Hartwig Schafer: World Bank Vice President, Global Themes

Hartwig Schafer became Vice President, Global Themes last year, a position which has him overseeing the World Bank’s engagement in the corporate priority areas of Fragility, Conflict and Violence (FCV), Gender, Infrastructure/PPPs/Guarantees, Climate Change and Knowledge Management.

As Vice President, Operations Policy and Country Services, Mr. Schafer was responsible for the World Bank’s business policies, practices and procedures for lending products and knowledge services for client countries. He led a number of key reforms, including roll-out of the Bank’s new policies on procurement and environmental and social safeguards and innovation of the Bank’s lending and knowledge instruments.

GEORGIA TODAY interviewed him to find out more.

Tell us about the Global Themes unit and its focus

The Global Themes Vice Presidency brings together the big development issues of our time, including Climate Change, Gender, Fragility, Conflict & Violence, Infrastructure, PPPs & Guarantees, and Knowledge. These groups existed separately within the World Bank, and it made sense to bring them together to leverage the synergies among these themes and encourage greater collaboration and knowledge-sharing among them, considering the Sustainable Development Goals.

Georgia is developing quickly and wants to be put on the map in terms of business. What advice can you give the Georgian government to achieve this?

Enhancing a business-friendly environment, financial sector development, enhancing social and financial safety nets, and spurring innovation and trade lie at the center of Georgia’s private sector growth agenda. In this regard, developing effective mechanisms for consulting with the private sector on economic policies, and communicating new reforms, would help improve the predictability of the business environment and strengthen the partnership between public and private sector.

What are the main challenges facing the private sector in Georgia?

So far, what I’ve seen is the willingness of the private sector and the willingness of the respective government entities to partner, with a shared ambition to diversify economic growth and enhance employment opportunities. There are several important initiatives underway, such as the PPP law, which are central to this partnership and to attracting private investment.

Tell us about Maximizing Finance for Development, the new initiative in the World Bank Group to work more closely with the private sector.

Maximizing Finance for Development, or MFD, entails leveraging the private sector in ways that optimize the use of scarce public resources. The approach is to explore private sector solutions when possible, or to help the government put in place a regulatory and institutional environment that allows private sector players to engage, and to allocate scarce public resources to sectors and investments where the private sector would not engage.

Inequality remains a big problem in Georgia, higher than in most other former Soviet states. Why do you think this is, and how can it be changed?

Indeed, inequality remains a big challenge in many countries in the region and in Georgia, where large gaps between urban and rural areas persist. Learning from other countries that have reduced inequality is important. Key interventions that stand out are vigorous investment in early childhood development, universal healthcare, quality education, conditional cash transfers, and investment in rural infrastructure. Strengthening equal opportunities for all and targeting social assistance to the poorest will be key to reducing inequality and improving living standards across the various segments of Georgian society.

Georgia’s progress towards improving coverage and targeting of social benefits moves in the right direction. Implementation of a universal healthcare reform has resulted in over 90% coverage of the population to access healthcare services. Targeted Social Assistance (TSA) coverage of the poorest decile was estimated to be on average at 58% in 2015. Pension and deposit insurance system reforms are underway for completion in 2018. Targets were achieved on teacher effectiveness evaluation tools, while the school-based quality assurance reforms still have a long way to go. Support through the Inclusive Growth Development Policy Operation (DPO) series led to improvements in the budgeting and financial management.

What is Georgia’s greatest climate challenge? What is the climate portfolio?

The impacts of climate change most evidently experienced in Georgia at present are the increased occurrence of extreme weather changes and growing frequency of natural disasters. Flash floods, landslides, hailstorms, strong winds on the coast and inland result in significant economic loss and affect the livelihoods of the people involved. In a longer-term perspective, Georgia should be aware of risks associated with water scarcity. Because the country is rich in water resources, it may not seem a real challenge today, however, the country’s heavy dependence on hydropower generation and agricultural production suggests that quite realistic future impacts of climate change on the water balance should be taken seriously. Investing in sustainable management of water and forest resources would be crucial in mitigating expected impacts.

Georgia obtained a grant from the trust fund established in support of the Nationally Determined Commitments (NDC) Partnership, which is an international coalition working to enable countries to achieve their climate and sustainable development goals. This grant will be used to assist Georgia in the development of a National Action Plan for Adapting to Climate Change Impacts on the Black Sea Coastal Zone. This is an example of an operation specifically targeting climate challenges. However, following the World Bank policy, any investment and technical assistance delivered to Georgia will be expected to identify and maximize, as relevant, its climate co-benefits in order to maximize the cumulative impact of the portfolio.

The Bank Gender team has done quite a bit of work in Georgia. What is the situation like on the ground for gender equality?

While Georgia is making important strides towards closing gender gaps, there still remains a lag in gender equality. 11% of GDP is lost because women don’t have the same access as men to career and entrepreneurship opportunities. Since women represent half the population, their active participation in the economy is imperative, especially in the rural areas, as this would significantly contribute to the gross domestic product (GDP) generally and their livelihoods particularly. The active participation of women in the economy also means equal treatment and equal wages in the workplace, with more women taking on decision-making roles.