World Bank Country Assistance Strategy 2009-2012

October 6, 2008

World Bank Strategy Workshop Focuses on Equitable Growth, Competitiveness and Accountable Service Delivery

COLOMBO Monday October 6, 2008 – The new World Bank Country Assistance Strategy for Sri Lanka was discussed at a workshop today where its emphasis on participation by communities across the war-torn island was welcomed as critical to achieving equitable development.

The new strategy, prepared in broad consultation with Sri Lankan communities, will guide the development institution’s work from 2009 to 2012. Its main strategic objectives are threefold. The first is to create opportunities for equitable growth and economic development, especially in lagging regions of the country. The second is to help Sri Lanka accelerate economic growth by fostering a competitive investment climate and the third is to help the country ensure that service delivery is effective and accountable to citizens.

A new feature of the strategy is a “conflict filter” designed to help the World Bank ensure that its support to the government is insulated from possible distortions by the ongoing conflict. Just as important, opportunities to address the causes and consequences of conflict will be proactively identified during the implementation of the strategy.

“The conflict filter will require projects to demonstrate that benefits are transparently distributed based on objective criteria and potential tensions are mitigated through broad-based consultations and credible grievance redress mechanisms,” said World Bank Country Director for Sri Lanka Naoko Ishii.  “And to check that we are meeting these requirements we have set ourselves we will use third-party monitoring to shed light on any tensions or irregularities around issues like beneficiary selection for example.”

Naoko Ishii

Ishii said the North and East of the country had been most severely affected by the last 25 years of fighting and there had been a massive displacement of people. The Bank would emphasize efforts to improve access to public services and help create livelihood opportunities in these areas, with a particular focus on the rehabilitation of roads, irrigation networks, water supply, housing as well as health and education services.

She added that the Bank would also support efforts designed to address the causes and consequences of conflict. This could be achieved, for example, in education programs by supporting English as a link language and working towards mixed Tamil-Sinhala schooling and teachers’ education.

She said the Bank was mindful of the risks in an extremely complex environment like the Eastern Province where work had begun with the new provincial council. The application of the conflict filter to ensure that communities were equitably served and could come together around common goals was all the more critical to govern work in difficult circumstances, she said.

The discussion on helping lagging regions picked up strongly on the theme of community participation, empowerment and ownership of development efforts. Speakers cautioned the Bank to remember the lessons of the Integrated Rural Development projects of the ‘80s and early ‘90s where supply-driven rural infrastructure was doomed to become unsustainable as there was little or no local ownership. The need to involve local communities and local political leaders in development decisions, particularly in the North and East, was emphasized during this session.     

The workshop agreed that improving the investment climate and competitiveness was critical for growth and poverty reduction. Efforts to boost competitiveness should focus on areas like public infrastructure, targeted support to key sectors like small- and medium-sized enterprises (SMEs), ICT and tourism and a stronger framework for public-private partnerships.

The International Finance Corporation, the private sector window of the World Bank and a partner in the new strategy, also underlined the importance of helping Sri Lanka address its infrastructure needs while making more room for the SMEs that were critical to building economic opportunity for Sri Lankans.

“For many communities access to SME finance can be the beginning of a path out of poverty,” said Per Kjellerhaug, IFC Regional Manager.

Speakers were also concerned to emphasize the importance of macroeconomic stability if foreign investors were to find Sri Lanka attractive.  High inflation was hurting Sri Lankan wage earners while high public expenditure was curbing growth.  And there was some frustration that many of the impediments to improving the investment climate – like access to SME finance, electrification costs and low levels of Research and Development spending – were not new, but have been holding Sri Lanka back for many years.

The third strategic objective of the Bank strategy, enhancing quality services and accountability was of central importance to Sri Lanka's human development and social progress, participants agreed. The Bank’s program focused on education at not only basic and secondary levels but sought to strengthen higher education institutions to deliver programs in areas relevant to the economy. Support to the health sector focused on non-communicable diseases and Sri Lanka’s ageing population. Capacity building of environmental agencies was designed to underpin efforts to ensure environmentally sustainable economic growth and social protection needed better targeting and cost effectiveness to meet the citizens’ needs.

Participants noted that the main challenge to the implementation of the program would be the complex governance arrangements at the national, provincial and local authority levels of the government.

Ishii called on participants to see this workshop as the first of many such consultations in future which the Bank would seek in order to more effectively implement the objectives of its strategy and see ideas turned into real development results on the ground, she said.

Executive Summary here.

Complete strategy, including data, here.