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David Malpass: Development in a Time of Upheaval

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World Bank Group President David Malpass today called our current era of high inequality and reversals in global development progress a “time of upheaval,” and he outlined steps to help boost economic growth, shorten the crisis, resume development, and lay a strong foundation for a future that is more prosperous and better prepared for global disasters like COVID19.

Reversals in development threaten people’s lives, jobs, livelihoods, and sustenance. In many places around the world, poverty is rising, living standards and literacy rates are falling, and past gains on gender equality, nutrition and health are sliding backwards. For some countries, the debt burden was unsustainable before the crisis and is getting worse. Rather than gaining ground, the poor are being left behind in a global tragedy of inequality. This drastic narrowing of economic and social progress is creating a time of upheaval in economics, politics and geopolitical relationships.”

Speaking in Khartoum as the first Bank Group President to visit Sudan in nearly 40 years, Malpass noted recent progress the country has achieved. “Over the past few years, you have made a tremendous effort to put people on a forward path, amid very adverse conditions. Two years ago, Sudan’s transitional government inherited a deeply damaged economy and society that had suffered decades of conflict and isolation. Even as the people resolved to break with the past, Sudan faced extraordinary headwinds: from the COVID-19 pandemic, from a locust plague, from unprecedented floods, and an inflow of refugees escaping conflict from across the border.”

“Yet the country pressed forward with bold reforms, re-engaging with the international community, clearing World Bank arrears with the help of a U.S. bridge loan, and in June reaching the decision point for the Heavily Indebted Poor Countries – or HIPC – initiative…While there is much work ahead, I commend the Sudanese authorities, civil and military, for their efforts and achievements in working together toward a better future. It’s critical to avoid political slippages because there is no development without peace and stability. I would also like to acknowledge the remarkable resilience of the Sudanese people – your drive to build a better Sudan despite the challenges is truly inspiring.”

Malpass noted the global pandemic has taken massive toll on poverty: “The COVID-19 crisis has resulted in increased poverty rates again after decades of steady decline. It has pushed nearly 100 million people into extreme poverty, with several hundred million more becoming poor, many of them in middle-income countries.”

He noted that while a turnaround is possible, risks remain. He recalled how  the deadly Spanish Flu of 1918-20 was followed by extremely rapid economic growth – but also by wider inequality, and dangerous financial vulnerabilities that culminated in the prolonged Great Depression.

Malpass posed a question for the international community: What should we do to boost growth that is inclusive, broad-based, and sustainable and avoid a lost decade for development? “First, we need a stronger focus on the key priorities, with clarity on how we approach and measure them…And second, we need much bigger scale to achieve impact.”

Malpass noted four areas in which determined action should make a difference: achieving economic stability; leveraging the digital revolution; making development greener and more sustainable; and investing in people.

Achieve economic stability

Malpass noted that many developing countries made extraordinary efforts to support their people and keep economic activity going during the pandemic. “Many have gone beyond what they could afford, especially as debt in developing economies was at record highs when the pandemic hit.”

When the debt service suspension initiative – or DSSI – expires at the end of this year, low-income countries that resume debt service payments will see their fiscal space shrink to purchase vaccines and finance other priority expenditures, Malpass said. “It’s time to pursue a gradual and people-oriented fiscal consolidation and restructure unsustainable debt.  Enhanced and accelerated implementation of the G20’s Common Framework will be critical on this front.”

Malpass called for greater global cooperation, including private sector participation, to provide debt relief to the world’s poorest countries and fund growth-enhancing investments. “In Sudan, for example, global cooperation that included the U.S., France and the UK helped the country clear its arrears with the World Bank, IMF and other IFIs, making possible more than $50 billion in debt relief in what will be the largest HIPC initiative ever.”

In addition to better debt management, Malpass said countries have to eliminate wasteful public expenditures, make service delivery more efficient, and reallocate public resources to their most productive uses. “This is also a time for proactive debt management to reprofile payments while international interest rates remain low. There need to be concrete steps to improve the transparency of debt contracts, increase accountability and ensure decisions draw on comprehensive information. Lower-income countries need to prioritize concessional financing and avoid the high interest rate financing that has become increasingly problematic. Focusing this agenda for each country and measuring the progress will be critical.”

Leverage the digital revolution

The faster adoption of digital solutions can radically expand access to finance and create new economic opportunities, Malpass said, noting that digital solutions can increase competition in product markets and enable people to sell services online, connecting them to national and global markets. “Supporting this transformation requires many actions at scale: investing in digital infrastructure, eliminating monopolies in the telecom sector, providing national IDs, and creating an enabling regulatory environment.”

“The digital revolution can also transform the public sector. For example, it allows a radical rethink of safety nets systems. Across the world we are seeing programs move from in-kind and cash delivery to digital delivery, direct to people’s bank accounts or visible on their phones. Similarly, in both the formal and informal sectors, new payment systems enable daily purchases through phones, using QR codes and other technologies. Kenya and many other African countries have extensive experience on this,” said Malpass.

Make development greener and more sustainable

Malpass noted that the international community is strongly committed to slowing the increase in atmospheric carbon and to reducing climate impacts on the most vulnerable. “A key step is to stop the creation of new coal-fired plants, decommission existing ones, and substitute them with cleaner sources of electricity. We should support countries in a “just” transition, which includes taking care of the workers affected.”

“This is also the time to reinvigorate often-stalled power sector reforms. Energy subsidies are expensive and distortive, while removing them needs to be done in ways that solve underlying inefficiencies and increase access. Aiming for clean, affordable energy requires competition in electricity generation and distribution, as well as a truly independent regulator…Transportation is another major source of emissions. With more urbanization expected in developing countries, infrastructure and design of cities can make an enormous difference. Instead of sprawling metropoles where commuters spend hours on the road, governments can aim for more compact cities with efficient and clean public transportation systems.

In the climate change efforts, both mitigation and adaptation, and the development effort more broadly, we need to prioritize and focus efforts for the largest impact per dollar spent and look for solutions that are rapidly scalable.”

Invest in people

Malpass highlighted the importance of investing in people’s long-term health and education – the human capital agenda. “Strengthening education and health systems takes more than just providing budgetary resources in an efficient and prioritized way. For example, aligning incentives for teachers and health care providers – public or private – with the needs of the people they serve is important. And finding scalable solutions to enhance health care and improve the quality of education, including through distance learning, is also critical. 

“Nowhere is human capital accumulation more important than in conflict-affected countries, where most poor people live today. Assisting refugees and host communities is a key priority. Security is essential, but soldiers can’t win the battle of development. Change is more likely to come from small victories won across millions of households over time.”

Malpass noted the role the World Bank Group can play. “The World Bank Group is uniquely endowed and positioned to support countries with the four priorities I have outlined — through finance and know-how for governments, while mobilizing the private sector. We have unmatched experience working with countries, using technical experts across all the key sectors.”

Combat reversals in development

“This unprecedented crisis has set in motion a time of upheaval. The many choices in coming years will determine whether developing countries suffer a lost decade or can usher in rapid growth and economic transformation,” said Malpass.

To succeed requires the active participation of the public and private sectors across countries, civil societies and foundations, indeed the whole international community working together. These efforts require leaders to be ambitious for the prosperity of people. And they require focus and scale throughout our development work.”

Development

With 1.3 million annual road deaths, UN wants to halve number by 2030

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Road accidents are still responsible for 1.3 million annual deaths and 50 million injuries all over the world, but the United Nations has a Global Plan to halve road deaths and injuries by 2030.    

The plan is a key part of the Decade of Action for Road Safety 2021-2030 and was discussed, on Friday, at an event supporting the High-Level Meeting on Global Road Safety at the General Assembly in New York. 

Opening the discussion, the President of General Assembly, Abdulla Shahid, said that the world needs to address this “unnecessary and tragic burden on families, communities and economies.”   

“Road accidents are entirely preventable, and our priority must be exactly that, to implement preventive measures”, he continued.  

Necessary action 

Mr. Shahid highlighted the importance of the Global Plan, but warned that “unless it is implemented, it is nothing more than a plan of action.” 

Looking ahead, he said implementation by national and local governments will require two main elements: financing and the engagement of relevant actors.    

With a notable funding gap in most countries, 90% of road deaths happen in low and middle-income countries. 

For Mr. Shahid, this means that achieving the targets will require increased support to these countries.  

Road traffic crashes are also the leading killer of children and young people worldwide, aged five to 29.  

As things stand, they are set to cause a further estimated 13 million deaths and 500 million injuries during the next decade. 

Personal stories 

During Friday’s event, Member States heard from families who lost loved ones, politicians that led the way, grassroot youth working on advocacy programs, and both government and non-governmental organizations.  

For the President of the General Assembly, “each is a story that will foster greater understanding and knowledge on how we can better engage on global road safety.” 

Mr. Shahid invited Member States, civil societies, and the international community to use these exchanges “as an opportunity to build collective commitments and strengthened partnerships”.   

“Global road safety is a shared responsibility that must be prioritized and integrated”, he argued.   

For him, achieving safety would contribute to the achievement of Sustainable Development Goals under education, health, and the environment, among others.   

The High‑Level Meeting on the topic will be held in July next year, under the theme “The 2030 horizon for road safety: securing a decade of action and delivery”. 

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Development

Strong Producer Organizations Key to a Vibrant Farming Sector

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Scaling up agricultural production among small farmers through clustering and organizing them into cooperatives and various types of producers’ organizations, and forging partnerships with agribusiness firms can help raise their incomes and subsequently spur the socio-economic transformation of the Philippine countryside.

A report titled “Realizing Scale in Smallholder-Based Agriculture: Policy Options for the Philippines” – launched jointly by the World Bank and the Department of Agriculture (DA) – said that there are rich lessons in the country and abroad for these clustering and consolidation of activities on-farm and along the value chain to succeed and transform the agricultural sector.

One notable example of this approach, the report said, is the Philippine Rural Development Project (PRDP), which is currently implemented by the DA. The PRDP clusters or organizes producers into enterprises that take a business-oriented approach to farming and fishing, supported through complementary investments in infrastructure such as farm-to-market roads, irrigation, post-harvest facilities, and cold storage.

“To succeed, efforts at clustering and consolidation needs to be voluntary, built on trust and confidence, and collaborative relationships among stakeholders—whether they are farmers, communities, municipalities, other local government units, or small and larger agribusiness enterprises,” said Ndiame Diop, World Bank Country Director Brunei, Malaysia, Thailand, and the Philippines.

“Where different approaches to clustering land management are not feasible, support for the mechanization of farming and post-harvest operations may be an alternative or complementary strategy for smallholder-based systems to increase farmer productivity and incomes, both on and off the farm,” Diop said.

Philippine agriculture is dominated by small farmers and fishers who operate independently, mostly using traditional production practices and earning low incomes. A typical farmer earns an average of P100,000 pesos each year, well below the poverty line (based on 2015 PSA figures).

Average farm size declined from three hectares (ha) per family per holding in the 1980s to only 0.9 ha per family per holding in 2012. These increasingly smaller farms are often split into more fragmented blocks. The country has some 5.56 million farms, totaling 7.2 million hectares, of which more than half (57 percent) are one ha or less, 32 percent are one to three ha, 9 percent are three to seven ha, and only two percent are seven ha or larger.

Agriculture Secretary William Dar has highlighted that using modern technology, schemes like block farming, trust farming, and contract farming can make farming more efficient and profitable for farmers and their partners in agribusiness ventures. With higher and better-quality production, linking agriculture to the domestic and global manufacturing sectors and accessing markets become easier, he said.

“Finding opportunities for clustering and consolidation of small and medium-sized farms as well as partnerships with agribusiness enterprises – to bring about economies of scale (and lower per-unit cost of production), particularly for crops that require mechanization and extensive use of technology – is part of the ‘new thinking’ of the Department of Agriculture,” said Secretary Dar.

“We want to collectively empower farmers, fisherfolk, and the private sector to increase agricultural productivity and profitability, taking into account sustainability and resilience,” the DA chief added.

Global experience shows that forcing collaboration among farmers and agribusiness enterprises through decree or subsidies (top-down approach) usually does not work but those that emerge from farmers’ bottoms up collective initiatives yield good results.

The report says that the country can explore various arrangements based on global experiences, including:

  • Realizing scale in primary production. In the Philippines, perhaps the most promising areas to pursue clustering can be among selected irrigation schemes where water user associations are already well established; and within Agrarian Reform Communities supported by the Department of Agrarian Reform.
  • Supporting market-oriented producer organizations. Encouraging the growth of cooperatives and producer organizations. In the East Asia region, Japan, South Korea, and Taiwan have had especially rich experiences promoting farmer groups or cooperatives.
  • Fostering contract farming, productive alliances, or other linkages between farmers groups and agricultural enterprises. These are well understood in the Philippines and can be scaled up.

Elsewhere in the region, contract farming has become increasingly common in some value chains, including value chains for specialized rice varieties or rice production systems.

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Saint Lucia Builds Investment Reference Guide to Boost Sustainable Development

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In partnership with the Government of Saint Lucia, the World Economic Forum is launching the Country Financing Roadmap for the SDGs. It aims to help Saint Lucia unlock sources of funding, remove investment bottlenecks and develop a more coordinated approach for financing projects that are environmentally friendly or can help people develop new skills.

The Country Financing Roadmap for Saint Lucia provides an overview of priority initiatives for leaders to assess and action project work – potentially saving money and helping to identify synergies across funding areas.

For example, the initiative brought together reskilling programmes with $12 million in total budget that can support the country’s economic recovery efforts – potentially supercharging efforts. These include a collaboration between the European Commission and Forte, to help 500–600 people develop skills related to hospitality, digital skills and green or blue economy by the end of 2022, at no upfront cost to the government.

Another project, the Caribbean Climate-Smart Fund initiative by the Rocky Mountain Institute (RMI) and Lion’s Head Global Partners (LHGP), is working towards mobilising both private and below market rate capital to finance a $80 million project pipeline dedicated to renewable energy in Saint Lucia.

“Finding viable solutions in the short, medium and long term to the myriad challenges that plague small island developing states (SIDS) like Saint Lucia is critical to safeguarding and putting the needs of our people first while achieving meaningful post-COVID socioeconomic recovery and implementing the Sustainable Development Goals,” said Wayne Girard, Minister in the Ministry of Finance, Economic Development and the Youth Economy, Government of Saint Lucia. “The CFR not only presents Saint Lucia with actionable options to unlock some of the financing and investment bottlenecks that limit sustainable development, it also presents a useful mechanism for replication across other SIDS in the Caribbean region. Saint Lucia is committed to continuing its work with the Sustainable Development Investment Partnership (SDIP), to advance a regional approach to driving our collective capacities to build back better.”

“Saint Lucia has demonstrated its commitment to meeting the SDGs by embarking on several important initiatives, with some of the most important focusing on financing targets,” said Sean de Cleene, Member of the Executive Committee of the World Economic Forum. “We hope that this CFR initiative will create opportunities for Saint Lucia and other countries to fast track similar impact projects.”

The CFR is a country-led initiative in collaboration with the Sustainable Development Investment Partnership (SDIP) and a joint initiative of the World Economic Forum and the Organisation for Economic Co-operation and Development (OECD). Its goal is drive economic recovery and achieve the Sustainable Development Goals by presenting viable solutions that address barriers to investment and attract greater sources of capital.

As a small island nation, Saint Lucia is vulnerable to economic shifts and continues to expand recovery efforts due to the consequences of the COVID-19 pandemic, which pushed the country to an 86.5% debt-to-GDP ratio for 2020. In 2019, tourism accounted for 80% of the nation’s labour market which faced a reduction in jobs from 63,400 in 2019 to 41,600 in 2020 as a result of the crisis, according to the World Travel and Tourism Council. Barriers to sustainable growth also hinge on the population’s dependence on fossil fuels which, through a successful transition to renewable energy, could increase self-sufficiency, equity, and environmental sustainability.

Alongside the CFR, the government in collaboration with the United Nations Office for Project Services (UNOPS) and the University of Oxford launched the Saint Lucia National Infrastructure Financing Strategy developed using the Sustainable Infrastructure Financing Tool (SIFT), which complements the CFR and further explores the opportunities for sustainable infrastructure financing in the country.

The Sustainable Development Investment Partnership plans to continue its support to the Government of Saint Lucia and regional organisations in hosting a series of discussions on reskilling and renewable energy solutions with over the next six months.

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