By Andrea Shalal
WASHINGTON, April 17 (Reuters) – The World Bank on Friday unveiled a new strategy aimed at helping small island states and other small countries better address unique challenges such as remoteness, exposure to shocks and a narrow economic base by focusing firmly on jobs.
World Bank President Ajay Banga discussed the initiative at a closed-door gathering of ministers and central bank governors from 50 small countries held during the spring meetings of the International Monetary Fund and World Bank.
He said the concept was aimed at using differentiated tools to help small states attract more private investment, carry out policy and regulatory reforms to make it easier for businesses to operate and grow, and ultimately create more jobs.
It will focus on areas such as health, affordable energy, resilient infrastructure and micro- and small businesses where Bank officials see the greatest opportunities to boost growth, strengthen businesses, and create more and better jobs.
The World Bank Group last year approved a record $3.3 billion in new commitments and guarantees for small states, which face unique economic challenges and are disproportionately affected by shocks, as seen during the war in the Middle East.
“For small businesses, a single hurricane, a sudden surge in imported fuel prices, or a downturn in tourism can undo months of investment and income in a matter of days,” the bank said in a blog released with the new strategy.
Banga said the Bank will take a differentiated approach to shape the regional projects it pursues in such countries, and partnerships would be a big component.
“This is not a one-size-fits-all approach. Small states are diverse, and our support will reflect that,” Banga told the finance officials. “We also know the economics are different.”
He noted that working in small states costs up to four times more than in larger countries, so the Bank planned to streamline delivery of its services, use more flexible financing and scale solutions to make the most of each dollar.
Some projects are already under way.
In Tonga, for example, the bank will co-finance an urban resilience project with the Asian Development Bank under a mutual reliance framework agreement, a first of its kind between multilateral development banks.
Banga said more such agreements were planned, including one with the Inter-American Development Bank to expand the approach to the Caribbean. The World Bank was also expanding the tools available to countries, he said.
Better diagnostics were also important, the bank said. Deeper reports studying the constraints to private-sector–led hiring were under way for Barbados, Guinea-Bissau, Lesotho, Mauritius, Samoa, and Seychelles.
The World Bank could also leverage its power to help drive investments, the blog noted. For instance, the International Finance Corp, the bank’s investment arm, helped fund development of Botswana’s first utility-scale solar project, while the World Bank worked on a parallel project on battery storage to enable the integration of solar projects into the grid.
“The result is not only a solar plant, but a replicable model for how unlocking private finance can open markets and create jobs,” the bank said in its blog.
(Reporting by Andrea Shalal; Editing by Andrea Ricci)
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