World Bank Group: The World Bank is an international financial institution that provides financial and technical assistance to developing countries to enhance socio-economic development and reduce poverty . The World Bank comprises two unique development institutions owned by 186 member countries : The International Bank for Reconstruction and Development (IBRD) and the Intrenational Development Association (IDA). Its headquarters are in Washington, D.C., USA. The areas of bank assistance cover poverty alleviation, health, education, agriculture, infrastructure, and so many other areas. However, in recent years, the Bank has laid greater emphasis on quick loans to help borrower countries alleviate their balance of payment problems.
The World Bank differs from the World Bank Group, in that the WB comprises only 2 institutions, namely – IBRD (established in 1945) and IDA (established in 1960), whereas the latter incorporates these two in addition to three more: IFC, MIGA, and ICSID (established in 1956, 1988, and 1966, respectively).
The World Bank Group came into being out of the Bretton Woods Conference of 1944 with a view to reconstructing Europe ravaged by the Second World War.
It has now expanded its activities to other parts of the globe, assisting programs on poverty alleviation.
The Wolrd Bank group is composed of five arms:
- IBRD (International Bank for Reconstruction and Development): promotes the international flow of capital for productive purposes, originally created for the reconstruction of nations devastated by the Second World War.
- IDA (International Development Bank): provides interest-free credits and grants to the poorest countries for programs to enhance economic growth, reduce inequalities and improve people`s living conditions.
- IFC (International Finance Corporation): finances loans for private sector projects in developing countries.
- MIGA (Multilateral Investment Guarantee Agency): encourages the flow of foreign private capital to developing countries by mitigating the major political risks involved in investing in these countries.
- ICSID (International Centre for Settlement of Investment Disputes): arbitrates disputes between foreign investors and governments.
Objectives of World Bank
The World Bank is a vital source of financial and technical assistance for developing countries around the world . Its mission is to fight poverty with passion and professionalism for lasting results and to help people help themselves and their environment by providing resources , sharing knowledge, building capacity, and forging partnerships in the public and private sectors. Besides this, the main objectives of the WB are:
- To assist the member countries for reconstruction and development,
- To promote private foreign investment
- To provide financial assistance to member states for productive purposes
- To promote long-range, balanced growth of international trade
- To assist in the maintenance of the balance of payments.
Structure of the World Bank
- Board of Governors: the highest decision-making body, meets annually
- Board of Directors : Main executive body, 24 executive directors
- President : Elected by the Board of Governers, for a five year, renewal term.
Functions of the World Bank
The main function of the World Bank is the provision of low interest loans, credit that is interest free, as well as aids to the least developed countries.for the development of the fields of education, health, public administration, infrastructure, environmental, and natural resource management.
The Bank focuses on the achievement of the SDGs, which call for the elimination of poverty and sustainable development. The bank provides more than US$ 24 billion every year as assistance to developing countries and those in transition.
The major sources of WB include : amount collected from international capital and share markets, capital fund of the Bank, donations and grants collected from governments, and investment from international organizations