The World Bank

The World Bank was originally  founded in 1944 to help in the reconstruction of post-war Europe: its current purpose is to assist the economic developments of nations by making loans where private capital is not available. Its stated goals are the reduction of poverty in developing countries, the protection of the environment and promotion of both private sector and human resource development. The world Bank is currently considered a specialised agency of the United Nations and consist of 177 member states.

The world bank consists of 5 institutions namely: the International Finance Corporation (IFC), the Multi Instrument Guarantee Agency (MIGA), the International Center for Settlement of Investment Disputes (ICSID), the International Development Association (IDA), and the International Bank for Reconstruction and Development (IBRD). We thus reach a situation which the world bank group controls all levels:

a.       Enforcement and financing of privatisation (World Bank)

b.      Investment in the private company (IFC)

c.       Guarantee for the company (MIGA)

d.      Dispute Settlement (ICSID)

The International Bank for Reconstruction and Development (IBRD) leads to governments of middle income and credit worthy low income countries. The International Development Association (IDA) provides interest-free loans called credits and grants to governments of the poorest countries.

The Investment in the private company (IFC) is the largest global development institution focused exclusively on the private sector. It helps developing countries achieve sustainable growth by financial investment, mobilising capital in international financial markets and providing advisory services to businesses and governments.

The Multi Instrument Guarantee Agency (MIGA) was created in 1988 to promote foreign direct investment into developing countries to support economic growth, reduce poverty and improve people's lives. Multi Instrument Guarantee Agency (MIGA) fulfills this mandate by offering political risks insurance (guarantee) to investors and lenders.

The International Center for Settlement of Investment Disputes (ICSID) provides international facilities for conciliation and arbitration of investment disputes.

Most decision-making is delegated by the governors to their specific Executive Directors. The Directors consider and decide on bank policy and all loan and credit proposals. They present to the Governors or the annual meetings an audit of accounts, an administrative budget, and any other pertinent issues.

First years of World Bank (1946 - 1962)

It is formally believed that the mission of the world bank was to reduce poverty in developing countries but this was not the case. The bank's mission as originally conceived the United States and Great Britain in particular was to help rebuild Europe and then to promote the economy growth of the countries in the south, many of which were still under colonial rules. The World Bank first, lent money to the colonial powers (Great Britain, France and Belgium) so that they can effectively exploit their colonies.

When these colonies became independent the Bank made them liable for the debt that has only been contracted by their former 'home countries' in order to better exploit their natural resources and population.

Objectives of the World Bank.

The World Bank was established to promote long-term foreign investment loans on reasonable terms. The 'Articles of Agreement' (objectives) in the world Bank are:

1.       To assist in the reconstruction and development of territories of member states by facilitating the investment of capital for productive purposes including:

a.       the restoration of economics destroyed and disputed by war.

b.      the reconversion of productive facilities to peaceful needs and

c.       the encouragement of the development of productive facilities and resources in less-developing countries.

2.       To promote private investment by means of guarantee or participation in loans and other investment made by private investors.

3.       When private capital is not available on reasonable terms to supplement private investment by providing on suitable conditions finance for productive purpose out of its own capital funds raised by it and its other resource.

4.       To promote the long-range balanced growth of international trade and the maintenance of equilibrium in BOP's by encouraging international investment of the development of the productivity resources of members, thereby assisting in raising productivity the standards of living and conditions of labour in their territories.

5.       To arrange the loans made or guaranteed by it in relation to international loans through other channels is so that the more useful and urgent projects, large and small task alike will be dealt with first.

6.       To conduct its operations within due regard to the effect of international investment on business conditions in the territories of numbers and in the immediate post war years to assist in bringing about a smooth transition from a wartime to peacetime economy.