THE WORLD BANK

An Overview of World BankMotto Working for a World Free of PovertyFormation July 1944; 71 years agoType Monetary International Financial OrganizationLegal status TreatyPurposeCreditingHeadquarters. Washington, D.C., United StatesRegion. WorldwideInstitutions  the International Bank for Reconstruction and Development (IBRD), and the International Development Association (IDA)Membership. 189 countries (IBRD). 173 countries (IDA)Key people. Jim Yong Kim, presidentParent organization. World Bank Group

World Bank was formed in July 1944 at the Bretton Woods Monetary Conference in Bretton WoodsThe headquarters buildings are in the Washington DC, United States.The president of The World Bank has always been a US citizen nominated by the US which is the largest shareholder.The current president , Jim Yong Kim became the 12th President of the World Bank Group on July 1, 2012.

Is a component of the World Bank Group and a member of the United Nations Development Group.World Bank is an international financial institution that provides loans to developing countries for capital programs.Comprises of the International Bank for Reconstruction and Development Association (IBRD) and the International Development Association (IDA).

PRESIDENT- JIM YONG KIM

History OF World Bank1944–1974 - Before 1974, the reconstruction and development loans provided by the World Bank were relatively small. The Bank's staff were aware of the need to instill confidence in the bank. Fiscal conservatism ruled, and loan applications had to meet strict criteria.The first country to receive a World Bank loan was France in 1947. 

1974–1980 - From 1974 to 1980, the bank concentrated on meeting the basic needs of people in the developing world. The size and number of loans to borrowers was greatly increased as loan targets expanded from infrastructure into social services and other sectors

1989 (present time) - Beginning in 1989, in response to harsh criticism from many groups, the bank began including environmental groups and NGOs in its loans to mitigate the past effects of its development policies that had prompted the criticism. It also formed an implementing agency, in accordance with the Montreal Protocols, to stop ozone-depletion damage to the Earth's atmosphere by phasing out the use of 95% of ozone-depleting chemicals

Objectives of the World BankThe principle objectives of the world bank were:

1. Help to improve the lives of under-served populations worldwide2. Eradicate extreme poverty and hunger3. Achieve universal primary education4. Promote gender equality5. 4.Reduce child mortality6. Improve maternal health7. Combat HIV/AIDS , malaria and other diseases8. Ensure environmental sustainability9. Develop a global partnership for a development

What is Governance?Governance consists of the traditions and institutions by which authority in a country is exercised. This includes the process by which governments are selected, monitored and replaced; the capacity of the government to effectively formulate and implement sound policies; and the respect of citizens and the state for the institutions that govern economic and social interactions among them.

What Constitutes good governance according to World Bank

1.Public sector management(equitable & inclusive)

2.Accountability3.A legal framework for development4.Transparency5.Participation

1.PUBLIC SECTOR MANAGEMENT

This deals with the improvement in the efficiency of the public institutions.The World Bank define “government effectiveness” as: “measuring the quality of public services, the quality of the civil service and the degree of independence from political pressures, the quality of policy formulation and implementation and the credibility of the government’s commitment to such policies”.

Continuation…Examples of a good public sector mgt are:

i)Public investmentsii)Good budget planning concerning operation

and maintenance andiii)Strengthening the budget process

2.ACCOUNTABILITYAccountability is described as holding public officials /government responsible for their actions.At the political means making rulers accountable to the ruled.The concept of accountability is equating one performance with another specific outcome.

3.LEGAL FRAMEWORK FOR DEVELOPMENT.

This refers to the rule of law approach.It refers to a substantive dimension that includes the contents of laws and the legal concepts such as justice, fairness and liberty.All the above legal framework helps in the development of the private sector and the relation with the public.

4.TRANSPARENCYTransparency would is beneficial in a number of ways;

i)Decision making- Helps in the access to information on governmental policies and transparency of the decision processes.

-The population would benefit from this understanding and have the possibility to influence the decision-making processes.

Continuation…iii) Prevention of corruption-Transparency improves the interaction between government and the public in terms of rendering more transparency in the decision-making processes .

-This steers the government in using the funds on major challenges because a good decision has been arrived at.

Continuation…Former World Bank president Wolfowitz stressed: “Improving governance is certainly about fighting corruption, although it is also about much more than fighting corruption”.

5.PARTICIPATIONAccording to World Bank,participation is the process through which stakeholders influence and share control over priority setting, policy-making, resource allocations and access to public goods and services. Participation is also a cross-cutting theme throughout good governance. Especially accountability and transparency that focuses on the participation of the population.

WHAT IS GOOD GORVENANCE THEN?

The manner in which power is exercised in the management of a country’s economic and social resources for developmentThe manner in this case combining all the contents of good governance discussed above.

The (Gross National Income) GNI Per capita

The classifications of GNI per capita;1.Low income countries2.Lower middle income countries3.Upper middle income countries4.High income countries

Continuation…Comparisons of national wealth are frequently made on the basis of nominal GDP and savings (not just income), which do not reflect differences in the cost of living in different countries (See List of countries by GDP (nominal) per capital); hence, using a PPP basis is arguably more useful when comparing generalized differences in living standards between nations because PPP takes into account the relative cost of living and the inflation rates of the countries, rather than using only exchange rates, which may distort the real differences in income. This is why GDP (PPP) per capita is often considered one of the indicators of a country's standard of living although this can be problematic because GDP per capita is not a measure of personal income.

Indices of African Nations

List of the indices of African Nations

COMPARISON OF NIGERIA AND SAO TOME

NIGERIA

Inflation RateInflation Rate in Nigeria averaged 12.13 percent from 1996 until 2016, reaching an all time high of 47.56 percent in January of 1996 and a record low of -2.49 percent in January of 2000. Inflation Rate in Nigeria is reported by the National Bureau of Statistics, Nigeria.

Corruption IndexNigeria is the 136 least corrupt nation out of 175 countries, according to the 2015 Corruption Perceptions Index reported by Transparency International. Corruption Rank in Nigeria averaged 118.30 from 1996 until 2015, reaching an all time high of 152 in 2005 and a record low of 52 in 1997.

Open MarketsNigeria’s average tariff rate is 10.1 percent. Meat and poultry imports are restricted. Foreign investors face regulatory and judicial barriers. The government’s import substitution policy interferes with trade and investment flows.

ContinuationFinancial-sector reform is ongoing, but the state continues to influence the allocation of credit. Measures to improve access to finance for local small and medium-sized companies have been introduced.

Sao Tome

Principle of GDPAs of 2014 the country was worth 0.35 billion dollars. This represents less than 0.01 percent of the world economy.

Continuation…Since the gross domestic product (GDP) is equal to the total expenditures for all final goods and services produced within the country in a stipulated period of time. It can thus be inferred that the citizens of Sao Tome have minimal disposable income, low consumerism, which are vital to growth in GDP.

Continuation…Take for instance Nigeria with its large population as opposed to Sao Tome and it minimal population. The larger the population, the larger the pool of consumers disposable income and rate of consumerism

High Inflation

The average inflation rate in the country from 1997 to 2016 was rated at 16.30% with an all-time percentile of 86.80% in 1998. But as of now, it rated at 6.2% as of May 2016.

Corruption Index

According to the 2015 Corruption Perceptions Index reported by Transparency International, it was ranked as the 66th least corrupt country of the 175 countries that were ranked.

Open MarketsDomestic and foreign investors are generally treated equally under the law. The underdeveloped financial sector does not provide much access to banking services for a large portion of the population.

Continuation…With such institutional structures local investors are disadvantaged owing to the fact that the native population is already disadvantaged. Further due to the fragile market, credit services are not accessible to the masses.

Resource Based EconomiesSao Tome’s economy is driven by cocoa production and a young tourism industry. Like most of African resource based economy, the rate of accountability is wanting and the amount of technology used in such industries is beyond such nations. It has been termed as the ‘resource-curse’ that has been seen in African resource based economies

Continuation…Though both are resource based economies, it is clear that oil is more profitable and economically vialble

CRITICS ON THE GOVERNANCE ON THE WORLD BANK

The World Bank has long been criticized by non-governmental organisations such as the indigenous rights group Survival International, and academics including its former chief economist Joseph Stiglitz,Henry Hazlitt and Ludwig Von Mises.The following are the Criticisms:

Governance of the World BankOne of the strongest criticisms of the world bank has been the way in which it is governed.While the world bank represents 188 countries, it is run by a small number of economically powerful countries.

Continuation…These (the economically powerful) countries (which also provide most of the institution’s funding) choose the leadership and senior management of the World Bank and so their interests dominate the bank.

Continuation… Decisions are made and policies implemented by leading industrialized countries—the G7—because they represent the largest donors without much consultation with poor and developing countries.

Unequal Voting PowerTitus Alexander argues that the unequal voting power of western countries and the World Bank’s role in developing countries makes it similar to the South African Development Bank under apartheid, and therefore a pillar of global apartheid.

ConditionalityThe World Bank often attach loan conditionality based on what is termed the ‘Washington Consensus’, focusing on liberalization of trade, investment and the financial sector, deregulation and privatization of nationalized industries.

Continuation…Often the conditionality is attached without due regard for the borrower countries’ individual circumstances and the prescriptive recommendations by the World Bank fail to resolve the economic problems within the countries.

Over-emphasis on Private SectorIt is feared that this may undermine the role of the state as the primary provider of essential goods and services, such as healthcare and education, resulting in the shortfall of such services in countries badly in need of them

Continuation…As an increasing shift from public to private funding in development finance has been observed recently, the Bank’s private sector lending arm – the International Finance Corporation (IFC) has also been criticized for its business model, the increasing use of financial intermediaries such as private equity funds and funding of companies associated with tax havens

Group Members

1. Hanifa Mohamed 2. Nthuku Mumo3. Samira Tifow4. Faaiza Khan5. Abdulsami Gaid6. Lynnette Luba7. Berguy Kinsila8. Rita Amadi9. Michael Kiragu10. Brian Kabui

11. Bhagyashree Halai12. Manish Halai13. Richard Muro14. Ravina Shah15. Sarah Mwangi16. Ian Kola 17. Margaret Mutuku18. Gilbert Etemesi19. Veronicah Mwangi20. Faith Kamau

END

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