Pvt sector to join WB on aid

FE Team | Published: October 19, 2007 00:00:00 | Updated: February 01, 2018 00:00:00

Krishna Guha, FT Syndication Service
WASHINGTON: Private sector companies will for the first time join governments in contributing to the International Development Association (IDA), the World Bank's main fund for poor countries, the bank's president, Robert Zoellick, has told the Financial Times.
Mr Zoellick said a "couple of private sector companies" had offered to pledge funds to help replenish the IDA. The agreement is subject to approval by the bank's board. The World Bank was unable to release the names of the companies.
The money raised from the private sector is likely to be only a small share of the total, but is part of a strategy to diversify the funding base in order to build the IDA for the future.
Mr Zoellick said the bank wants to "broaden the pool of contributors", bringing in middle-income countries as new donors as well as private corporations.
He said South Korea, Turkey and Egypt had offered to contribute to the current fund-raising round. Mr Zoellick has also been talking to China about contributions.
However, the bank president made it clear that, while he is actively soliciting new donors, he will press the big industrialised economies to deliver fully on their commitments to boost aid at this weekend's bank annual meeting.
Mr Zoellick refused to give a target for the total fund-raising. However, the bank is likely to seek roughly $25bn from donors, a big increase from the $18bn last time, because of the need to make up for repayments lost due to debt relief.
The new bank president said that, in terms of donations, European countries should be able to do better because of the appreciation of the currency. "It is harder for Japan and the US," he added.
However, he said the US had promoted the notion that this should be an "ambitious" fund-raising round at the last meeting of officials. He has also visited Japan in a bid to muster support for an increase in funding there.
Mr Zoellick, who inherited an institution in turmoil following the departure of his predecessor, Paul Wolfowitz, said the bank was now in a better position to ask for funds. Since taking over in July, he has smoothed internal tensions, brought in a new senior deputy, former Nigerian finance minister Ngozi Okonjo-Iweala, reorganised top management, offered $3.5bn of the bank's own funds towards the IDA and laid out a strategic framework. "We have got the ship of state righted a bit," he said.
Mr Zoellick emphasised that his agenda was "flexible" and he would be seeking advice from ministers at the annual meeting as to how to refine it.
The bank president will also use the meeting to explain how the bank hopes to support global efforts on climate change.
He avoided talk of a "grand bargain" of increased aid in return for efforts by the developing world to curtail emissions of greenhouse gases. But he said it was a "realistic approach" that is "very important to get the developing countries to buy into the climate change agenda."
Mr Zoellick said many poor countries, particularly in Africa, fear global efforts on climate change will come at the expense of aid, rather than in addition to it. He said the bank's existing work on clean energy was important, but he was willing to be drawn "more into climate change support".
In a speech on Monday he will lay out a number of ways in which the bank can help, including building climate change strategies into national development plans, developing new financing mechanisms and markets, spreading know-how and speeding technology adoption, as well as supporting finance. "Climate change should not be the frosting on the development cake. It has got to be part of the recipe of development," he said.
Mr Zoellick said that in all its work, the bank should seek to be a catalyst and integrator rather than just a lender.