Reducing poverty via the World Bank

This month’s issue of Foreign Policy, which is not yet posted on their web site, has some interesting comment on the World Bank’s investment arm, the International Finance Corporation (IFC).

IFC is chartered to reduce global poverty while making money for the bank.  It seems to be more involved in making money than reducing poverty.  A review by the bank’s equivalent of Inspector General found that “Most IFC projects generate satisfactory returns but do not provide evidence of identifiable opportunities for the poor to participate in, contribute to, or benefit from the economic activities that the project supports.”   The IG looked at 500 projects and found that only 13% “had objectives with an explicit focus on poor people”.

One of its latest projects is a 5-star hotel in Ghana that was built in conjunction with a Saudi prince. Ghana is ranked 172^nd in per-capita income; its roads are congested and potholed, the electricity system shaky, its food supply limited.  Does it really need a 5-star hotel more than investment in infrastructure?

The Ghana hotel is not the only 5-star hotel IFC has invested in; there are another ten scattered in such hot spots as Kenya.  And its investment portfolio includes upscale shopping malls, candy-shop chains, breweries, soft-drink distribution and other industries that don’t benefit the poor but do not also really need IFC money, as the companies are such as Dupont, Dow Chemical, KFC, Coca-Cola, SABMiller.