2012 World Bank Editorial Packet

Fuzzy Math At the World’s Bank: A Major Change to a Baseline Threatens Education Funding

This editorial packet is also available in Word and PDF forms

The field of mathematics — once the boring domain of those armed with pocket-protectors — has of late been vaulted into the high-stakes world of politics and international affairs. U.S. presidential candidates are accusing one another of an inability to perform simple arithmetic. Banks, we recently learned, have been falsely inflating or deflating their rates to impact profits or appear more creditworthy than they actually are. Casual observers could be forgiven for wondering when simple math became so difficult.

Now, a new report from RESULTS Educational Fund is finding fuzzy math at the World Bank. The report centers on the Bank’s commitment to providing low-income countries with assistance to finance basic education — a cornerstone of successful development.

In 2010, the World Bank’s then-president Robert Zoellick and Managing Director Ngozi Okonjo-Iweala joined the throngs of global leaders in New York for the UN General Assembly. Surrounded by celebrities and politicians, they made a bold new pledge to help educate the world’s poorest.

“[T]oday I am proud to announce that the Bank’s International Development Association (IDA), our Fund for the Poorest, will increase grants and zero interest loans for basic education by an additional $750 million over the next five years to 2015. This represents about a 40 percent increase in our basic education lending over the past five years for the poorest countries.”

— Ngozi Okonjo-Iweala, New York (September 20, 2010)

Given the World Bank’s International Development Association’s (IDA) support to basic education from 2006 to 2010 totaled nearly $4.9 billion, a 40 percent increase in basic education funding would total $6.8 billion, or roughly $1.36 billion per year from 2011-2015. Since this $1.36 billion annually includes the additional $750 million (or an average of $150 million per year), then based on the World Bank’s proclamation above, the annual baseline they were using as a starting point was $1.2 billion. IDA support to basic education in 2010 also happened to be about $1.2 billion. In other words, the pledge amounted to a commitment for IDA to maintain its 2010 level of basic education support over the next five years, plus an additional $750 million spread over the five years.

One year later, the World Bank’s IDA lending for basic education fell from $1.2 billion to $403 million — more than halving assistance. As the Bank came under intense criticism from civil society, they rolled out a new, creative line of thinking. In a statement quietly posted to their website in 2011 (not proclaimed loudly to a large gathering of world leaders at the U.N.), the Bank argued the following:

“Average IDA support for basic education was $742 million per year during 2000-2010. Our projections are for a sharp rise in IDA support for basic education in the current fiscal year (FY2012) to about $1.2 billion. If this is realized, the Bank will meet its pledge by 2015 by sustaining support for basic education around $1 billion per year over the next three years.”

In just three sentences of bureaucratic jargon, the Bank changed the original one-year baseline (2010) that Okonjo-Iweala had articulated in her speech to an 11-year average baseline (2000-2010). With just a bit of fuzzy math, the Bank almost halved the original annual baseline of $1.2 billion to $742 million. Over the five years of the original pledge, this change will mean $2.3 billion less for education in low-income countries.

Imagine if your boss announced that you received a raise. Then imagine that that instead of receiving an increase based on your current salary, your boss later informed you that the raise would be based on your average salary over the last decade, and that because of this your weekly paycheck would actually go down a bit. It’s hard to imagine how the World Bank could make such a change in the baseline calculation — particularly give the dramatic negative effects it will have on the world’s children.

Substitution Gone Wrong: Neutralizing the Global Partnership for Education

The Bank’s changed pledge reaches far beyond just World Bank basic education funding. By providing $2.3 billion less for education in low-income countries over five years, the World Bank is essentially neutralizing commitments made by the international community last year to the Global Partnership for Education (GPE), the only multilateral initiative dedicated to ensuring all children have access to a quality education. Just last year, GPE kicked off a three-year replenishment campaign to raise funding to realize its goals of getting 25 million children in school and training 600,000 teachers by 2014.. But the $1.5 billion in pledges received by GPE have now been neutralized by the World Bank cutting its pledge to basic education by $2.3 billion through 2015.  It also puts us further behind on achieving the world’s Millennium Development Goal #2 of putting all children in primary school by 2015.

Cause for Cautious Optimism

On July 2, 2012, Dr. Jim Kim took over as president of the World Bank. Kim is a physician, not a mathematician; however, one hopes he can teach the Bank some simple 8th grade math. Kim is a long-time development leader, including co-founder of Partners in Health. Most recently, Kim was the president of Dartmouth University, so he knows first-hand how critically important education is for the development of the world.

Kim also understands that setting bold targets can catalyze global action. While with the World Health Organization, Kim launched the “3 by 5” initiative along with UNAIDS to provide three million people living with HIV/AIDS in low- and middle-income countries access to critical AIDS treatment by the end of 2005. Just as he helped millions of people around the world realize their right to lifesaving treatment, he now has the opportunity to fulfill the original intent of the World Bank’s 2010 pledge and help millions of children realize their right to a quality education.

Kim will travel to Japan in October to attend his first World Bank Annual Meetings as President. This provides him with the ideal forum to right this wrong and re-dedicate the Bank to playing a leadership role in global education. What is needed around the world is a re-investment in education, especially for girls, and the financing that the World Bank provides to low-income countries through IDA is critical to expanding education for all. While it is far from clear what Kim’s legacy at the Bank will be, starting with a big win on education should be a no-brainer. Well, except for the math.