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How Can the Private Sector Help End Poverty? Start With Measurement

April 15, 2013

Recently, the World Bank Group President, Jim Kim, announced two new global development goals which will be put before the Bank’s Governors for approval this weekend. The first goal is to end extreme poverty, with a target reduce the global extreme poverty rate to 3 percent by 2030. The second goal is to promote shared prosperity, fostering income growth of the bottom 40 percent of the population in every country.

History is on our side. Thanks to high growth, the world met the first Millennium Development Goal, to halve poverty by 2015, five years ahead of schedule. While many threats remain—including, most notably, the risk that climate change will reverse past gains—today many developing countries can realistically aspire to end extreme poverty within a generation.

The private sector will be key to achieving these goals. Private companies generate tax revenues, support growth and contribute to local communities.  The private sector also provides 9 out of every 10 jobs in developing countries – and poor people overwhelmingly consider a job to be their most realistic pathway out of poverty.

IFC— the part of the World Bank Group that provides support to the private sector—is hosting a conference with the Bill & Melinda Gates Foundation today to explore how we can increase the contributions our private sector clients will make to these goals.

A major part of the answer lies in measuring results effectively.

Measuring results is critical to understanding how well strategy is working—and whether IFC and our clients are reaching the people and markets that most need our help.  We can learn from our results, use those lessons to improve our operations, and in turn help our clients increase the development impact they have in the countries and communities where they operate. But are we just extracting data from our clients for IFC’s own use?  Or are we together measuring results in ways that can also be used by firms to help them improve implementation of their business model?

A quick note on how IFC measures results, and our experience so far.

We measure results through an integrated system with three components. First, we have forward looking goals or targets, which we call the IFC Development Goals. Second, we have a tracking system that monitors outputs and outcomes of activities. And third, we have evaluations of the impact of our activities.

To be credible and effective, this system depends on us having regular and reliable data based on a core set of development indicators. We get this data from our clients, who we ask to gather it, and send it to us, when we do a range of quality control tests. Many clients were already collecting some of this data for their own purposes.

Today’s conference focuses on learning from such companies—based on their practical experience—how we can  improve the way we jointly measure results, so that the clients see as much benefit from the process as we do. We will be joined by many IFC clients, by some academics and think tanks, by other development finance institutions and by civil society representatives.

The key question is how can we together track and report results in ways that are also useful for our clients? How can we generate improved understanding that they can use in managing their businesses? To what extent can this be a shared agenda, a shared learning opportunity that makes business sense?

You can watch and participate in the conference here.  I look forward to hearing your thoughts.

Follow the Live Event on Twitter with #wblive

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