In recent weeks, the Fiscal Year (FY) 2022 omnibus spending bill became law, and the Biden-Harris Administration released its Fiscal Year 2023 President’s Budget Request (FY23 PBR), which now goes to Congress for consideration. The FY22 omnibus spending bill provided meager support for climate finance and failed to authorize the Asian Development Fund (AsDF) or pay down arrears to the International Development Association (IDA). However, BIC commends the administration for showing greater ambition in the FY23 PBR. It is crucial that the administration works with Congress to pass the FY23 PBR before the midterm elections. Increased political uncertainty after November 2022 may jeopardize the ability of the U.S. to raise its climate commitments and fulfill its pledge to the multilateral development banks (MDBs), damaging U.S. credibility at the institutions and with international partners. 

BIC’s key takeaways and recommendations from the FY22 omnibus spending bill and FY23 PBR include:

Green Climate Fund: Congress failed to support the Green Climate Fund (GCF) in the FY22 omnibus spending bill, a disappointing outcome representing a broken promise to the international community. While the FY23 PBR includes $1.6 billion for the GCF, this is not enough funding for the U.S. to meet its Obama-era pledge of $3 billion. The missing U.S. GCF contribution underscores the longstanding failure of wealthy countries to appropriate adequate levels of climate finance. Still, the U.S. can work to close this gap by utilizing its leadership role at the MDBs to push the institutions to meet their climate commitments. 


International Development Association: Due to COVID-19, IDA, the World Bank’s window for low-income countries, frontloaded funding from IDA19 to address the crisis and began the IDA20 replenishment process a year early to secure the necessary support to continue providing high levels of financing to the world’s poorest countries. The accelerated replenishment requires the U.S. to contribute an unprecedented level of funding this year toward the final year of IDA19 and the first year of IDA20. BIC is pleased that the FY22 omnibus spending bill includes total funding of $1.01 billion for the final year of the IDA19 replenishment. Further, the FY23 PBR includes $1.43 billion for IDA20 and details a plan for the U.S. to backload the remaining funding for IDA20 over the last two years, FY24 and FY25. Fulfilling its pledge to IDA is key for the U.S. to maintain its ability to push the World Bank to improve its environmental, social, and accountability standards. 

However, despite the administration's welcome inclusion of a strategy to meet its IDA20 pledge, we are concerned that backloading contributions risks adding more outstanding U.S. arrears to the institution, which were not paid down in either the FY22 omnibus spending bill or the FY23 PBR. Typically, pledges are appropriated equally over three years. The administration’s IDA20 funding strategy will require Congress to increase contributions to IDA over the next two years, which may be politically difficult after the midterm elections. We encourage the U.S. Treasury Department to communicate its IDA20 funding strategy and the importance of the U.S. fulfilling its IDA pledge to Capitol Hill and civil society stakeholders, emphasizing the need to preserve the unique leadership role of the U.S at the institution. 

Asian Development Fund: The FY22 omnibus spending bill failed to secure authorization for the U.S. contribution towards the Asian Development Fund’s (AsDF) twelfth replenishment (AsDF-13). The failure of Congress to authorize AsDF-13 will impact the credibility and leadership role of the U.S. during policy negotiations, such as the ongoing Asian Development Bank (ADB) Safeguard Policy Review. However, the FY23 PBR seeks to correct this oversight and requests authorization for the AsDF-13 replenishment. We encourage Congress to meet this request, passing the necessary authorization to allow the institution to receive the $43.6 million appropriated in the FY22 omnibus spending bill for the first installment of the AsDF-13 replenishment. Further, passing replenishment authorizations is an opportunity for Congress to push the IFIs to improve their practices and policies. When authorizing AsDF-13, Congress should call on the ADB to meet the highest international standards in developing their new safeguard policies. 

BIC encourages the administration and Capitol Hill to recognize the unique role of the U.S. at the MDBs in improving these institutions’ policies and practices. While BIC is disappointed that Congress failed to fund the GCF in the FY22 omnibus spending bill, the U.S. should seek to mitigate this by utilizing its leadership role at the MDBs to push these institutions to meet their climate commitments. However, for the U.S. to maintain its influence at the MDBs, Congress must appropriate enough funding to fulfill U.S. pledges, pay down arrears, and authorize new replenishments. 

What are the implications of Congressional Appropriations for U.S. leadership at the MDBs?

The International Financial Institutions (IFI) Working Group welcomes the launch of the Congressional IFI Education Caucus, co-chaired by Reps. Dean Phillips [D-MN-3] and John Rutherford [R-FL-4]. The bipartisan Caucus will focus on educating Members of Congress and staff on the IFIs and the historic leadership role of the United States at the institutions. 

Relying on the support of their member countries, the IFIs provide financial and technical assistance to developing countries with the aim of supporting economic growth and access to essential services. For many developing countries, the IFIs are the largest source of low-cost international financing and play a key role in funding countries’ development agendas. Further, the IFIs, including the International Monetary Fund (IMF), the World Bank, and regional multilateral development banks (MDBs), have mobilized unprecedented financial resources to support the response to the COVID-19 pandemic and resulting economic downturn. 

“The International Financial Institutions are one of the most cost-effective and largest sources of development finance, leveraging every U.S. dollar with contributions from other donors and fundraising on the capital markets. The United States should utilize its unique leadership role at the IFIs and take a multilateral approach when addressing global challenges, including COVID-19, climate change, and hunger,” said Rep. Phillips.

“Development is an essential part of the U.S. foreign policy agenda, and the IFIs are the largest source of concessional lending to the world’s poorest countries. As one of the top shareholders at the World Bank, the IMF, and the regional MDBs, the U.S. should lead the institutions in supporting policies and programs that align with U.S. interests and counter the malign influence of undemocratic actors,” said Rep. Rutherford.

IFI Working Group Welcomes the Launch of the IFI Education Caucus

BRAC welcomes the adoption of the Doha Programme of Action (DPoA) for the Least Developed Countries for the Decade 2022-2031 by the member states of the United Nations. We applaud its strong commitment to inclusive social protection systems for people living in extreme poverty.

The DPoA is a critical document for achieving the Sustainable Development Goals and leaving no one behind. While the Least Developed Countries (LDCs) represent only 46 of the 193 countries in the world, these countries host about 40% of the world’s population living in poverty and face significant development challenges. The DPoA’s focus on achieving sustainable and inclusive recovery, building resilience to future shocks, and eradicating extreme poverty serves as a model for the international community.

BRAC commends the DPoA for its inclusion of a target to reach at least 350 million people living in extreme poverty in LDCs through social protection systems. DPoA is a model for the inclusive policy language needed to guide investments and interventions for the most marginalized communities. It is imperative that the international community and governments intentionally design programs and policies for the people who are poorest, otherwise we risk not meeting our global commitment of leaving no one behind. As UNDP’s recent research on marginalized communities emphasizes, “targeted actions are needed to reach those marginalized who are usually disproportionately represented among those left behind.”

This is especially the case for social protection systems that are essential to achieving SDG 1. Social protection systems are crucial for not only meeting basic needs and escaping extreme poverty, but also for supporting inclusive growth: 36 percent of all people who escape extreme poverty are enabled to do so through social protection programs, and one percent of GDP invested in social protection leads to 1.1 percent GDP growth and 1.8 percent growth in government tax revenues on average. However, social protection systems often fail to reach those furthest behind. Only 47 percent of people worldwide are covered by even a single social protection program, while a mere 21 percent of the bottom quintile of earners are covered in low-income countries. From the global to the local level, programs and policies must prioritize reaching people in extreme poverty and addressing their multidimensional needs and the challenges that perpetuate the poverty trap. Otherwise, the deepest forms of poverty will remain entrenched.

The inclusive language in the DPoA sets an important standard for the international community, and BRAC hopes to be a partner for its full implementation through our evidence and learning on effective interventions for people living in extreme poverty such as the Graduation approach. The strengthened commitment and partnership represented by the DPoA between the LDCs and their development partners, including civil society partners, is necessary for addressing large-scale aspirations like poverty eradication and inclusive growth for shock-prone communities. As BRAC celebrates our 50th anniversary and a history of innovations that break the poverty trap, we recognize the need for ambitious partnerships to meet the needs of the people who are most marginalized.

Cross-sector partnerships will be critical to take interventions proven to be effective at reaching and empowering people in the deepest forms of poverty to scale. This will require governments to take the lead, with support from multilateral institutions, researchers, civil society, and NGOs. BRAC Ultra-Poor Graduation Initiative (UPGI) has worked with government partners across Africa and Asia to integrate the Graduation approach into existing social protection systems to ensure the inclusion for people living in extreme poverty and sustainable impact for these communities. By incorporating Graduation into government social protection systems, countries can better reach people in extreme poverty with existing programs while reducing program costs and improving impact for these communities. For the social protection systems of the LDCs to reach 350 million people in extreme poverty, an explicit focus on this population through approaches like Graduation will be a necessity.

As governments design their National Plans of Action in line with DPoA targets to promote a prosperous and poverty-free future, BRAC looks forward to partnering on our shared vision of eradicating extreme poverty through inclusive, comprehensive, and shock-resilient social protection systems. Scaling the Graduation approach offers one promising path to achieve this.

More information about the scaling of the Graduation approach can be found here. Or, learn more about how to partner with BRAC UPGI.

BRAC Applauds Commitment to Reach 350 Million People in Extreme Poverty in the Doha Programme of Action

The war in Ukraine has put the global economy to its hardest test since the aftermath of World War II. In this context, the G20 must show leadership with new commitments to boost energy resilience and support vulnerable economies, which will be disproportionately impacted.

As the G20 Energy Transition Working Group meetings commence this week, the focus must be on energy security, access and resilience. Amid the global volatility of fossil fuel supply and price, clean energy and demand-side solutions should be central to any energy resilience strategy. Energy efficiency and distributed renewables play a key role in boosting resilience and energy access.

While this has been acknowledged by the G20 communiques for several years, actual progress has been lacking. In 2018-2020, G20 countries and respective multilateral development banks (MDBs) provided  2.5 times more in international public finance for fossil fuels compared to their support for renewable energy, while since 2020 it is 10 times more its support to energy efficiency. Distributed solar, through isolated grids and standalone systems, accounted for less than 1% of bilateral and multilateral development finance between 2012-2019. On top of insufficient investment in absolute terms, only a fraction goes to emerging markets and developing economies (EMDE). While the region accounts for two-thirds of the global population, it only represents one-fifth of clean energy investment.

Distributed solar, through isolated grids and standalone systems, accounted for less than 1% of bilateral and multilateral development finance between 2012-2019.

2022 is a pivotal year for G20 Energy Ministers. Successful foreign policy leadership can be delivered by focusing on 3 priorities: energy affordability through distributed renewables, increasing support for demand-side efficiency, and closing the financial gap between the OECD and EMDE countries.

Focus 1: Securing energy affordability through distributed energy solutions

The current crisis has exacerbated the need for accessible, affordable energy access. The instability of fossil fuel prices and its multiplier effects on commodity prices will further endanger the welfare of those most vulnerable.

Promoting distributed solar addresses common issues in developing countries: lack of funds, technology, and bankable project for global investments. It helps secure people-centred benefits, with the distributed, ‘small’ infrastructures that the climate-neutral energy transition requires.

As the largest shareholders of International Financial Institutions (IFIs), the G20 must support low-income countries (LICs) with investment costs for distributed solar – currently 2-3 times the 2015 GDP of these LICs to achieve its country-specific potentials. This should be done on top of extending cover to archipelagic countries and rural areas in G20 countries, with limited or low-quality energy access, such as South Africa, Indonesia and India. Japan and Germany are best placed to lead this effort as the largest G20 clean energy financiers.

Focus 2: Boosting financial and technological support for demand-side efficiency

While global coal, oil and gas prices soar, developing countries are struggling with the double challenge of cushioning price shocks and addressing rising energy demand.

Focusing on energy efficiency supports energy security, offering the most cost-effective and rapid actions by mitigating the effects of price volatility and providing cost savings to consumers.

Investing in demand-side responses (DSR) such as smart grids could enable better utilisation of existing generation assets while accommodating the growing supplies of utility-scale and distributed renewables systems.

The G20 should commit to supporting at least a tenfold increase in deploying DSR measures, which calls for 500 GW by 2030 to reach net zero by 2050. This should act as a materialisation of the Rome G20 declaration that acknowledged the need for renewable technologies dissemination. Beyond the above commitment, the G20 need to mandate MDBs to base their energy policy planning on an “Efficiency First” principle.

Focus 3: Closing the financial disparity between OECD and EMDE countries

The current international public financial flow to clean energy is not yet going to the countries that need it the most. Achieving universal access to energy in the least developed countries by 2030 requires USD 12-40 billion per year, but in 2017 they only received USD 2.7 billion or 12% of the total international finance support.

Accounting for 80% of global energy consumption, the G20 can lead efforts in increasing energy resilience while modernising the energy market to align with the low carbon system. This should begin by closing existing financial disparity and delivering on the required USD 1 trillion support to EMDE countries this decade.

Achieving universal access to energy in the least developed countries by 2030 requires USD 12-40 billion per year, but in 2017 they only received USD 2.7 billion or 12% of the total international finance support.

Indonesia’s G20 should leverage previous G20 legacies, such as the IMF’s Resilience and Sustainability Trust, which specifically looks at support for vulnerable countries. There is also an opportunity to materialise the G7 Finance Ministers and Central Bank Governors Communiqué, which urges MDBs to increase finance for a clean energy transition.

How can the G20 show leadership in the current energy crisis?

Nearly six months into the fiscal year, Congress finally delivered an FY22 spending bill last week. But even after stalled negotiations prompted worries that lawmakers would be unable to reach a deal at all, the final measure is something of a disappointment—failing to deliver sufficient resources to address several pressing US development and humanitarian priorities. Undoubtedly the biggest upset came when lawmakers struck new COVID-19 response money from the bill to secure timely passage. (This felt like adding insult to injury since even the funding initially included in the package to fight the pandemic abroad fell well short of anticipated needs.)

While we’re crossing our fingers that Capitol Hill will manage an agreement to provide additional resources to combat COVID-19 at home and abroad, we thought we’d provide a rundown on a few components of the international affairs division (K) of the spending bill—lamenting shortfalls and missed opportunities while highlighting a few wins. The text of the full spending package can be found here, the joint explanatory statement for Division K here.

Earlier this month, the White House asked Congress for $5 billion to continue pandemic response efforts around the world. Officials outlined the need for resources to achieve near and medium-term ambitions in global vaccine delivery and extending access to critical medical supplies—including therapeutics, diagnostics, and personal protective equipment—while also meeting urgent pandemic-related humanitarian needs. The request represented only a fraction of what advocates and some lawmakers had hoped—and fell short of reported agency needs. Still, Capitol Hill had appeared poised to deliver on both domestic and global emergency COVID-19 spending until late-breaking dissent emerged over the decision to pay-for new spending by recapturing unused COVID-19 funds that had been allocated to states and localities. Facing a pressing deadline, House leadership decided to advance the package without COVID-19 funding.

But even as President Biden signed the omnibus bill into law this week, the administration continues to make the case for more resources to manage the pandemic at home and surge response efforts overseas. A recent White House fact sheet spells out the urgent need for further resources. In the absence of new funding, USAID will have to draw down its work to get shots in arms. House leaders have stated they’re committed to bringing supplemental spending legislation to the floor—with House Speaker Nancy Pelosi (D-CA) voicing support for a much larger topline figure—and are looking into new options to offset the spending.

As it stands, lawmakers’ inability to secure additional funds—even as vaccination rates remain exceedingly low in many parts of the world, threatening lives and increasing the risk of new emergent variants—is a monumental failure and outrageously short-sighted. Congress needs to come to an agreement on the lifesaving money as soon as possible.

Cuts to humanitarian money, even as global crises unfold 

One of the most alarming elements of the spending bill is its shortchanging of critical humanitarian accounts. The president’s initial budget request, submitted to Congress in early June, proposed increased funding for USAID’s International Disaster Assistance and the State Department’s Migration and Refugee Assistance, but the omnibus includes cuts to both when compared to recent years. While a portion of the supplemental spending for Ukraine will be used for humanitarian support—and a share of emergency aid passed by Congress last year was dedicated to the resettlement of Afghans—the need for life-saving support around the world is unprecedented.

The United States has long been the leading provider of humanitarian assistance. Faced with a growing number of protracted crises alongside new and emerging conflicts—situations exacerbated by the pandemic and the effects of climate change—now is the time to step up, not pull back. 

Standard support for the IFIs—but Congress swerved on SDR lending

While the measure includes funding to deliver on current pledges and capital commitments to key multilateral development banks (MDBs) and funds, it ignored the administration’s request to pay down a portion of US arrears to the World Bank’s International Development Association (IDA). As we pointed out when the budget request was released last June, total US unmet commitments to international financial institutions (IFIs) have been growing. And with the MDBs ramping up financing to support pandemic response and economic recovery, this was a particularly opportune time to make good on outstanding commitments. It also would have been a chance to ramp up MDB financing ahead of next year, when the US will need to make a double payment to the World Bank’s concessional window. Owing to an early pandemic-focused IDA replenishment, in FY2023, the United States will likely need to provide both the third (and final) installment of its pledge under IDA19 and its first payment toward fulfilling its IDA20 commitment made in December. 

Appropriators included a contribution to an IMF facility supporting lower-income countries, but rejected the administration’s request for authorization to lend US Special Drawing Rights (SDRs) which could have provided a far more robust contribution. When the equivalent of $650 million in SDRs was approved at the IMF last year, the pitch centered on providing critical resources to lower-income countries amid an unfolding economic crisis. But by design, a general SDR allocation is distributed in proportion to IMF shareholding—meaning countries like the United States received the lion’s share. From the start, the hope had been that wealthier countries would find ways to reallocate SDRs to countries with greater need. This was always going to be complicated, but the absence of the authorization requested by Treasury is likely to stall this effort further—both for the United States and potentially for other donors looking to follow its lead.

Appropriators also rejected the administration’s $1.25 billion request to deliver on its commitment to the Green Climate Fund and slashed the administration’s contribution to the Clean Technology Fund—one of two Climate Investment Funds at the World Bank. The latter was a key climate priority for Secretary Yellen, highlighted in recent statements at the World Bank and G20.

Though the bill provides $912 million for the Millennium Challenge Corporation—level funding compared to last year—it would also rescind $515 million in unobligated money previously appropriated to the agency. Admittedly, this “miss” can’t be pinned solely on lawmakers, since the administration was the one to propose the recission in its budget request. A substantial portion of the rescinded funds had been intended for a compact with Sri Lanka that never came to fruition. But though there would seem to be some justification for reclaiming this particular unspent investment, our colleague Sarah Rose pointed out last fall that the move could create a perverse incentive. MCC’s willingness to pause or pull the plug on compacts when problems arise with a partner country has long been central to the agency’s model. The decision to rescind such a substantial sum rather than allowing MCC to put at least some of the additional resources into its other programming—including helping to finance limited compact extensions that Congress authorized in light of pandemic delays—raises the concern that MCC leadership might be less likely to cancel unsuccessful partnerships if they perceive a threat of future budget volatility. 

Congressional consensus on aid to Ukraine

While COVID supplemental funding was stripped from the package, lawmakers delivered over and above the president’s request for supplemental assistance for Ukraine across military and humanitarian assistance accounts. It was encouraging to see Capitol Hill reach consensus on at least one urgent request. And there’s little doubt the situation on the ground warrants great attention and resources. We’ll be watching to see how the US works to support the large number of Ukrainians displaced by the current conflict. Our colleagues have pointed to the potential for the Global Concessional Financing Facility, a World Bank trust fund that provides financing to countries hosting large refugee populations, to bolster response efforts. In accompanying materials, House appropriators emphasized that the Economic Support Funds including in the Ukraine supplemental (Division N) can be used flexibly, and referenced macroeconomic needs and the needs of neighboring countries. The administration should consider further support for the GCFF to bolster the regional response. 

Signs of support for locally-led development? 

Lawmakers boosted USAID operating expenses compared to recent years. The additional money comes as USAID Administrator Samantha Power has prioritized agency plans to put local actors in the driver seat and diversify USAID’s partner base.

Power has committed to a target of 25 percent of USAID assistance going to local partners over the next four years, some of which will need to be through small, direct awards that require significant staff time to manage effectively. New resources to hire more staff will, in the long term, contribute to the administration’s broader vision of USAID as nimble and responsive to local needs. Language accompanying the bill notes that the agency “lacks sufficient personnel to adequately respond to many urgent and compelling needs around the world,” and expresses congressional intent that the additional funding is to be used to hire new Foreign and Civil Service Officers. Increased bandwidth can help the agency bolster its collaboration with local actors and meet emerging development challenges.

And in a clear signal of support for the localization agenda, appropriators included a $100 million set aside to promote locally-led development in Central America. In November USAID launched an initiative, Centroamérica Local, to offer $300 million in support over five years to local actors addressing the root causes of irregular migration from El Salvador, Honduras, and Guatemala. As the agency moves forward with the initiative, we hope to see a commitment to evidence-based approaches and evaluating what works in local contexts—including a broader commitment to expanding legal pathways for migration.

Crucially, the spending directive for locally-led development in Central America would allow for up to 15 percent of funds to be spent on administrative expenses and oversight—which are expected to be higher as the agency seeks to partner with a growing number of new partners. But the bill doesn’t envision the extended timeframe made possible by the five-year money included in the Senate draft. 

A boost for global health security at a critical moment

Despite failing to include new funding to combat the current global pandemic (see above), the experience of the past two years seems to have provided the impetus for further investment in international readiness to face future global health threats. While shy of the president’s request, the bill provides $700 million for Global Health Security through USAID’s Global Health Programs account. The joint explanatory statement suggests appropriators may be looking for more detail from the administration on plans for future global health security spending, including “possible contributions to multilateral mechanisms.” Presumably this refers to the administration’s efforts to stand up a new financial intermediary fund at the World Bank that would help incentivize countries to address critical preparedness gaps. Sadly, our collective memory is often short—now is the time for the US not only to deliver a down payment on global pandemic preparedness, but to lay the groundwork for sustained investment that will ensure the world is better equipped to fend off the next pandemic.

More resources for the newest US development agency, DFC 

Since it opened its doors, the US International Development Finance Corporation (DFC) has been tapped to tackle all manner of foreign policy priorities: deliver on global climate finance, counter China’s overseas lending, advance global health and support economic recovery from the pandemic—all while addressing gender inequality. It was encouraging to see a bump in resources for the young agency to help it meet—seemingly boundless—expectations. Our colleagues often noted that DFC’s predecessor OPIC was an (unnecessarily) lean agency. Continuing to hire new staff will be important as DFC grows its portfolio—particularly to ensure it can deliver on its development mandate. Given the apparent bipartisan support for a well-resourced DFC, we’re hopeful that lawmakers will also move forward with a proposal to fix the agency’s equity scoring mechanism—a proposal included in the House-passed competitiveness package being negotiated alongside the Senate version now. 

Appropriators displayed some optimism about the potential for innovation to address development challenges by maintaining a $30 million spending directive for USAID’s Development Innovation Ventures (DIV). Back in mid-2017, DIV’s future looked uncertain. In the absence of dedicated funding, the program was forced to suspend new applications. But Congress included a funding allocation in the next year’s spending deal that enabled DIV to re-open. Though a relatively small program, lawmakers have good reason to back DIV. Research has shown DIV’s early portfolio delivered an incredible social rate of return per aid dollar invested.

Language in the measure’s explanatory statement directing the USAID Administrator to develop and submit a multi-year strategy on global health research and development, including plans on coordinating with other federal agencies on innovative product development, also caught our attention. CGD has a long history of work on the potential for pull financing mechanisms—including the Advanced Market Commitment—that incentivize private actors to bring socially beneficial innovations to market. Such mechanisms have shown the potential to drive innovation and can be harnessed to deliver significant development benefits—particularly in the health sector. The US government faces some obstacles to offering or engaging in pull financing mechanisms, but they’re surmountable. Faced with a relatively stagnant topline budget, US development agencies should explore opportunities to work with the private sector to finance and support the scaling of innovative ideas shown to work. A new emphasis in this area from USAID could also complement the work of authorizers on Capitol Hill seeking to bolster domestic health R&D and leave us better prepared equipped to tackle health challenges in the future.

Few Hits and Many Misses for Development in the FY22 US Spending Package

The war in Ukraine grows worse by the day, with an estimated 1,500 civilians killed and more than 3 million forced to seek refuge in other countries, according to the Council on Foreign Relations.

Stopping the war as soon as possible is essential for saving lives, protecting Ukraine’s sovereignty, and curbing global repercussions.

In particular, the war has had a devastating impact on local food production. Since the global food system is a fragile web of interconnections, many countries dependent on Russia and Ukraine for food and agricultural supplies now face immediate and looming food shortages that will inevitably worsen the global hunger crisis.  

“I am deeply concerned that the violent conflict in Ukraine, already a catastrophe for those directly involved, will also be a tragedy for the world’s poorest people living in rural areas who cannot absorb the price hikes of staple foods and farming inputs that will result from disruptions to global trade,” said Gilbert F. Houngbo, president of the International Fund for Agricultural Development (IFAD), in a statement. 

“We are already seeing price hikes and this could cause an escalation of hunger and poverty with dire implications for global stability.”

IFAD, a Global Citizen partner, has teams worldwide working to support small-scale producers and improve food security in rural areas of developing countries that have documented the ways in which the war in Ukraine has worsened existing food crises.

The impact has been particularly devastating in agricultural contexts, where the ability to acquire and distribute food is always a vexed ordeal due to chronic underfunding. But new crises are emerging as a result of the disruptions caused by the war. 

Many farmers and food producers are still struggling to recover from the ongoing effects of the COVID-19 pandemic. Now the war is making it harder. 

“IFAD is committed to increasing the resilience of the world’s poorest rural producers who are critical for producing a third of the world’s food. We must do all we can to ensure they have the resources to keep producing food and be protected from additional shocks,” said Houngbo. 

“In the short-term, however, it will be difficult to mitigate the global impacts of this crisis. I join the UN Secretary-General’s call to end the conflict now and restore peace. It is the only solution to avert global catastrophe.”

According to analysis by IFAD and other organizations, here are five ways the war has already worsened global hunger.

Already, millions of smallholder farmers that provide food to their communities operate on tight margins that have been strained even further by the climate crisis. Now, rising fuel prices caused in part by the war have made it difficult for many farmers to carry out basic tasks. 

In Somalia, where an estimated 3.8 million people face severe food insecurity, electricity and transportation prices are climbing, and diesel-powered irrigation methods have become prohibitively expensive, IFAD reports. 

Russia and Ukraine account for approximately 25% of global wheat exports, with around 40% of wheat and corn exports from both countries going to the Middle East and Africa, according to IFAD. Egypt, for example, gets 85% of its wheat and 73% of its sunflower oil from these two countries. 

As a result of the war, prices on imported food have been surging, making it harder for families to afford. 

Fertilizer helps farmers improve their crop yields to meet global food demand. Russia is the leading exporter of fertilize and, as a result of the war, many smallholder farmers have been unable to buy the fertilizer they need. Even before the conflict, spikes in fertilizer prices last year contributed to a rise in food prices by about 30 percent.”

In some countries like Rwanda, a lack of fertilizer could halve harvests, leading to local and regional food shortages.  

Remittances — when migrant workers send money back home — keep the global economy churning, helping many communities worldwide afford the basic necessities of life. The COVID-19 pandemic already significantly reduced the ability of workers to earn and send money home. Now, for families relying on their relatives earning income in Russia and Ukraine, remittances have nearly ceased. 

IFAD reports that more than 31% of Kyrgyzstan’s GDP comes from remittances from Russia alone. Now that the war has disrupted this flow of money, migrants’ families in rural areas may battle to access food, education and other necessities. 

The war has caused urgent food crises in many countries including Iraq, Yemen, and Lebanon, a country that gets 80% of its wheat from Russia and Ukraine. The 2020 Beirut explosion destroyed major grain silos, limiting the country’s ability to store food, according to IFAD. Now that their regular supply of wheat has been cut off, local prices are surging and shortages are occurring.

In Iraq, riots have emerged as a result of growing food shortages.

Prior to the Russian invasion of Ukraine, Yemen was already facing looming famine. Now the country’s food security is rapidly deteriorating, with the World Food Programme calling for immediate global assistance, especially as humanitarian funds get diverted. 

“We are looking at a seismic hunger crisis if we do not step up now. Unless we receive immediate funds, hungry people will lose assistance right at the time they need it most,” said David Beasley, the executive director of the WFP, during a pledging event for Yemen. 

“Funding for Yemen has never reached this point. We have no choice but to take food from the hungry to feed the starving.”

5 Ways the War in Ukraine Has Worsened Global Hunger

As Dany Bahar said recently, the refugee crisis is shaping up to be the worst the world has seen for 80 years. There are also millions of civilians inside Ukraine—some displaced by the fighting, others still at home—who (either now or in the near future) will need assistance from humanitarian agencies like the UN, the Red Cross and international NGOs.

How should the international community respond? Here are six proposals.

First, although the countries hosting the current wave of refugees have more ability to look after them than is the case in most of the world’s refugee crises, by dint of their level of economic development, there is still a valuable role to be played by the UN refugee agency, UNHCR, and other relief agencies. Donors should quickly and fully fund this month’s UN appeal, which seeks $1.7 billion, for both refugees and work inside Ukraine. The initial signs are positive, with $1.5 billion pledged in the first week. But promises must quickly to be turned into cash, and this first appeal covers three months only. It will soon be followed by other larger calls for resources.

Second, the EU, drawing on the experience of the exceptional aid it has provided Turkey to help support millions of Syrian refugees, should approve a package of financial support—which even initially will need to be calibrated in the billions of euros—for its member states hosting fleeing Ukrainians. (Others, notably the UK, Norway and Switzerland should help with that too). Many of those who have left so far are well educated and have professional and vocational skills: they could be productive and make a valuable contribution if helped to do so. That would be much better than what often happens, which is that refugees simply become dependent on their hosts. Again, there are positive lessons to draw on from other recent experiences, including the way Germany and Sweden integrated hundreds of thousands of refugees they took in from Syria and elsewhere in 2015.

Third, prosperous western countries further afield should take in a share of the refugees. That is substantively and symbolically important for reasons of solidarity. So far some governments, including unfortunately the UK, have been too slow and too miserly in their response to this (in stark contrast to the wave of generosity many of their citizens have expressed in offering to take fleeing Ukrainians into their homes). Resentment will build and complicate other crucial collaboration if this is not redressed.

Fourth, the financial firepower of the World Bank (and the European Bank for Reconstruction and Development) should be put to work to offer more support for the Ukrainian economy and ensure social safety net programmes can be sustained, but also to ease the burden on refugee hosting countries. Under its soft lending arm, the International Development Association, the World Bank has provided such support in recent years for refugee hosting countries. In these unique circumstances it should use its large balance sheet to help in eastern Europe too.

What those who remain inside Ukraine want more than anything is, of course, an end to the bombardment. We can all see what the Russians think about that, and those of us with experience of Russian behaviour elsewhere, not least in recent years in Syria, can guess what is to come. Much of the defensive response will inevitably be military. But two humanitarian initiatives that were valuable in Syria could be replicated in Ukraine now.

So my fifth proposal is that friendly countries should support any Ukrainian moves towards the establishment of a Ukrainian equivalent of the White Helmets. Comprised of thousands of volunteers, in Syria the White Helmets played a role in medical evacuation, urban search and rescue in response to bombing and the evacuation of civilians from danger areas. One thing Ukraine now needs is help to cope with escalating Russian targeting of civilians. The purpose of bombing hospitals and other civilian refuges is to terrorise the population, undermine morale and erode resistance. These tactics come straight out of the Chechnya and Syria playbooks. Combatting them requires protected underground hospitals and a drum beat of publicity showing what is happening. The White Helmets have done courageous and effective work publicising and warning of the risk of atrocities in Syria, gathering video footage and eye-witness testimony and disseminating it widely. People committing war crimes and other atrocities generally prefer not to be seen doing so: they can sometimes be put off if they know the full detail of what they are doing will be seen round the world.

And sixth, also drawing on the Syrian experience, it is possible that at some point in the future there will be a degree of accountability for those responsible for atrocities. Gathering evidence to be ready for that day is important. Some of the people who committed serious crimes against civilians in Syria have been prosecuted, convicted and imprisoned in Germany. That has been possible only because the evidence was collected. Those doing this kind of work should be supported from the outset.

Mark Lowcock’s new book, “Relief Chief: A Manifesto for Saving Lives in Dire Times,” published by the Center for Global Development, is out on 17 May and can be pre-ordered here.

Six Recommendations for Boosting the Humanitarian Response to the Ukraine Crisis

This year, BRAC celebrates its 50th anniversary and the 20th anniversary of its flagship Graduation approach. In 1972, Sir Fazle Hasan Abed KCMG (affectionately known at BRAC as ‘Abed bhai’) started BRAC as a small relief program, in the aftermath of the devastating Bhola cyclone and Bangladesh’s hard-won war for independence. 30 years later, BRAC pioneered the first Graduation program. Fast forward to 2022 and BRAC has directly empowered more than 2.1 million households to escape extreme poverty in Bangladesh alone via the Graduation approach and directly implemented or advised on Graduation programs in 15 additional countries. Nearly 92 million people across 75 countries have been reached by 219 economic inclusion programs which share elements of BRAC’s Graduation approach.

Reflecting on this history, our approach to extreme poverty eradication has been guided by four critical principles which underpin BRAC’s past success and future ambitions.

From the first village Abed bhai and his passionate team of volunteers began working with in 1972, BRAC worked from a philosophy of harnessing the innate power, agency and dignity of people, in spite of the vulnerability of their situation. He quickly realized he had to start with the most deprived areas and reach the people in the deepest forms of poverty first. This was more than a duty to serve the most vulnerable. It was the understanding that people living in extreme poverty were being overlooked in spite of their potential to lift themselves from their circumstances if only given the tools and self-belief that others had, to realize their potential.

According to Abed bhai, BRAC sought to embody Paulo Freire’s philosophy that people should be the subject, not the object of development programs. This principle lives on in BRAC’s work with governments today whereby we are demonstrating the power and potential of populations in extreme poverty that have been left behind by traditional economic development policies and practices. People living in extreme poverty must not be considered passive recipients of aid but powerful potential agents of change and progress. This principle continues to drive BRAC’s direct implementation, technical assistance, and advocacy around the Graduation approach.

Extreme poverty is multidimensional and requires a multidimensional approach

BRAC recognized that enabling people to escape extreme poverty would require a holistic approach that includes both social and economic empowerment. In 2006, reflecting on BRAC’s Graduation program in Bangladesh, Abed bhai wrote that, ‘the constraints [people] face in escaping extreme poverty are interlocked in ways that are different from those who are moderately poor. This challenges us to rethink our existing development strategies and interventions for the extreme poor, and come up with better ones that work for them.’ This was the challenge that drove BRAC to initiate what was an experimental programme in 2002, with the idea being ‘to address the constraints that the extreme poor face in asset building, in improving their health, in educating their children, in getting their voices heard, in a comprehensive manner so that they too can aspire, plan, and inch their way out of poverty.’

Evaluate and re-evaluate methods and assumptions

To ensure its programs had lasting impact, BRAC committed itself to a culture of critical self-evaluation, built on humility, curiosity, and rigor. These values led to the uncomfortable realization in the late 1990s that our programs were failing to adequately reach and generate long-term impacts for a subset of households living in the most extreme states of poverty and marginalization, which BRAC dubbed ‘ultra-poverty’. Graduation emerged from BRAC’s findings that its Income Generation for Vulnerable Group Development (IGVGD) program with UN World Food Program (WFP) and the Government of Bangladesh was having positive impacts, but women in ultra-poverty were still unable to access loans by the end of the program and needed more intensive support.

BRAC developed the Graduation approach in response to this need, constantly asking how it could improve the program, and if the assumptions it operated under remained valid. This constant, careful fine-tuning of the program led to significant and sustained impacts captured in randomized controlled trials, and sparking a tide of Graduation adaptations around the world. Even so, sensing that the program was no longer sufficiently suited to the evolving poverty context of Bangladesh in 2016, the Ultra-Poor Graduation (UPG) program probed nearly every aspect of Graduation in a major redesign. For instance, upon realizing its asset transfers were no longer large or diverse enough in the current market, the UPG program doubled their value and expanded the livelihood options available to participants.

Such reevaluations of Graduation have ensured its continued relevance and impact. They would not have been possible without BRAC’s commitment to rigor and connection to the communities we serve. BRAC takes firsthand insights from the field staff and listens to local communities, combining this lived experience with rigorous research through internal evaluations, working with the BRAC Institute of Governance & Development (BIGD), and external research partnerships to ensure program quality.

The qualities listed above would have been sufficient to empower many people to improve their lives through Graduation. But Abed bhai’s vision, and the vision of his successors has always pushed BRAC to think of impact and scale as inseparable. As he often said, “Small is beautiful, but scale is necessary.” Impact at scale is an operating principle for BRAC.

A program is not sufficiently impactful because it can be effective for any one household, but because it has the potential to reach millions of households. This is what BRAC Ultra-Poor Graduation Initiative now aims to do as part of BRAC International’s efforts to bring an approach born in Bangladesh to the world for extreme poverty eradication. Programs we directly implement like UPG are BRAC’s soul and strength, where our experience, skills, and learnings come from, but we know BRAC – nor any other NGO – cannot achieve our vision for the world alone. Scale is only possible through ambition and collaboration.

By 2026, we aim to reach 4.6 million more households with the Graduation approach by scaling through government uptake with multisectoral partners. Sir Abed’s vision was for BRAC to reach a point where it was no longer needed. At the community level, this meant empowering people to continuously develop and improve their lives long after participating in a BRAC program. At a global scale, this means taking 20 years of experience with Graduation and passing that knowledge to governments, researchers, multilateral institutions, media, and civil society to continue expanding the approach.

With nearly 700 million people still living in extreme poverty globally, we face what may seem an insurmountable challenge. But by committing to the same values which have defined BRAC’s approach to extreme poverty reduction, the international community has the chance to deliver real, meaningful progress toward a world where the deepest forms of poverty are extinct.

“Poverty eradication may be a few years away, but it is possible,” said Shameran Abed, Executive Director of BRAC International, who oversees BRAC’s Graduation programs. “We should be the last generation on earth that sees extreme poverty. The resources are there. The research exists. It’s going to take some convincing of governments. It’s going to take some political will, which requires effective advocacy and technical assistance at the local level, but it can be done.”

50 Years of Combating Extreme Poverty, From Bangladesh to the World

Rakan Aboneaaj, Azusa Sato, and Scott Morris

When sudden shocks like the COVID-19 pandemic cripple an economy’s ability to rapidly raise revenue and reallocate limited resources, multilateral development banks (MDBs) can lead the crisis response. MDBs provide a range of instruments that support countries in different ways and at different periods of crisis. A major factor in the success of these instruments is their speed—how quickly do they get funds to where they are needed after a crisis strikes?

In a new note, we look at two key measures—relative disbursement rate and response time—to review the performance of the crisis-response instruments of the Asian Development Bank (ADB) and the World Bank, and compare them to the performance of more commonly used, non-crisis specific instruments. We find that across both categories and institutions, preparation is key: the fastest projects have advanced-design elements and policy conditions that are met prior to approval.

The ADB and the World Bank both make the quickest disbursements, whether crisis-specific or not, primarily in the form of budget support. Relative disbursement rate, which tracks the relative rate at which a given commitment disburses, was highest for program and policy-based lending (PBL) instruments at ADB, and for Development Policy Loans (DPLs) at the World Bank (all of which are essentially conditioned budget support). 

At ADB, PBLs and Program instruments even outpaced the specially designed modality for COVID-19, the CPRO modality. The quick disbursement of these instruments is unsurprising, since the conditions of disbursement (fulfillment of specific policy actions) are designated prior to approval and in some cases are already fulfilled upon approval. This means large amounts can be disbursed immediately once approved. We confirmed this result for ADB projects by identifying a specific subset of ADB operations that had already been approved or were underway, which we refer to collectively as “continued” operations. When looking at the speed of response for continued versus non-continued projects, we found the “continued” subset of ADB projects to be consistently faster disbursing than the non-continued sample across all years. 

While the relative disbursement rate metric was useful in assessing disbursement speed of most instruments offered by ADB and the World Bank, the metric is less useful when considering contingent crisis-specific instruments: Contingent Disaster Financing (CDF) at ADB, and Catastrophe Deferred Drawdown Options (Cat-DDO) and Deferred Drawdown Options (DPL DDO) at the World Bank, which are approved in anticipation of, and much earlier than, the crisis dates that they presumably respond to. As a result, relative disbursement rates can make them appear slow. To assess the speed of these instruments more effectively, we used the “response time” measure. In addition, we subdivided our sample to get a sense of how the response time of COVID-19-related projects compared to response times in previous crises.

We found that, at ADB, COVID-19-related operations’ response time was significantly quicker than other crisis-response operations, by approximately six days on average. We attribute this pickup to three causes:

Instruments used to respond to the COVID crisis, namely CPROs, had fewer processes to go through before approval. CPRO operations had no procurement plans, which many other modalities would have had to include.

Given that countries were struck by the pandemic at different times and different intensities, some countries had advanced warning of the crisis before their population was infected. This allowed some countries and the ADB to prepare response packages before the “crisis date” used in our data set.

Given the widespread medical nature and urgency of the pandemic, barriers to approval that may have existed for other crises that responded to more politically sensitive crises were absent. For the World Bank, we found that Cat-DDOs’ average response time hovers at approximately 29 days. Accounting for COVID-19 projects exclusively, this falls to around 21 days, again reflecting the urgency of the pandemic. We did not extend our analysis of response times to DPL DDOs, which, given their much more general disbursement criteria, are more challenging to study from the crisis-to-response framework with which we analyzed Cat-DDOs.

Our analysis suggests that to respond effectively to crises, preparation is key: disbursement speed is much faster where instruments have advanced-design elements and policy conditions are met prior to approval. At ADB, this result holds for “continued” operations such as subprograms and additional financing. At both the World Bank and the ADB, contingent crisis-specific instruments (Cat-DDO, DPL DDO, CDFs) take these dynamics into account, approving commitments and executing policy actions in anticipation of crises, rather than after they strike. Our analysis of response times for CDFs and Cat-DDO shows that during the COVID-19 crisis, these instruments performed especially well. However, while speed is a key element of instrument performance during crisis, our analysis stops short of looking at quality. Achieving quality results and desired outcomes in a time of crisis is challenging, and these factors deserve greater attention as MDBs seek to optimize crisis financing.  

For more detail on our analysis and methodology, check out the note.

At the ADB and the World Bank, which Instruments Are Fastest in a Crisis?

In October 2002, IFC and ABN AMRO Bank convened in London the 12 largest project finance banks (including Citibank, Barclays, others) to discuss social and environmental issues in our lending practices with local communities, trade unions, NGO’s. We had 12 different cases in the morning and 1 common cause at the end of the afternoon, resulting in June 2003 into the Equator Principles, based on the IFC Performance Standards on Environmental and Social. A landmark achievement: it was the first voluntary sector agreement among sector industry leaders to raise the values’ bar.

The convening role of IFC and the ability to have its Performance Standards as reference, was crucial for the success of this private financial sector accord.

This year, 20 years later, a similar landmark initiative should be initiated, addressing the urgent issue how the financial sector can be a steward for a better world, with ethical standards, environmental sustainability and social justice worldwide, by fundamentally improving our practice of risk & impact management in the entire financial and non-financial private sector, with a clear focus on values’ based true value creation for all stakeholders with true prices for products and true profits for companies.

ROLE OF FINANCE: MOVING BEYOND ESG, IN SEARCH OF A NEW PURPOSE

The private financial sector is in search of a new purpose and its role in society, considering its own long-term interest, as well as its duty of care to serve the real economy and the public interest towards a peaceful, fair and thriving society “for generations to come”. It is uniquely placed to credibly offer perspectives and solutions using its knowledge, networks, financial capital mobilization ability, within its regulatory environment.

Playing ESG-defense is just the beginning:

Active embracing of the values-based, “do no harm” ESG-agenda (notably GHG emissions, loss of biodiversity, human rights, illicit money flows) by advising, supporting, even conditioning its customers and investees how to become more resilient and have no undue negative impacts, is an essential, already on-going first step by the financial sector.

Transformation towards a new income model:

However, there is an urgent need for much better by actively creating new “true” value: a fundamental rethink on how to drive a positive transformation by way of a “doing good and well”-opportunity-agenda with a clear mission towards “better business, clients and investees for a better world”. A more macro-prudential risk & impact approach, addressing systemic risks, should prevail over the traditional short term micro-prudential orientation. The 1st Line of Defense (the business line in the banking sector) should be reframed as the business force to contribute to serve, on a profitable basis, the public interest through its customers and investees.

This transformation should be seen in the context that our traditional beliefs, mindsets, tools and screens on investing, the economy and our society have become fundamentally flawed in our “age of consequences” (natural resources’ depletion, pollution, climate change, social divides) in which we face a massive markets’ failure: Adam Smith’s “invisible hand” needs brains and a heart.

MAKING THE ECONOMY, CAPITALISM AND MARKETS FIT FOR PURPOSE                                                                

GDP as key indicator of economic success is mis-measuring our real economy and, hence, misdirecting our policies and lives, as the sole focus is on economic performance by financial flows, without recognition of “external” factors:  issues such as dependency of and/or access to increasingly scarce natural resources, social cohesion, human dignity & skills, any negative impacts we cause, contribute to or incur, such as climate change, pollution, loss of biodiversity.

We are living and doing business well beyond our planetary boundaries, which is unsustainable: “net zero” is only stabilizing the patient, we need to move to “net positive”: to repair and regenerate. We are leveraging our financial, natural, and social balance sheets. We are mortgaging the future of next generations.

Our market economy is dysfunctional, with markets not being efficient, not only because of too much and too long monetary and fiscal stimuli during the last couple of years, but, even more, because of lack the right performance and valuation information, disciplines, and disclosures. We are mis-pricing long term risks, and our asset valuations are misleading as the costs and returns of increasingly scarce types of other than financial capital (i.e. Natural, Social, Human) are not considered, let alone reported and verified.

Business’ long-term self-interest and the expectation, even imperative of responsible business conduct (by international agreements and many national jurisdictions) implies much stronger due diligence and duty of care in its entire value chain (“Scope 1, 2, and 3”), addressing the traditional, material “outside-in” financial risks as well as, equally, material “inside-out” impacts on stakeholders and wider society. Active stakeholder engagement (“what matters to whom”) is important, including in governance. “Impact Weighted Accounts” should be a key feature of investment analysis and corporate reporting (www.impacteconomyfoundation.org).

Green transformation scaling and accelerating:

The Net Zero GHG emission targets and other green policies and initiatives are only the beginning of a much needed, more systemic transformation in our economies and societies, all related to sustainability. The big challenge hereby is to address global issues (climate, biodiversity, public health) in a fragmenting world on a global basis, effectively and fairly.

We are offloading many social and environmental costs in the value chain of a product on others than the end-user of such products: true pricing (www.trueprice.org) should become a generally accepted, principles’ -based approach by internalizing such externalities and reflecting these in end-prices (without necessarily being higher).

The COVID-related monetary and fiscal stimuli were initially justified as rescue-funds to maintain relative economic and social stability, but prolonged too long and by too much, it may have seriously destabilizing effects, exacerbating the markets’ failure.

UN-SG has called in his 2021 Report “Our Common Agenda” for renewed solidarity between peoples and future generations and proposes a 2023 “Summit of the Future”, including drafting a follow-up of the Sustainable Development Goals post 2030. The IFI’s can make a very important and tangible contribution by rethinking, redrafting, and recommending the outlines for a new economy, together with leading actors of the financial sector.

IFI’s as Game Changers for a new Economy

NAIROBI – With the right opportunities, women can play a critical role in the social and economic development of Africa. But what interventions are most effective at empowering more African women to seize such opportunities?

When women have more say in their own social and economic choices, their well-being and that of their households and communities improves. Their families show progress on nearly all development indicators.

For example, a study by the African Economic Research Consortium in Kenya examining the impact of policies to empower women on household nutritional outcomes found that the percentage of underweight children under five years old dropped from 19% to 12% between 2003 and 2014. In Nigeria, a survey of farming households revealed that gender parity significantly reduced household food insecurity. And an analysis of data from nine African countries linked women’s empowerment with improvements in children’s cognitive development, growth, and nutrition.

These household-level benefits trickle up. A 2018 report by the International Monetary Fund associated greater gender equality with increased economic resilience, higher GDP per capita, lower income inequality, and higher labor productivity.

An investment in effective, evidence-based policies that empower women thus is an investment in a country’s overall economic future. But when African governments and their partners commit to invest in women’s empowerment, they first must understand which approaches produce sustained results. Recent evaluations of several programs provide some insights into the best way to set women on a path to long-term self-reliance and improved well-being.

The Empowerment and Livelihood for Adolescents (ELA) model offers young women a combination of life skills and vocational training. It uses peer mentors to provide information on reproduction and sexual health and instruction in financial literacy and business management. So far, ELA has reached over 200,000 adolescent girls and young women across Uganda, Sierra Leone, South Sudan, Nepal, Liberia, and Tanzania.

A randomized controlled trial in Uganda found that young girls in communities with ELA programs were “48% more likely to engage in income generating activity,” primarily self-employment. These villages also benefited from a 34% reduction in teen pregnancy and a 62% reduction in early marriage or cohabitation.

Another model is Graduation, which takes a multi-pronged approach to addressing extreme poverty. The program meets participants’ basic needs, often through connecting them to existing safety net schemes, and then provides assets for income generation and instruction on how to manage them. Participants also receive instruction on financial literacy and life skills training. And all program components are adapted to the local context and implemented through in-person coaching.

A growing body of evidence suggests that this model, by combining support such as cash transfers with more comprehensive initiatives, can have broader and longer-lasting effects than cash transfers alone. Research in South Sudan found that both cash transfers and Graduation had positive effects on consumption, but Graduation also had a longer-term effect on participants’ overall wealth. Similarly, a study in Uganda showed that Graduation led to greater improvement in income, consumption, nutrition, and subjective well-being compared to cash alone.

In Ghana, researchers studied the long-term effects of Graduation by comparing program participants to others who received only a transfer of assets (goats, in this case). The Graduation program provided agricultural jobs and training, health and nutrition information, enrollment in national health insurance, savings accounts, and weekly coaching by program staff, in addition to cash transfers. After three years, the value of Graduation participants’ assets, consumption, and income was higher than those who received only the goats.

Through the Graduation approach, women in Kenya have been able to participate in the economy, send their children to school, improve gender relations, and become leaders in their communities. And in Uganda, young people have learned to increase their savings, boost their productivity, and improve food security for their entire households.

Partnerships between non-governmental organizations, researchers, and governments are critical to bring innovative projects from the pilot stage to full implementation. In the case of Graduation, research partnerships were crucial to the program’s expansion. Researchers monitored the program in various contexts to ensure that government officials understood its effectiveness. Internal and external evaluations also helped improve Graduation over time, as program staff used the data to adapt its design.

The education, social inclusion, and economic integration of African women will shape the future of the continent. NGOs, researchers, and governments must work together to expand programs that have been shown to work and to develop new ways to encourage women’s empowerment and self-reliance. Africa’s future depends on it.

Empowering African Women to Shape the Continent’s Future – Project Syndicate

This International Women’s Day, we want to both celebrate the women who lead multilateral development organisations, and draw attention to those organisations where the “glass ceiling” remains intact.

While women’s representation has improved over the last few decades, our analysis shows that 60 percent of the 48 top-funded development organisations are still headed by a man, and nearly half (48 percent) have never had a woman leader. This is an issue particularly in multilateral development banks (MDBs), where the European Bank for Reconstruction and Development (EBRD) is the only one of 13 MDBs we look at to ever have had a woman in charge.

Evidence suggests that when women are placed in leadership roles, more effective and inclusive outcomes can follow. The presence of women as political leaders has been associated with improved service provision and reduced corruption. In the financial sector, a higher share of women on bank boards appears to be associated with greater financial resilience and lowered rates of misconduct. And in post-conflict settings, when women were given substantial opportunities to lead on the peace-making process, reaching and implementing sustainable peace agreements became more likely.

The past year has indeed seen some progress towards greater equality. In 2021, two women became the first to lead their respective multilateral organisations: Ngozi Okonjo-Iweala made history as the first woman (and first African) Director-General of the World Trade Organisation (WTO), while Rebeca Grynspan became the first woman Secretary-General of the United Nations Conference on Trade and Development (UNCTAD) since its formation in 1964. Just over a year ago, in late 2020, Odile Renaud-Basso was elected by the EBRD’s Board of Governors as the first woman to serve as its President.

Where are the women? Trends in multilateral development leadership

To put the current situation in context, we’ve analysed trends over time for 48 heads of the major international organisations involved in development. In addition to the top aid-funded UN bodies and MDBs, we also look at organisations important for the multilateral governance system, including the International Monetary Fund, the World Trade Organisation, and the OECD’s Development Assistance Committee (DAC) (for details regarding the scope of UN bodies and MDBs considered, see footnotes to table 1). Our database considers whether and when a woman has led the organisation, and how many women have held the top position since the body’s formation.  In future analysis we hope to look at bilateral development agencies, and those organisations with a thematic focus, like GAVI, the Global Fund or the Green Climate Fund.

Our analysis shows that, despite some recent progress, most leaders in the multilateral development system—including at United Nations (UN) bodies and MDBs—are still men. While the current UN Secretary General has made parity a priority since his appointment in 2017, a third of the 33 UN bodies with the largest development budgets have still never had a woman at their head —and this includes the most senior role within the UN, the office of the Secretary General itself. Still, in contrast with this slow but steady progress at the UN, the “glass ceiling” in multilateral development finance institutions has barely even started to crack.

* The scope of analysis includes those UN bodies which either had over $10 million in annual Official Development Assistance (ODA) contributions, or over $10 million in development, peace, or humanitarian expenditure for the latest year available (Data on ODA contributions was taken from the OECD DAC tables on members’ total use of the multilateral system, and includes both core and earmarked contributions. Data on expenditure was taken from the UN Financial Statistics for 2020). Regional commissions, entities or funds which are co-managed by another lead agency, as well as the UN’s research and training entities were excluded.
** The scope of analysis includes those MDBs which exceeded $50 million in annual ODA contributions according to the OECD DAC tables on members’ total use of the multilateral system, as well as those MDBs which input to the MDB’s annual Joint Report on Climate Finance. While the Eastern and Southern African Trade and Development Bank passes our threshold for inclusion, historical data on presidents since the Bank’s foundation in 1985 could not be confirmed, so it is left out.

Parity for women in multilateral governance bodies is long overdue

Our analysis has highlighted that progress is sorely needed, particularly within institutions where only one woman has ever been elected as president by an MDB’s board. While there has been some progress within the UN—with senior leadership positions under the UN Secretariat now equally split between men and women—fewer women have been leaders of the UN’s specialised agencies, whose heads are elected by Member States rather than being appointed by the General Assembly on the recommendation of the Secretary General.  Ultimately, this pattern highlights that greater parity demands a wider change in attitudes among board members, shareholders, and member state representative towards women’s leadership.

It should also be noted that while representation of women at the very highest levels carries unique benefits, parity has to be reached at all levels—not just at the top—to be meaningful. Data from the UN Secretariat Gender Parity Dashboard reveals a common trend, already well-known in the corporate world—that while women are increasingly taking up executive leadership positions (i.e. at the Under-Secretary General level), equal representation remains elusive within lower and middle management. Instead, we see that women are disproportionately represented at the very lowest rungs of the UN professional career ladder.

As multilateral development organisations gear up to achieve SDG5 by 2030 and work to mainstream gender considerations into their projects, they should also take a moment to look inwards and consider how their internal structures and hierarchies reflect progress towards the goal of women’s empowerment.

Is the Glass Ceiling at Multilateral Development Organisations Intact?

Mark Plant, David Andrews, and Lucas Sala 

With Russia’s attack on Ukraine raging and most of the world imposing severe financial sanctions on Russia, attention has turned to whether Russia could use its allocation of special drawing rights (SDRs) to bolster its foreign reserves and finance its war effort. The answer is yes, in principle, but no in practice. We explain why.

SDRs account for 4 percent of Russian reserves (SDR 17,301 million), however considering the current situation where 55 percent of its reserves are unusable because of sanctions, these SDRs (valued at about $24 billion) might come in handy.

As of the 28th of February, Russia has not touched its SDR holdings since the new SDR allocation of August 2021 (although its holdings are slightly less than its allocation, indicating some use in the past (figure 1). However, Ukraine, depleted about half its SDRs in September and used most of the remainder in November (figure 2).

To exchange SDRs, Russia would have to either find another government willing to enter into an agreement with them (highly unlikely) or request a conversion using the voluntary trading arrangements (VTAs) established with the Fund, which we explain here.

However, these VTAs are just that—voluntary. For Russia to exchange its SDRs against dollars or other hard currencies, there would have to be willing parties for this transaction, which, considering the present geopolitical situation, seems unlikely. Most VTA participants (with the exception of Saudi Arabia, Oman, and China) have condemned Russia’s invasion of Ukraine. And many large VTA participants have also banned transactions with the Central Bank of Russia—the counterparty in any such SDR conversion (figures 3 and 4). 

It is also important to note that large conversions for Russia’s SDRs could not take place under the radar. As we have noted elsewhere, it is often hard to trace SDR transactions, and steps are needed to provide greater transparency. But conversion of Russia’s holdings of SDR 17.3 bn would be by far the largest single SDR transaction to date—about a third larger than the total decline in SDR holdings by all low- and middle-income countries between August 2020 and January 2022. Thus, the resulting changes in SDR holdings (routinely reported by the IMF at end month) would likely make it obvious which country or small number of countries had stepped in to convert Russia’s SDRs. Conversion of Russia’s SDRs would thus be a very public demonstration of support for Russia, and one likely to provoke near global opprobrium. 

Could Russia use IMF rules to force other countries to exchange its SDRs? 

This is where it gets blurry… Article XIX “Operations and Transactions in Special Drawing Rights” of the Articles of Agreements of the IMF states that each member country has an obligation to provide currency, if another country presents a balance-of-payment need (such as Russia currently).

In this vein, if voluntary transactions are not able to meet the requirements of a country with a balance-of-payment need, the Fund is expected to designate participants to provide currency (“The Designation Mechanism”). Countries are designated if their reserve positions are sufficiently strong. The normal procedure would be to include in the designation plan all the countries (currently 51) whose external positions are strong enough for them to be included in the IMF’s Financial Transactions Plan which is used to fund the IMF’s non-concessional lending from its General Resources Account. The rules governing for operation of the designation plan (Schedule F of the Articles) imply that countries with larger reserve positions and SDR holding would be called upon to convert more SDRs. Thus, the designation plan would appear to “mandate” large exchanges of SDRs by the very countries that would not expect to enter voluntary trades with Russia.

If a designated country refuses to fulfill its obligation, it will not be able to use its SDRs for other purposes “unless the Fund otherwise decides”. Since the final decision to sanction countries not meeting their obligations under the designation plan will come from the Fund (Article XXIII, Section 2)—i.e., a decision of the Fund’s membership—it would be very hard to imagine the EU and the US for example voting to ban themselves or other countries from using their own SDRs.

If (hypothetically) some went along with the designation plan, with major economies not participating, they would likely cover only a fraction of the full amount of Russia’s SDRs. In these circumstances—and with the large shareholders able to block any sanction for noncompliance with the designation plan—it seems very unlikely that the designation mechanism could be used to force conversion of Russia’s SDRs.

It is also hard to conceive of the IMF taking this route and activating the designation mechanism in these circumstances. Since the designation mechanism is the backstop that ensures the liquidity—and the reserve asset status—of the SDR, the failure to activate the mechanism might be seen as undermining the essential character of the SDR. But in present circumstances, it would only be the liquidity of Russia’s SDRs that would be called into question.

The IMF is in a delicate position. Russia is a sovereign country, a member of the IMF, with a recognised government. It would thus be hard for the IMF to justify blocking its assets. But on the other hand, so is Ukraine. Blocking Russian’s assets would mean supporting the Western sanctions but allowing Russia to draw on this capital would mean financing a globally condemned war.

Legally, all Russia would have to do is declare a balance-of-payment need to activate the designation mechanism for its SDRs, hope for a country to support them, and have access to its reserve tranche position. But this is unlikely to lead to any substantive exchange of foreign currency for Russia’s SDRs.

What happens next is uncertain, but it would certainly help if the IMF were more transparent about SDR transactions. If VTA exchanges were reported and SDRs movements easily trackable, it would allow the world to see clearly how SDRs were being used to support or to block Russia in its war against Ukraine. Lack of transparency just fuels harmful speculation and mistruths become facts.

This week, the World Bank and Asian Infrastructure Investment Bank (AIIB) announced the suspension of their programming in Russia and Belarus (see here and here).  Similarly, earlier this week, the EBRD board voted to submit a resolution to their governing body to open-endedly suspend financing to Russia and Belarus. These are important symbolic moves.  But there is still room to go further by temporarily suspending Russia’s membership across the international financial institutions (IFIs).   

The World Bank could lead the charge.  The Bretton Woods institution was initially established to reconstruct a war-torn Europe. The IBRD’s foundational Articles of Agreement set its mission at the outset:

“To assist in the reconstruction and development of territories of members by facilitating the investment of capital for productive purposes, including the restoration of economies destroyed or disrupted by war, the reconversion of productive facilities to peacetime needs and the encouragement of the development of productive facilities and resources in less developed countries.”

Russia—the World Bank’s eighth largest shareholder with 2.74 percent of vote shares—is actively undermining this mission by destroying the human, economic, and physical capital of another member country.  The World Bank currently has around 20 active projects in Ukraine amounting to $3.5 billion in exposure.  These include investments in the power grid and transportation infrastructure and programs around social safety needs, health, and education.  By obliterating these investments and the development assets of another country, Russia is undermining its obligations as a World Bank shareholder. 

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