Concern over corruption in Third World

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The Independent Online
James Wolfensohn, president of the World Bank, is to stress the importance of tackling corruption in Third-World countries in his speech at its annual meeting next week, writes Diane Coyle.

The need to create the right environment for investment by the private sector, of which eliminating bribery and patronage is one element, is a key theme in the bank's annual report, published yesterday. Gautam Kaji, managing director for operations, said the bank was being reshaped to work with a growing array of groups rather than just governments.

"It is a broader, more participatory approach," he said. "Development must be private-sector led."

The report points out that private sector capital flows to developing countries set a record of about $170bn (pounds 109bn) in 1995, up from $44bn in 1990. So important does the bank believe private capital to be that it set up a group of senior managers last year to co-ordinate a new private sector development strategy.

One early sign of its activities is that the annual report talks of "products" and "clients" for the first time. The bank is also making great play of the fact that it is hosting, for the second year running, a series of seminars for businesses interested in investing in developing countries in parallel with the official annual meeting. Speakers this year include Sir David Simon, chairman of BP, and Percy Barnevik, chief executive of engineering giant ABB.

The World Bank's own lending was a record $19bn in the latest financial year. There had been a particularly big increase in lending for health and education, areas in which there was no private sector investment. The experience of South-east Asia had shown, however, that high levels of investment in people were essential for growth.