The World Bank African Countries Need

The case for bigger and transformative ideas, faster project implementation, better policy research, more and better data collection

An important weakness of the field of international development is that often the ideas that animate policies and programs implemented in low-income countries originate from academic, political, and multilateral institutions in or dominated by high-income countries. As a result, the real concerns of low-income countries seldom get prioritized as a matter of course.

Taking the ideas and concerns of people in low-income countries seriously isn’t just good for political correctness. It matters for program success. Reasonable people would agree that it is a good idea to avoid comical mischaracterizations of the state of the world or policy proposals that invariably collapse on first contact with politics or other contextual realities.

With this in mind, it is important that current efforts to reimagine the World Bank Group’s mission incorporate the real needs of low-income countries. Doing so would maximize the impact of the World Bank’s talents towards ending global poverty. As I previously noted, there is a lot of promise in reforming the World Bank in order to address the multiple crises of this moment.

I: When first world problems become everyone’s problems

Since a leaked copy of the reform roadmap appeared last year, several people have raised the alarm over proposed changes that would result in the World Bank focusing more on problems prioritized by middle and high-income countries. For example, the proposed focus on climate change might not be fully aligned with the growth agendas of low-income countries. This is not to deny that climate change is a global problem that requires collective solutions. Rather, it is a recognition that, while fully understanding the risks posed by climate change, low-income countries have more pressing concerns on their priority lists (see image below).

Here are Charles Kenny, Vijaya Ramachandran and Riddhi Kankaria of the Center for Global Development:

People in developing countries are concerned about climate change. Many there support carbon pricing and clean technology subsidies. But that doesn’t mean they want multilateral development banks, including the World Bank, to make climate the major focus of their work. World Bank clients rank climate low on the issues they see as vital to development or important for the bank to work on.

… On average across the 43 nations surveyed, less than 6 percent of respondents listed climate as one of their country’s top development priorities (that rises to 7 percent among the countries of the Organization of Eastern Caribbean States).

And here is Tyler Cowen of George Mason University writing in Bloomberg:

… contrary to the prevailing wisdom, the World Bank should not make climate change more of a priority. Climate-change issues are more closely associated with rich and middle-income countries than with the poorest countries. The very poorest countries, because they have small economies, do not as a rule emit much carbon. Indoor air pollution, such as burning wood or fuel for heat or cooking, is usually more of a problem. Those emissions can be toxic, and the World Bank should try to help reduce them. But that won’t do much to cut carbon emissions.

The World Health Organization estimates that about seven million people die each year from the direct effects of air pollution. For poorer countries, alleviating that problem should be a greater priority than fighting global climate change.

Both observations are spot on. I would also add that if history is anything to go by, the World Bank will not be able to operationally separate low-income countries’ growth agendas from the overall focus on climate change. The cases of labor regulations and environmental impact assessments come to mind (both, like climate change, are important policy concerns). Whenever organizations like the World Bank take on “first world” regulatory/policy frameworks, the net effect is often to increase costs and delay project implementation in low-income countries. I foresee the same thing happening with regard to climate change. There will be one climate change team and steam of research knowledge production to address the problem; and both will undermine low-income countries’ growth agendas by prioritizing climate mitigation and adaptation strategies designed for high-income countries.

There will likely be very little room to consider that, in the context of low-income countries, both ending poverty and saving the planet will require growth.

Beyond climate change, another global challenge raised in the roadmap document as a potential focus area is migration. Here, too, there is a distinct possibility that the World Bank’s migration experts will address the problem from the perspective of high-income countries. It is conceivable, for example, that some version of extending the borders of high-income countries to distant lands will be incorporated into the World Bank’s policy conditionality toolkit.

Overall, while I hope that the reform roadmap’s call to directly address the interconnectedness of developmental challenges will create room for big picture thinking at the World Bank, I also worry that the thinking will still continue to happen from the perspective of high-income countries. It is also worth noting that widening the World Bank’s mandate will increase the risk of staff being stretched thin, or picking and choosing their preferred areas of focus based on faddist motivations as opposed to clients’ real needs (some of this already happens, but it’s harder to monitor multitask agents with much bigger portfolios).

II: The World Bank African countries need

As the World Bank’s shareholders and other stakeholders discuss the roadmap document over the next several months, here are some considerations that should inform African countries’ submissions (the African Union has a working group that has yet to publicly announce its position on the roadmap document).

1. Embrace of bigger and transformative ideas

The dominant paradigms of international development have changed multiple times over the last 60 years — from major capital investments, to human capital, to institutions, to behavioral approaches. The general trend has been from macro to micro understandings of the process of economic development. Unfortunately, the changes have typically been marked by the complete abandonment of previous paradigms without a full considerations of why things did not work in past eras as anticipated. For example, what made African countries’ political economies in the 1960s unsuitable for large scale capital interventions? Has anything changed since then?

Asking and answering such questions would ensure that the focus remains on structural economic transformation as the goal. Now that industrial policy is back in vogue, African countries should reawaken the region’s ambitious policy imagination of the 1960s and take bold and smart gambles. They should also ask the World Bank to cultivate the expertise and allocate resources (even as it jealously protects the AAA rating) that can support the development and implementation of ambitious industrial policies (of course incorporating the many important lessons learned since the 1960s).

2. Faster project implementation

For an organization that is in the business of making economies work more efficiently, the World Bank can be atrociously bureaucratic (in a bad way) and unnecessarily slow. Such delays gum up policy planning and implementation in low-income countries. An under-appreciated consequence of this feature of World Bank project cycles is that it short-circuits political markets in low-income states. The fact that politicians often want to fit projects within their political business cycles should be seen as a feature and not a bug of electoral systems — especially by people who like the idea of having strong institutions and politicians who are responsive to the public.

Consider this paper that documents the delays and marginal benefits typical of World Bank projects (in this case using data from a last mile electricity connectivity project in Kenya):

We find that the [World Bank] WB’s requirements cause significant delays in implementation, with households at WB sites receiving their electricity connections on average 9.6 months later than households in sites that are funded by the AfDB. We can rule out that the conditions causing these delays generated statistically or economically meaningful improvements in power outages or voltage quality in the short term. However, we find a 0.6 standard deviation improvement in construction quality at WB site, driven by increased presence of pole caps, stays, and struts, which were key components examined during the WB’s additional inspection round. The estimates on several other key outcomes—such as household installation quality, cost, and electricity usage—are positive but generally modest in size and not statistically significant, although improvements may emerge in the longer run.

It is not clear whether the red tape and delays associated with World Bank projects are justified. Therefore, in addition to embracing ambitious developmentalist agendas, the reformed World Bank would increase the speed with which it implements projects. Again, enabling countries to implement projects within their political business cycles would likely go a long way in towards institutionalizing policymaking. In other words, World Bank projects should not be deliberately designed to exist outside of the normal policy feedback mechanisms in client states.

3. Better policy research

Research is one of the strong suits of the World Bank. However, there is a lot of room for improvement when it comes to policy research (which is different from providing recommendations based on academic findings).

For example, a common explanation for why policies fail in low-income countries is “the lack of political will.” This is usually a reliable indicator that the researchers did not do a good job of understanding the context, institutions, and the incentives of pivotal players. Good policy research seeks to find paths to success despite the expected suboptimal behavior of pivotal actors. Instead of proposing first best solutions then ascribing their failure to “lack of political will,” World Bank researchers should embrace the habit of taking context, institutions, and pivotal actors’ incentives seriously.

Doing so might require a multidisciplinary approach. In addition to hiring smart economists (who are well read and curious about non-OECD countries), the World Bank should consider hiring bigger cohorts of experts from other disciplines that are relevant to understanding the process of economic development. This is not a call to hire people who would “nuance” the World Bank to inaction. It is a recognition that economics graduate programs cultivate a limited set of skills.

Policy researchers would also have to be honest about the intended audience of their findings. Currently, a lot of what passes for policy research is targeted at fellow academics (peer reviewers at journals) and funders. Yet the real clients of policy research ought to be policymakers in low-income countries. African countries would benefit from policy research designs and processes that pay attention to context and are readily legible to policymakers.

4. More and better data

Understanding the true state of the world is an important step in the policymaking process. To this end, one needs data. The World Bank is already a great repository of data, but it can do more. Like with research, it ought to double down on this comparative advantage and help client states collect and analyze better data. The data collection and analysis agenda should include indicators that allow for cross-country comparisons as well as country-specific indicators that are relevant for evaluating government performance (including at the subnational level).

In the spirit of producing locally relevant knowledge, the World Bank should invest in strengthening public statistical agencies as well as supporting policy analysis (whether by academics or think tanks). Improving the salience and quality of economic policy debates in low-income countries would be a significant contribution in and of itself.

III: Conclusion

African countries have a lot of reason to worry about the World Bank’s proposed pivot to do more work in middle-income countries. As shown below, over the last 30 years extreme poverty has increasingly become an African problem. Eradicating poverty in the region will require a laser focus on growth. Therefore, the last thing the region needs is a World Bank that is distracted by the priorities of high-income countries or spread thin by an expanded mandate.

In the same vein, the process of reimagining the World Bank’s mission should not reproduce the habit of throwing out the baby with the bathwater. As Rachel Glennerster of the University of Chicago notes below, there are no silver bullets. Each specific paradigm’s theory of change has its strengths and weaknesses (depending on time and context).

Rachel Glennerster @rglenner

So what do we learn from this history of dev? Avoid silver bullet thinking. Improving lives is the goal. K & L, human capital & policies are all important. We should work on what we can practically fix b/c evid shows gains can be achieved even under bad policies & conditions END

Overall, African countries should push for a World Bank that is open to learning from the past, cultivating a tolerance for big and transformative ideas that may seem risky, embracing goal-oriented multidisciplinarity, and collecting more and better data to facilitate an accurate understanding of the state of the world.