World Bank Group work in low-income countries under stress: a Task Force Report

This report summarises the analysis, findings, and recommendations from the World Bank’s study on Low-Income Countries Under Stress (LICUS). The Task Force was created to respond to concerns about how the development community, in particular the World Bank Group, can best help chronically weak-performing countries get onto a path leading to sustained growth, development, and poverty reduction.

The report is structured as follows: summary of the Task Force’s analysis of poor-performing countries; analysis and recommendations on donor strategies in LICUS; the catalytic role of donors; the delivery of basic social services in LICUS; and the implications for the World Bank Group.

A number of the main conclusions, recommendations and suggested strategies include:

• rather than disengaging completely from LICUS, the development community should continue to engage with them, albeit differently than with the typical low-income country. Development agencies generally deploy two sets of instruments - finance and knowledge. Knowledge instruments are particularly useful in LICUS, so that the balance between knowledge and finance should be more heavily weighted toward the former, with a more selective content targeted to a broader audience than in other countries. Similarly, donor financial engagement should also be distinctive, with a greater proportion of grants relative to loans
• strategy for improving policies, institutions, and governance: including "zero-generation" reforms, for example two or three reforms that are important in economic terms and likely to result in a rapid and substantial payoff, but that are also feasible in sociopolitical terms, tending to unite a broad coalition for reform; engagement with society needs to be taken further in LICUS than in other countries: reform is less likely to be an autonomous initiative of the government
• strategy for improving the provision of basic social services: supplementing government provision
• transition to government service provision: social funds and independent service authorities work with government at the local level, can include government representation in their governance structures, and should be designed so that the basic services they finance are gradually incorporated into the government.

[adapted from author]