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Poverty reduction

Andreas Becker, Washington / sst
April 18, 2013

World Bank chief Jim Yong Kim is expected to use the World Bank and International Monetary Fund Spring Meetings to push his agenda on poverty reduction. He says world poverty can be eradicated completely by 2030.

Spring Meeting World Bank and IMF (photo: DW/Andreas Becker)
Image: DW/A.Becker

Back when Jim Yong Kim, a US citizen with Korean roots, became the World Bank's president in 2012, he criticized the organization's lack of focus. Now, ahead of the annual Spring Meeting of World Bank and International Monetary Fund (IMF) in Washington, he has said his organization aims to eradicate extreme poverty by 2030.

"If you ask any person who's ever tried to run a complex organization or even built a social movement, unless you have a clear target with a clear end date, people often don’t change the way they do their work," Kim said. "Everyone can agree - poverty is bad. And you can agree that poverty is bad, but if there's no urgency in actually getting somewhere, you don’t change the way people work."

When the World Bank was founded in 1944, it was tasked with providing the funds to rebuild countries after World War II. Over time, the organization grew into what it is today, moving away from their former task to now focussing on global poverty. The World Bank group - with its five institutions and about 10,000 employees - has financed development projects all over the world.

A clear focus

Although the new goal may be to eradicate poverty "that does not mean that you bring it down to zero," the World Bank's Chief Economist Kaushik Basu says. "There will be frictional poverty - frictional poverty is as painful as poverty in any other form. But the strategy of how you battle with that begins to change."

According to the World Bank's standards, poverty can be considered to be eradicated once less than 3 percent of the world's population is 'extremely poor'. By definition, people are considered extremely poor if they live off less than $1.25 (96 eurocents) a day.

In order to reach Kim's target within 17 years the world's 'extremely poor' would have to decline by 17 percentage points, from 20 percent currently to 3 percent by 2030. That means extreme poverty needs to drop by 1 percent per year. 

"This is going to be extremely difficult," World Bank head Kim admits. "Developing countries have to continue to grow; high-income countries have to get back to historical levels of growth. There are so many things that have to fall into place. We have to make sure that climate change doesn’t destroy all the advances that we've made so far and make lifting people out of poverty so difficult."

World Bank President Jim Yong Kim (photo:Cliff Owen/AP/dapd)
World Bank head Kim wants to slash extreme poverty rates over the next 17 yearsImage: dapd

The new goal to eradicate poverty is accompanied by the concept of shared prosperity. The World Bank wants to examine how income of the country's poorest 40 percent has developed over the years to see whether this group has been profiting from economic growth at all. 

Development goals likely to be missed

Kim hopes to convince the Development Committee, a joint ministerial-level forum of the World Bank group and IMF, to commit to his new poverty goal at the Spring Meetings in Washington from April 19 to April 21, 2013. 

Just in time for the Spring Meetings, the World Bank and IMF have published their Global Monitoring Report which documents the progress so far in reaching the UN's Millenium Development Goals (MDGs). It's almost certain that most of these 10 goals the UN had agreed on in 2000 won't be reached by 2015, despite some early success such as halving worldwide poverty already in 2010.

"It's not so much what is the goal, it's how much progress are you making this year as opposed to last year or the year before that," Mari Kiwanuka, Uganda's Minister of Finance, Planning and Urban Development told DW. "In Uganda, the number of people living below poverty has dropped tremendously from 38 percent to under 24 percent between the two poverty reports. And now we are looking to make sure that is sustainable, that they don’t tip back into poverty."

Growth versus environmental protection

Economic growth plays a major role in fighting poverty. China and its economic boom have contributed tremendously to eradicating poverty, the World Bank says. Uganda and other African countries also want to boost their growth rates but they are mostly relying on the private sector.

"The government invests in agriculture by helping the private sector overcome the obstacles. So the government is building roads in that area and extending main power transmission lines to the upcountry urban centers," Kiwanuka said. By creating a good business climate, they will help the private sector thrive, Kiwanuka is convinced. "We recognize the private sector is an engine, so we just want to oil the engine, not be the engine."

According to World Bank head Kim, growth is important, but not at any cost. Being environmentally sustainable also has to be monitored too. He envisions that the African countries would generate power that's needed to boost their growth from renewable energy sources only. But that would be another goal entirely.