The Role of the World Bank

1

• The Role of the World Bank
• in
• Fragile and Conflict-Affected States
• Alastair McKechnie
• Director
• Fragile and Conflict-affected States Group
• http//www.worldbank.org/fragilityandconflict

2
One of the Strategic Themes

• We need to address the special problems of
  states coming out of conflict or seeking to avoid
  the breakdown of the state.
• When the visionaries at Bretton Woods conceived
  of the IBRD over 60 years ago, the R stood for
  the reconstruction of Europe and Japan. Today,
  the R points us toward the challenge of
  reconstruction in states harmed by modern
  conflicts.
• Robert Zoellick
• October, 2007

3
Conflict Development Dimension

• Paul Colliers research on the economics of civil
  war
• 73 of people in the bottom billion have recently
  been through a civil war or are still in one
• A typical low-income country face a risk of civil
  war of about 14 in any five-year period . Each
  percentage point added to the growth rate knocks
  off a percentage point from this risk
• Risk of renewed conflict in post conflict
  countries is high50 of post-conflict countries
  relapse into conflict within 10 years.
• High rate of unemployed youth has a significant
  correlation with conflict onset
• Feasible actions could be taken to substantially
  reduce the global incidence of civil conflicts.
• The direct cost of a conflict in a typical
  developing country is about 60billion
• More than four-fifths of fragile IDA countries
  are or have been subject to conflict.
• For stronger performers, sharing a border with a
  fragile state is estimated to cause a loss of
  approximately 1.6 of GDP per annum.

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The World Banks role

• The World Bank was established with a specific
  mandate for post-conflict reconstruction the
  R in IBRD, the International Bank for
  Reconstruction and Development
• Concessional financing and grant window channels
  resources to poorest countries International
  Development Association, IDA
• Wide range of countries around the world, facing
  different challenges of fragility and conflict
• Activities financed have included
• economic governance and public finance systems
• civil service reform and capacity-building
• infrastructure rehabilitation private sector
  recovery
• service delivery
• DDR and safety nets for vulnerable groups
• Joint coordination of post-conflict recovery
  planning with the UN and key bilaterals

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Understanding fragile states?

• Historically, the Banks post-conflict unit
  provided a semi-annual monitoring report on
  conflict-affected situations to the Board of
  Executive Directors, using information reported
  by the country teams.
• Based on the 2002 Task Force on Low Income
  Countries under Stress, the Bank began to focus
  analytical and operational attention on fragile
  states, the low-income countries with the
  weakest policies and institutions.
• We use the same multi-variable index, the Country
  Policy and Institutional Assessment (CPIA), that
  we use to monitor all low-income countries.
• The CPIA rankings are published each year, and
  are the backbone of the IDA performance-based
  allocation system, or PBA

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A more refined understanding . . .

• Bank monitoring has always noted that there are
  middle-income countries with weak or no CPIA
  ratings, where aspects of fragility and conflict
  were clearly in evidence
• 2007 Working Group of Multilateral Development
  Banks anchored a consensus on broader definition
  that takes due account of the range of
  conflict-affected situations
• Thus, the Banks monitoring of fragile and
  conflict-affected states and situations includes
  countries with international peacekeeping or
  peace mediation missions
• We also support country teams in monitoring and
  responding to development challenges poised by
  sub-national conflicts or crises

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The Challenge and the Response

• challenge fragile states are significantly more
  prone to large-scale violence and civil conflict
  than other low income countries middle-income
  countries plagued by conflict are not able to
  reap the benefits of growth and development
  manifest in their more stable neighbors
• response need for range of institutional changes
  on country strategies, partnerships, human
  resources, and operational policies and
  procedures
• definition low country performance and
  institutional assessment (CPIA) rating (threshold
  is a CPIA of 3.2), and/or the presence of an
  international peacekeeping or peace mediation
  mission

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Key themes in global thinking

• OECD-DAC Principles of Good International
  Engagement in Fragile States and Guidelines to
  Preventing Violent Conflict
• Recognition of key linkages between development,
  peace and security hence, of peace-building and
  state-building
• Recognition of the need for strengthening the
  speed of aid response and field presence

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Situations of Fragility and Conflict Towards a
Differentiated Approach
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Post-conflict financing

• Low-income countries emerging from conflict, or
  re-engaging with the international community, are
  eligible for exceptional IDA allocations,
  providing resources in addition to their normal
  performance-based allocation
• Special grants from IBRD surplus have been
  provided to West Bank and Gaza, Kosovo, Liberia,
  and Timor-Leste, which were either non-member
  territories or in arrears to the Bank
• Grants from surplus have also allowed the Bank to
  contribute to multi-donor trust funds, as in
  Sudan
• Debt-distressed countries now receive 100 grants
• The LICUS Trust Fund and Post Conflict Fund
  provide limited bridging finance until IDA or
  surplus funds can be engaged
• Pre-arrears-clearance grants from a countrys IDA
  allocation are also available in specific
  exceptional circumstances

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Recent Bank reforms

• New Policy Framework
• Accelerated and Streamlined Procedures
• Strengthened Organizational and Institutional
  Support for country teams

12
Emerging Issues

• Fragility amongst middle/high income countries
  (Iraq, Lebanon)
• Sub-national fragile situations (Aceh, Mindanao,
  Jharkhand)
• Need for improved harmonization and coordination
  between national and international actors all
  along the spectrum of fragility and conflict
• Coordination is especially challenging in
  situations of deteriorating governance, where no
  one is sure they have the answer

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Peace-building, partnerships and the Banks role

• Peacebuilding goals involve a different range of
  international actors, but political-security-devel
  opment areas have historically been managed in
  stovepipes (nationally and internationally).
• Work is ongoing to improve coherence through
  closer collaboration between diplomatic, security
  and development actors (IFIs, bilaterals,
  OECD-DAC, Peacebuilding Commission, regional
  organizations)
• Country examples of partnerships to address
  peace-building linkages include
• Support to recovery and development planning
  which covers political governance and security
  sectors (Timor, Afghanistan, Liberia, Sudan,
  Haiti)
• Ground-breaking collaboration on Common
  Assistance Framework in DRC
• Public finance capacity-building across
  government, including security and political
  governance institutions (Afghanistan, Haiti,
  possibly DRC, Burundi)
• Joint approaches on economic governance and
  critical infrastructure with PKOs (Liberia, Haiti)

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Multilateral Efforts to Improve Coherence the
Post Conflict Needs Assessment (PCNA) and
Transitional Results Framework (TRF)

• Goal identify, prioritize and finance recovery/
  reconstruction needs by defining a joint plan
  that national and international actors can align
  around
• Historically focused on mobilizing resources to
  transition from relief to reconstruction (and
  towards development)
• Emerging focus is on
• Supporting the fragile peace through selective
  near-term actions basing recovery plan on strong
  conflict analysis
• Building capacity in communities and institutions
• Supporting economic stabilization and recovery
• Joint national-international exercise
• PCNA-TRF process involves national authorities,
  UN, WB, bilateral and multilateral donors,
  regional institutions and civil society
  organizations

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Democratic Republic of Congo

• Bank provides support through trust funds and
  investment operations there are currently no
  budget support operations. Funds currently made
  available on 100 grant basis in view of
  countrys debt burden, terms will be reviewed
  when country reaches HIPC completion point
  (expected as early as end-2008).
• Total IDA commitments amount to about US 1.9
  billion, and support dialogue with the
  authorities in the areas of social sector
  reforms, governance, decentralization,
  demobilization and disarmament, infrastructure
  rehabilitation, natural resource management, and
  private sector development.
• Current projects include infrastructure
  rehabilitation, including power and roads
  demobilization and reintegration emergency
  support to living conditions and urban, economic
  and social reunification, private sector
  development and social development, including
  multi-sectoral HIV/AIDS program and a recently
  approved education project.
• DRCs Country Assistance Framework (CAF) brought
  together 17 international partners, including
  Bank, United Nations, and key bilaterals
  including USAID, in a common strategic approach
  for economic assistance in the post-elections
  period. The CAF is expected to be the framework
  for over 95 of ODA to DRC over the next three
  years, and is viewed as a ground-breaking step in
  donor harmonization and coordination.

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Afghanistan

• As of January 9, 2008 the World Bank had
  committed US1.6 billion in IDA assistance to
  Afghanistan, financing 30 projects in public
  administration, infrastructure, education,
  health, customs, transport, and rural
  development.
• Rural and transport sectors are two largest
  shares largely due to the successful
  implementation of the two nation-wide programs
• National Solidarity Program (NSP) supports
  development of community demand-driven rural
  infrastructure and community level governance,
• National Emergency Employment Program (NEEP)
  provides short-term employment opportunities to
  the vulnerable segments of rural population
  through rural roads rehabilitation and
  reconstruction.
• Bank also administers Afghanistan Reconstruction
  Trust Fund (ARTF), on behalf of 27 donors
  (including USA), effective May 2002. ARTF
  provides coordinated funding support to
  Afghanistans recurrent budget, as well as
  investments in line with agreed budget
  priorities. The National Solidarity Program II
  and the Microfinance Project are the two
  fast-disbursing programs in the ARTF.
• Bank also actively engaged in analytical and
  advisory services Gender Assessment released
  January 2006 analytical work on Fighting
  Corruption is underway

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Liberia

• World Banks program in Liberia supports
  Governments post-conflict transitional program
• Economic Revitalization, including rebuilding
  basic public financial management and procurement
  systems and support for reform in the forestry
  sector
• Governance and Rule of Law, including civil
  service and legal and judicial reform
• Infrastructure and Basic Services, including
  emergency road rehabilitation urban works
  community development and emergency support to
  the health sector.
• Since reengagement in 2004, Bank has made
  available more than US 140 million in grant
  funding both from trust funds and IDA grants.
• IDA special post-conflict funding (both pre-and
  post-arrears clearance) is on 100 grant
  financing terms and annual commitment totals
  around 35 million.
• Liberias first post-war Development Policy
  Operation approved Dec 2007, cleared the
  countrys arrears totaling 400 million.
• High female illiteracy and low female enrolment
  in secondary education sizeable group of adult
  women and adolescent girls unprepared for social
  and economic opportunities
• World Bank partnering with Nike Foundation on 3m
  project to provide adolescent girls and young
  women with skills training for wage employment
  and entrepreneurship.

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Liberia (2)

• Bank program in Liberia seen as good practice
  example of collaboration and coordination in four
  specific ways
• post-conflict needs assessment and recovery
  planning in 2003 covered critical spectrum of
  economic, social, security, and political
  challenges with close involvement of bilaterals
  incl USA
• aggressive response to deteriorating governance
  and corrupt public finance under transitional
  government before 2006 elections was a tight
  collaboration between USA, EC, Bank, Fund, with
  political cover from UN and ECOWAS
• Bank country office in constant strategic and
  operational contact with USA (State, Treasury,
  USAID) other key bilaterals (EC)
• pioneering collaboration between Bank, UN
  Department of Peacekeeping Operations, UNDP, and
  Government to undertake critical road repairs
  using assets from peacekeeping and development
  actors together

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Kosovo

• The Bank began operations soon after the conflict
  in 1999.
• The Bank has provided IDA grants amounting to
  132 million under UNSC Resolution 1244 (1999),
  and IFC has invested 51 million in the private
  sector in a range of small and medium
  enterprises, among other sectors.
• The Bank's current active portfolio of grants
  amount to 51 million and include projects in
  education, energy, environment, public
  expenditure management, and business and cadastre
  development.
• The Bank strategy in Kosovo is implemented in
  partnership with a host of partners, including
  the EC, USAID, DFID, SIDA, the Dutch Office, etc,
  and with the Kosovo authorities (The Kosovo
  Government and UNMIK), to support programs
  primarily focused on strengthening the
  macroeconomic stability through sound fiscal
  policy and public finance management, and develop
  sources of economic growth in the short to medium
  terms.
• The Banks current strategy focuses on the
  demonstration of gradual but steady improvements
  in the capacity of institutions, client ownership
  and effective donor partnerships.
• The Bank, along with the European Commission
  (EC), is currently involved in the preparation of
  a Kosovo's Donors Conference slated for July 11,
  2008.

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Sudan Darfur

• In July 2006, the World Bank, African
  Development Bank and UN, with support from many
  donors, embarked on a Joint Assessment Mission (
  DJAM), which was suspended in September 2006
  because of the increased conflict and insecurity
  in Darfur
• The Bank report on Dimensions of Challenge for
  Development Background Volume in June 2007,
  contains the diagnosis of the six sector teams on
  the issues facing reconstruction and development
  in Darfur.
• The DJAM has been supported by a core
  coordinating group (CCG), including the
  Government of National Unity, the UN, the World
  Bank, AfDB, the African Union and selected
  donors, chaired by Netherlands.
• A LICUS grant for the African Union supports the
  Darfur-Darfur Dialogue and Consultations, as well
  as other peace-building activities, and provides
  for possible technical assistance for the Darfur
  peace negotiations.
• A Post-Conflict Fund (PCF) grant supports
  research and knowledge dissemination on
  institutions and key aspects of the socio-economy
  of Darfur.
• The grant is also intended to build the capacity
  of local partners in Darfur, particularly NGOs
  and CBOs, to prepare development programs
• Additional work to fill knowledge gaps is
  currently under way to enable operational
  readiness to quickly start reconstruction and
  development activity when peave and security are
  restored in Darfur.