World’s need for inclusive growth

For a very long time, the rich have known to some extent how the poor around the world live. What’s new in today’s world is that the best-kept secret from the poor, namely, how the rich live, is now out.

Through the village television, the Internet and hand-held instruments, which a rapidly increasing number of the poor possess, life-styles of the rich and the middle class are transmitted in full colour to their homes every day.

Last year, when I travelled with President Evo Morales to a Bolivian village 4,267 metres above sea level, villagers snapped pictures on their smart phones of our arrival.

In Uttar Pradesh, the state in India with the highest number of poor people, I found Indians watching Korean soap operas on their smartphones.

We live in an unequal world. But while the rich world may be blind to the suffering of the poor, the poor throughout the world are very much aware of how the rich live. And they have shown they are willing to take action.

Inequalities hurt everyone.

Women’s low economic participation creates income losses of 27 per cent in the Middle East and North Africa. 

Inclusive growth, in contrast, builds a stronger, more robust social contract between people and their government — and builds stronger economies.

If we raised women’s employment to the levels of men, for instance, average income would rise by 19 per cent in South Asia and 14 per cent in Latin America.

People in extreme poverty live on less than a $1.25 a day — less than the coins that many of us empty from our pockets each night. And yet more than a billion people in middle-income and poor countries today survive on less than that.

We know that the fundamental problems of the world today affect not millions, but billions of us. Nearly 2 billion people lack access to energy.

An estimated 2.5 billion people lack access to basic financial services. 

And all of us — all 7 billion of us — face an impending disaster from climate change if we do not act today with a plan equal to the challenge. 

The world’s development needs, of course, far outstrip the World Bank Group’s abilities to address them. But we can do much, much more.

In order to meet the increased demand that we are expecting as we get better at delivering knowledge and solutions to our clients, we’re strengthening our financial capability to scale up our revenue and stretch our capital.

We’ve recently taken steps to nearly double our annual lending to middle-income countries from $15 billion to as much as $28 billion a year.

This means that the World Bank’s lending capacity — or the amount of loans we can carry on our balance sheet — will increase by $100 billion in the next decade, to roughly $300 billion.

This is in addition to the largest replenishment in history of IDA, our fund for the poorest countries, with nearly $52 billion in grants and concessional loans.

At the same time, we are also increasing our direct support to the private sector.

MIGA, the World Bank Group’s political risk insurance agency, is planning to increase its new guarantees by nearly 50 per cent over the next four years.

IFC, our private sector arm, expects it will nearly double its portfolio over the next decade to $90 billion. 

In 10 years, we believe IFC’s annual new commitments will increase to $26 billion.

Taken as a whole, the World Bank Group’s annual commitment, which today is around $45 to $50 billion, is expected to grow to more than $70 billion in the coming years.

This increased financial firepower represents unprecedented growth for the World Bank Group. We are now in a position to mobilise and leverage, in total, hundreds of billions of dollars annually in the years ahead.

We need to find more effective ways to work with key partners and stakeholders, including those in civil society and the private sector.

We need partnerships, strong global institutions, a vibrant private sector and committed political leaders. 

Most important of all, we need to unite people around the world in a global movement to end poverty.

All parts of our global society must unite to translate the vision of a more just, sustainable economy into the resolute action that will be our legacy to the future.

The world is watching.

The writer is president of the World Bank Group. He contributed this article to The Jordan Times.