The Netherlands - World Bank Group Partnership: Strategic and Challenging

Weblogbericht | 08-02-2018

Geschreven door Axel van Trotsenburg.

Over the years, The Netherlands and the World Bank Group (WBG) have built a very close and strong partnership that is not only driven by financial considerations but also, and perhaps more importantly, by a constant dialogue on development issues.

Ideas and approaches that were often promoted by The Netherlands and other partners, (including the social dimensions of development in the 1980s or debt relief in the 1990s and climate change in the 2000s), have been positively received by the WBG and subsequently integrated into policy and operations. In addition, historically, there has been a very close link up with The Netherlands in the areas of gender, water and agriculture. More recently, The Netherlands has helped the Bank enhance its focus on fragile states, refugees, and migration.

This dialogue has resulted in strategically well aligned development policies centered on the goals of eliminating extreme poverty and boosting shared prosperity as well as support for the sustainable development goals (SDGs) and the Paris Agreement on climate change. The combined strong commitment to these goals captures the high level of ambition and a determination to deliver on them.

Effective delivery is a joint challenge. For the WBG, this means ensuring that we have an effective implementation mechanism in place as well as the available resources required -- an agenda which in The Netherlands is often called "the better Bank". Over the last couple of years, we have organized ourselves in such a way that we can deliver expanding country programs while keeping costs down (i.e. managing within a flat real budget during the last four years) and working directly on the ground, supported by about 120 offices around the world and about 43 percent of staff outside of Washington.

Another aspect of delivery is the channel through which services are offered to our client countries. Our public sector arms, the International Bank for Reconstruction and Developemnt (IBRD) and the International Development Association (IDA), provide critically needed policy and investment support as well as technical assistance and advisory and analytical services. This is complemented by our private sector arms, the International Finance Association (IFC) and the Multilateral Investment Guaranty Agency (MIGA), in providing private sector solutions at increasing scale. Together, our public and private sector financial support add up to about $65 billion per year. The challenge ahead of us is how we can continue this support so we can share meaningfully in helping to deliver on the achievement of the SDGs.

In this context, a couple of building blocks are falling into place. First, with the support and the active participation of the Dutch Government, we concluded the historic IDA18 negotiations that transformed IDA's traditional donor model to a hybrid financial model, allowing IDA to access international capital markets with a AAA rating for the first time. IDA 18 will mobilize $75 billion or a 50% increase over the last replenishment while keeping donor contributions flat. It also provides donors unprecedented financial leverage with their scarce aid resources: for every Euro a donor gives to IDA, it leverages three times the financing to IDA clients. This 1:3 leveraging ratio of new donor money is unique in a concessional window like IDA. During the IDA 18 negotiations, The Netherlands held the EU presidency and in this capacity, convened some of the key meetings among donors that helped facilitate the successful transformation of the financial model in IDA as well as reaching consensus on some of the special themes for IDA 18 such as fragile states, climate change, gender, and jobs.

With the first building block focused on the low-income agenda and especially IDA, the second building block centers on the middle-income countries. Here, the debate is mostly on how to ensure that the public and private sector arms of the WBG, i.e. IBRD and IFC, are fit for purpose and can respond adequately to the challenges posed for MICs.  In particular, these countries demand substantial IBRD and IFC support on the global public goods agenda, including for climate change. Over the last year, we have been engaging with our shareholders to strengthen the financial capacity of the IBRD and IFC. The powerful aspect of multilateral banking is its leveraging effect: in the case of IBRD and IFC, they received about $20 billion in paid-in capital over the last 70 years but were able to provide with this capital about $900 billion in cumulative lending. This leveraging effect, plus IFC's ability to mobilize large amounts of private sector finance, provides an opportunity to respond to the large financing needs of the SDGs and climate change. In this context, we have appreciated the constructive attitude of the Dutch Government towards the vision of a “bigger” bank.

Finally, the third building block is our role as a team player among governments, bilateral and multilateral organizations, the UN system, private sector, civil society, think tanks, and academia. Today's challenges are such that no one group alone can solve the many development problems. Development effectiveness is directly related to how well we all coordinate and cooperate with each other. The WBG is working with hundreds of partnerships in implementing its country programs, which have often been enhanced by trust funds, including from The Netherlands, in key strategic areas.  These partnerships have made our programs better and stronger and ensured better results on the grounds. We need to continue to benefit from these partnerships and seek to expand them with new ones, especially the private sector.

It is in this context, that we can learn from our partnership with The Netherlands. It is not limited to the government, as we have also developed extensive partnerships with the private sector, finance institutions, civil society, and universities and with many Dutch embassies overseas. What is valuable in this partnership is that we have an open, direct dialogue on many development issues with frank exchanges on what works and what doesn't work, as well as receiving honest feedback on how well we are doing in our operations. This constructive spirit was again on display this week when we held our strategic dialogue in The Hague with the Dutch Government, the private sector, and CSOs. It will also continue to challenge us as we identify better approaches that can make a lasting difference in the lives of those that we seek to help. 

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