technologies Water Resources Information, Computing and Telecommunications Water Supply and Sanitation Law and Justice International Economics and Trade Labor and Social Protections

8. WORLD BANK COMPOSITION The World Bank consists of five closely associated institutions, all owned by member countries that carry ultimate decision-making power. Each institution plays a distinct role in the mission to fight poverty and improve living standards for people in the developing world. The term “world Bank Group” encampasses all five institutions, IBRD, IDA, IFC, MIGA and ICSID. The term “World Bank” refers specifically to two of the five, IBRD and IDA.

9. The IBRD aims to reduce poverty in middle-income and creditworthy poorer countries by promoting sustainable development through loans, guarantees, risk management products, and analytical and advisory services. Established in 1944 as the original institution of the World Bank Group, IBRD is structured like a cooperative that is owned and operated for the benefit of its 185 member countries. INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT (IBRD)

10. IBRD LENDING CRITERIA The IBRD lends mainly to middle-income countries (MIC) using funds borrowed at commercial rates in world capital markets. Most IBRD borrowers have annual per capita income levels well below the $5,280 ceiling on eligibility. IBRD loans are repayable over a 10–20-year period at interest rates slightly higher than those the Bank pays to borrow funds.

11. The IDA is the part of the World Bank that helps the world’s poorest countries. Established in 1960, IDA aims to reduce poverty by providing interest-free credits and grants for programs that boost economic growth, reduce inequalities and improve people’s living conditions. IDA complements the World Bank’s other lending arm–the IBRD–which serves middle-income countries with capital investment and advisory services. IBRD and IDA share the same staff and headquarters and evaluate projects with the same rigorous standards. THE INTERNATIONAL DEVELOPMENT ASSOCIATION (IDA)

12. IDA FUNDING PURPOSES Debt burden relief in the most indebted and poverty struck countriesDebt burden relief in the most indebted and poverty struck countries Amelioration of sanitation and water supplyAmelioration of sanitation and water supply Support of vaccination and immunization programs for the reduction of communicable diseases such as malariaSupport of vaccination and immunization programs for the reduction of communicable diseases such as malariavaccinationmalariavaccinationmalaria Combating the HIV/AIDS pandemicCombating the HIV/AIDS pandemicHIV/AIDS Support civil society organizationsSupport civil society organizationscivil societycivil society Creating initiatives for the reduction of greenhouse gasesCreating initiatives for the reduction of greenhouse gases greenhouse gases greenhouse gases

13. IDA LENDING CRITERIA The IDA makes loans to the world's poorest countries, that is to those with annual per capita income levels well below the $885 ceiling for eligibility. IDA loans are funded with money contributed by donor countries. IDA lends without interest charges, with a 10-year grace period and principal repayments stretching thereafter over 20– 30 years (depending on the situation.) The borrower pays a three-fourth of 1% service charge to IDA, which the World Bank uses to cover IDA administrative costs.

14. IFC fosters sustainable economic growth in developing countries by financing private sector investment, mobilizing capital in the international financial markets, and providing advisory services to businesses and governments. IFC helps companies and financial institutions in emerging markets create jobs, generate tax revenues, improve corporate governance and environmental performance, and contribute to their local communities. The goal is to improve lives, especially for the people who most need the benefits of growth. INTERNATIONAL FUND FOR CONSTRUCTION (IFC)

15. MULTILATERAL INVESTMENT GUARANTEE AGENCY (MIGA) MIGA provides investment guarantees for projects in a wide variety of sectors, covering all regions of the world. MIGA's mission is to spur developmentally sustainable foreign direct investment to help create jobs, promote economic growth, and reduce poverty in its developing member countries

16. INTERNATIONAL CENTER FOR SETTLEMENT OF INVESTMENT DISPUTES (ICSID) ICSID is an autonomous international institution established under the Convention on the Settlement of Investment Disputes between States and Nationals of Other States with over one hundred and forty member States. The Convention sets forth ICSID's mandate, organization and core functions. The primary purpose of ICSID is to provide facilities for conciliation and arbitration of international investment disputes.

17. INTERNATIONAL MONETARY FUND (IMF) The IMF was created in 1944, with a goal to stabilize exchange rates and supervise the reconstruction of the world's international payment system. Countries contribute to a pool of resources which could be borrowed from, on a temporary basis, by countries with external payment imbalances.The IMF was created in 1944, with a goal to stabilize exchange rates and supervise the reconstruction of the world's international payment system. Countries contribute to a pool of resources which could be borrowed from, on a temporary basis, by countries with external payment imbalances. The IMF describes itself as "an organization of 185 countries (Montenegro being the 185th, as of January 18, 2007), working to foster global monetary cooperation, secure financial stability, facilitate international trade, promote high employment and sustainable economic growth, and reduce povertyThe IMF describes itself as "an organization of 185 countries (Montenegro being the 185th, as of January 18, 2007), working to foster global monetary cooperation, secure financial stability, facilitate international trade, promote high employment and sustainable economic growth, and reduce poverty

18. EXAMPLES OF WORLD BANK SUCCESS STORIES  In the area of education – Mali through funding from WB has the highest child educational access in subSaharan Africa. -Decentralization of human and financial resources led to 8.5% growth in primary, 14.4% in lower secondary, 8% in upper secondary and 21% in higher education. E.g. gross primary enrollment rose from 56.6% to 72.5% from 1999-2000 to 2004-2005.  In its health sector, Mali has improved the management and operational capacity of its Ministry of Health:. Population percentage within a 5 Km radius of a health service center rose from 34% to 50% and for those within 15 Km radius increased from 40% to 75%.. 0-1 year old infant immunization rate rose 45% to 91% and pre-natal care rose 40 to 75%

19. SOME CONDITIONS LEADING TO SUCCESS OR FAILURE OF WB FUNDED PROJECTS In general WB funding is most effective in countries with newly elected, and transparent democratic governmentsIn general WB funding is most effective in countries with newly elected, and transparent democratic governments WB projects tend to fail in countries with authoritarian governments as in many countries in AfricaWB projects tend to fail in countries with authoritarian governments as in many countries in Africa WB funded projects also fails in ethnically polarized and fragmented social and political systemsWB funded projects also fails in ethnically polarized and fragmented social and political systems

22. NEED FOR REFORMING THE WORLD BANK Globalization of market forces creates greater inequalityGlobalization of market forces creates greater inequality - 20% of world’s richest population receive 83% of world’s income, while the poorest 60% of world’s population get 5.6%; while the poorest 60% of world’s population get 5.6%; - Also the worlds’s 20% richest population consumes 70% of energy, 75% of metals, - Also the worlds’s 20% richest population consumes 70% of energy, 75% of metals, 85% of wood, 60% of food and produces 75% of pollution; 85% of wood, 60% of food and produces 75% of pollution; World Bank is wrong that economic growth will solve all World Bank is wrong that economic growth will solve all the problems society faces; the problems society faces; Current real functions of institutions like the WB are considered by some to integrate 3 rd world elites into the global system rather than to promote development;Current real functions of institutions like the WB are considered by some to integrate 3 rd world elites into the global system rather than to promote development; Many WB policies have worsened the conditions of many countriesMany WB policies have worsened the conditions of many countries WB emphasizes on expanding products for export rather than for domestic consumption;WB emphasizes on expanding products for export rather than for domestic consumption; The free market economic policies pushed by the WB is not considered to be the same industrialized countries followed to develop themselves;The free market economic policies pushed by the WB is not considered to be the same industrialized countries followed to develop themselves; Globalization from below rather than from above is the preference of many developing countries.Globalization from below rather than from above is the preference of many developing countries.

23. THANK YOU

24. WORLD BANK LOAN VERSUS GDP IN Chad