The Global Significance of Development Banking

Around the world, poverty, conflict, and climate shocks are rising just as many governments are pulling back from international development spending. Into this widening gap step multilateral institutions like the World Bank and its concessional lending arm, the International Development Association (IDA). These institutions have long provided a stabilizing force in global development, but their role is more critical than ever as needs grow and traditional aid falters. They represent not only a strategic investment in global stability, but also a moral commitment to compassion, stewardship, and caring for those in need. 

The World Bank

History

After World War II, it became apparent that many countries required assistance to recover. In response, delegates from 44 countries met at the Bretton Woods Conference in New Hampshire in July of 1944 and there created two institutions, the International Monetary Fund and the World Bank. 

For the next 20 years, these institutions met the rebuilding demands in some countries and began assisting other countries still developing. After a steady period of engineering and building, the World Bank focused on two goals: stimulating economic growth and reducing poverty. The 1980s and 1990s saw the World Bank expanding its efforts and structuring economies for new and changing countries.

Purpose 

Today, the World Bank continues as a cooperative organization that provides financial and technical assistance for development projects all over the world. With 189 countries acting as shareholders, its mission is “to end extreme poverty and boost shared prosperity on a livable planet.” Its four areas of priority include creating more and better jobs, improving healthcare, supporting agricultural business, and providing electricity to countries with development needs.

Structure

Board of governors: Representatives from each country, including the U.S. secretary of the Treasury, meet annually to make policies.

President, vice president, and other staff: Manage the daily operations of the organization.

The World Bank board of directors: This board is composed of four organizations separated into functions that support the overall mission of the World Bank.

• International Bank for Reconstruction and Development (IBRD): Offers financial loans, public debt resolution, and advisory services to middle-income countries.

• International Finance Corporation (IFC): Invests in the private sectors of countries, empowering business owners and developing jobs.

• Multilateral Investment Guarantee Agency (MIGA): Insures projects and loans in countries, providing guarantees needed to achieve progress.

• International Development Association (IDA): Provides grants, loans, and advisory services to low-income countries, allowing for prosperity. 

How development bank financing works

Development banks like the IBRD and IDA of the World Bank operate on a model that blends donor contributions, borrowing, and reinvested funds to maximize development impact. Their financing structures allow them to lend at lower rates and with longer timelines than the private market would offer. This is especially critical to countries facing economic hardship that would discourage other lenders. 

Unlike bilateral foreign aid, where one country decides how and where to spend its funds, multilateral development banks pool resources from many countries. This spreads financial risk and ensures more coordinated, strategic planning. Because the World Bank works in long-term partnership with governments, its investments are designed to build resilience and reduce the likelihood of future crises. The combination of grant financing, highly concessional loans (meaning loans with more favorable terms than would otherwise be available on the private marketplace), and technical expertise makes these institutions uniquely effective at supporting sustainable development. 

Development banks are also subject to rigorous accountability and evaluation processes. Projects are monitored, data is collected, and results are publicly reported. This transparency helps ensure that funds reach their intended purpose and that lessons learned from the past can inform future investments. 

Real-world impacts 

The work of the World Bank is vast and varied, but its impacts can be seen across sectors and regions. The examples below show only a fraction of the projects supported by the World Bank. 

Health

 

Brazil (2004-2009): The World Bank organized and funded a multi-layered effort to improve sanitation, water, and healthcare overall, including for Indigenous populations, 74% of whom were immunized by 2010. This project also resulted in a 60% decrease in malaria deaths. 

Climate resilience

Bangladesh (2020): Bangladesh had been working with the World Bank to build up coastal cyclone resilience measures when Cyclone Amphan began churning in the Bay of Bengal. Due to recently funded and built shelters, the mass evacuation of 2.4 million people was safely accomplished, despite the COVID-19 pandemic.

Education

Democratic Republic of Congo (2020): Through credit and grants, the IDA funded a massive effort to provide free public education for 10 million children and improve maternal and children’s health services in some of the poorest areas in the country. 

Infrastructure

Mozambique (2015): The IDA made possible the renovation of the region’s only dam, which had been severely damaged in a flood years before. The critical upgrades to the dam itself and the outgoing irrigation system provided jobs and stability for 50,000 people and repaired water access to landlocked communities.

A moral and humanitarian imperative

Institutions like the World Bank and IDA embody a moral commitment to human solidarity and global stewardship. Investing in the world’s poorest countries is not only about stabilizing economies, it is about affirming the dignity and potential of every human being. 

For communities of faith, these values resonate deeply. Caring for the poor, relieving suffering, and enabling self-reliance mirror the principles that guide the International Development Association: building capacity, strengthening communities, and supporting long-term well-being. 

Supporting these programs allows individuals and nations to extend that same compassion globally, reflecting the belief that helping vulnerable populations is both a moral responsibility and an investment in global stability.

This article was written by Jill Fairholm, program manager for MWEG’s family health and well-being advocacy, and Sherilyn Stevenson, MWEG lead researcher and writer.