A Battle Plan for the World Bank

Why Refugees Are at the Center of the Fight Against Poverty

The abrupt resignation of Jim Yong Kim as president of the World Bank on February 1—more than three years before the scheduled end of his term—sent ripples of concern through the global development community. With the multilateral system under sustained attack, the last thing it needs is instability at the top.

On February 6, U.S. President Donald Trump nominated David Malpass, a U.S. Treasury official, to succeed Kim at the bank’s helm. Other countries have until mid-March to put forward their own candidates, but the United States controls 16 percent of votes in the executive board, giving Malpass every chance of becoming the latest in a long line of American leaders at the bank.

The new president will face a big task. The institution’s core mission is to end extreme poverty and promote sustainable development. But the geography of poverty is changing, shifting more and more toward conflict-affected sites. Kim understood that fulfilling the bank’s mission meant tackling the consequences of war and forced displacement. It is essential that his successor continue on this path.

ON THE MOVE AND FORGOTTEN

Extreme poverty and conflict go hand in hand. By 2030, some 85 percent of extremely poor people—those living on less than $1.90 a day—will live in fragile settings, affected or threatened by war and other shocks. The number of armed conflicts around the world is 65 percent higher today than it was a decade ago. Many of these conflicts are civil wars, which tend to last longer than interstate wars and are much more likely to recur after a peace agreement has been reached.

As a result, displacement is lasting longer—at least ten years for the average refugee. During those years, many of the displaced are unable to work or go to school. The host countries are often overburdened: almost 90 percent of the world’s 24.5 million refugees live in low and middle-income countries, which already struggle to educate their populations and expand their economies. An influx of refugees can threaten tentative progress toward development. And when host countries do develop, refugees are often left behind. Refugee children are five times less likely to attend school than their peers.

The global response to the displacement problem has been underwhelming. Back in 2007, the United Nations reported a 28 percent shortfall on its humanitarian appeals. As of 2017, that number had risen to a shocking 40 percent. Most humanitarian aid addresses the short-term, basic needs of camp populations, even though the majority of refugees now live in urban areas. By circumstance or by design, national poverty surveys rarely include refugees. When countries submit their action plans for achieving the United Nations’ Sustainable Development Goals, they rarely account for the displaced populations they house. The goals themselves include neither indicators nor targets for tracking process among these populations.

TERMS AND CONDITIONS

During Jim Yong Kim’s seven-year tenure, the World Bank stepped into the breach. It expanded support for countries threatened by conflict and began to focus on transnational crises, including displacement, climate change, pandemics, and famine. In 2016, the bank started offering concessional financing—grants and loans with little or no interest—that allowed it to raise more than $2.6 billion for low- and middle-income countries that host refugees.

The model has the potential to be a game-changer. Instead of stopgap cash, the bank provides multiyear financing that allows refugee-hosting states to improve a broad range of services, from public infrastructure to health and education. The grants and loans support vulnerable host communities as well as refugees, thereby helping reduce friction between the two groups. 

The World Bank has pushed for legal reforms in the countries to which it provides financing. At the bank’s urging, governments have allowed refugees to move more freely, work legally, and send their kids to school. In exchange for the more than one billion dollars that the World Bank helped it secure in grants and loans, the government of Jordan provided its refugees with work permits, expanded the types of jobs they could take, and allowed them to run home-based businesses. Ethiopia made a similar agreement; a law that was passed in January gives refugees the right to attend primary schools and opens up pathways for legal work and residence outside camps.

Kim’s reforms have made a crucial difference at a time when refugee populations are rising and even wealthy nations are turning their backs. Whoever succeeds Kim at the World Bank must keep the momentum going. The tide of displacement is unlikely to ebb, and meeting humanitarian needs is an investment in stability, not an economic waste.

THE FIGHT AHEAD

This agenda is challenging. It requires officials to take up the thorny issue of refugee politics with host governments. Tackling poverty in the midst of conflict in South Sudan, Yemen, or Nigeria, for example, calls for a whole new set of skills.

The new World Bank president should refine and, ideally, expand financing for refugee response. To ensure that its financing improves the lives of refugees and hosts, the bank needs clear goals and benchmarks (think income levels and child literacy rates). The bank could use the targets and indicators enshrined in the UN’s Sustainable Development Goals as a blueprint, adjusting them to measure progress among refugee populations. It should also improve data collection on refugee well-being, which has been patchy. The new Joint Data Center, a collaboration between the World Bank and the UN High Commissioner for Refugees (UNHCR), could be tasked with fixing this problem.

The bank, under Kim’s leadership, was right to tie its financing to policy reform, and the new president should do the same. The sustainable development of host countries depends on the ability of refugees to thrive alongside the host population. Refugees need to be able to move freely, obtain quality education, access health services, get safe and decent jobs, and be protected from forcible return to the countries they came from. Bank financing has enabled a number of countries to make and implement regulatory changes that allow refugees to exercise these rights. To make this work more systematic and transparent, the bank could develop a refugee policy index that evaluates host countries’ policies and identifies necessary reforms. Progress on the policy front would be rewarded with eligibility for more financing.

The World Bank’s partnership with the UNHCR has been fruitful, but it is insufficient. The bank’s interlocutors should include states, humanitarian groups and NGOs with strong research and evaluation expertise (such as my own, the International Rescue Committee), and of course refugees themselves. Only such varied input will allow the bank to understand what is really needed and what isn’t. In Jordan, a bank-funded health project prioritized services in far-flung brick-and-mortar public clinics, forcing refugees to use money they did not have to travel for proper treatment and medication. As a result, some Syrian refugees have relied instead on underqualified doctors, self-medicated, or chosen to forego vital services altogether. Had the bank consulted Syrian refugees during the design phase of the program, it might have made a different set of investments that accounted for these challenges.

At a 2016 summit, 50 countries committed to raise financing for refugee-hosting countries by 30 percent, double the number of resettlement spots, and increase refugees’ access to schools and jobs. For the most part, progress has fallen far short of these commitments. But there are bright spots on the map—countries such as Jordan, Ethiopia, Uganda, and Cameroon, which are tapping into World Bank support.

It is up to the bank’s next president whether these outliers will come to represent the norm. The financing is on the line this very year: the bank’s next replenishment of the International Development Association—the most important source of funding for low-income countries—will take place in December. Renewed financing for refugee-hosting countries, in particular, should be a top priority.

In an era of humanitarian retreat, the bank’s leadership understood that meeting global development goals meant addressing the effects of conflict and displacement. Whoever takes over the bank next will inherit this mission and needs to carry it forward.


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