World Bank creates new fund to enable faster disaster response
JUDY WOODRUFF: Now: how the World Bank is changing its response to fast-moving crises.
In 2014, it took months before international agencies ramped up their approach to the Ebola outbreak, and that included getting money to hard-hit countries. Eventually, more than 11,000 people died in West Africa, and the economic cost topped $10 billion.
Now the bank is creating a fast-disbursing fund to provide assistance during pandemics.
Hari Sreenivasan spoke recently with the bank's president, Jim Yong Kim, about that and other humanitarian crises.
HARI SREENIVASAN: Dr. Kim, thanks for joining us.
You recently launched something called the Pandemic Emergency Financing Facility. What is this?
DR. JIM YONG KIM, President, World Bank Group: So, Hari, we were thinking, what can we do to prevent what happened with Ebola from happening again?
The response was too late. The money didn't start flowing really until about October, 10 months after we knew that there was an outbreak. So…
HARI SREENIVASAN: And during that time, people are getting infected.
DR. JIM YONG KIM: Absolutely.
And so we said, can we somehow use our experience with catastrophe bonds? We have now developed this way of pooling countries together. So, the Caribbean countries who couldn't afford to get insurance policies on their own, we have pulled them together. And when a catastrophe happens, we have now got an instrument that immediately releases funds so that they can respond.
We thought, can we do something like that for pandemics? And so we started looking at it. We started talking to insurance companies. Insurance companies had never had an insurance policy for pandemics before. But they said we have learned how to insure lots of different things, let's give it a shot.
Here's what it's going to do. It's a $500 million instrument that has attached to it an additional $100 million that will be used right away whenever we see anything going on. The $500 million instrument is for three classes of diseases, the flu orthomyxoviruses, which are the flu pandemics, the filoviruses, which are the Ebola and Marburg viruses, and then also the coronaviruses, SARS and MERS, that we have experienced in the past.
So, for those three, this $500 million instrument will disburse immediately to the poorest countries in our group, the 77 poorest countries. And our hope is that the instrument, the cash instrument plus the $500 million pandemic facility will go so far upstream in tackling pandemics that we will stop them before they become a big problem.
HARI SREENIVASAN: Now, $500 million sounds like a ton of money, but considering how much it costs to deal with Ebola on a global scale, there's folks out there saying, this is just not enough.
DR. JIM YONG KIM: We think it's a — we think it's not enough for all the different pandemics, but it's really important that we have got a start.
So, to give you a sense of perspective, right, you cannot change the force of a hurricane. You cannot change the force of a tornado, but you can change the force of an epidemic, and it's all about getting it as early as possible.
So, days make a difference. Certainly, weeks and months make a difference. So, you know, $50 million, $100 million six months ahead of when we actually started making a major response to Ebola could have kept the epidemic much, much smaller. It's really not the size of the money. It's how early you can deploy it that's important.
HARI SREENIVASAN: Almost 60 million people are on the move around the planet right now. How do you solve some of these deep, systemic problems that are facilitating this transfer of humans?
DR. JIM YONG KIM: What we're seeing is that these humanitarian crises are stretching out 10, sometimes 20 years. And what we were told by the United Nations High Commissioner for Refugees, Antonio Guterres, and now Filippo Grandi has taken over the role — they have said, we have become development actors. We're doing development work. Most of us are lawyers. We're not qualified to do this. Can we change the way this happens, so that instead of waiting for the humanitarian response to finish before you come in as development specialists, why don't we work together? We don't we try to go upstream?
Now, let's use institutions like the World Bank in the way that they were supposed to be used. We have capital. We can go to the capital markets and raise funds. It starts looking attractive if you say, well, look, why don't we try to develop a business activity, so that you can create jobs not only for your citizens, but for refugees?
That would create stability. That would create hope, less likely for them to get on these dangerous boats and try to make their way to Europe. So, that's what we're doing. We're trying to think out of the box, and use our capacity as a bank with a balance sheet, but also marry that with our mission, which is to end poverty and boost shared prosperity, and tackle these problems upstream, so that it never gets to the 60 million people who are displaced today.
HARI SREENIVASAN: One of the consequences especially in Europe right now, it has a lot of countries questioning their identity. And one of those countries, Britain, is thinking about walking away from the E.U.
What are the practical implications of that happening?
DR. JIM YONG KIM: We don't know exactly what the outcomes will be, but we can take some good guesses.
The U.K. is 25 percent of financial services activity of all the E.U. as it exists now. And it's 30 percent of the stock market capitalization, so this is a huge blow for the E.U.
And also what the U.K. is going to have to do is to renegotiate all their trade agreements, and the hit on GDP is going to be very serious. Now, our — we don't work directly with the U.K. economy, but, of course, the — any uncertainty in the global economy is going to have an impact on developing countries.
So we really see that uncertainty around Brexit is already having an impact. And if the U.K. actually leaves, we think that the impact on developing countries could be quite substantial.
HARI SREENIVASAN: Dr. Jim Yong Kim of the World Bank, thanks so much for joining us.
DR. JIM YONG KIM: Thank you, Hari.