Having worked at the World Bank for almost 10 years, I understand the importance of selecting a new leader that understands development challenges, and that is both business and politically savvy. These skills are invaluable to the new President to effectively address climate, energy, food, and debt crises.
Just a bit of background. The World Bank was established at the 1944 Bretton Woods Conference in New Hampshire, along with the International Monetary Fund. While the Bank (which is how practitioners call it) kicked off its work to assist rebuild Europe after World War II, it has become the largest development bank with over US$ 700 billion annual budget to provide loans, grants and technical assistance to low income and middle-income countries. The main objectives of these loans and grants are to reduce poverty and build shared prosperity. The World Bank is traditionally led by an American President while the International Monetary Fund (IMF) by a European Managing Director. This is because the US and the EU are the largest shareholders of these organizations. China is the third largest shareholder.
As the current President, Mr. Malpass, (who was appointed by the Trump Administration) recently announced its resignation before the end of his 5 years term, the White House moved swiftly to nominate a new candidate. President Biden choose the Wall Street friendly, Mr. Ajay Banga. The Indian born Banga started his career at Nestle in India, moving his way up through various senior management roles across the world, including CEO of Mastercard for more than a decade. Mr. Banga has extensive experience leading global organizations in emerging markets and promoting public-private partnerships to address financial inclusion and climate resiliency. Many acclaimed economists and environmental leaders including Joseph Stiglitz, who won the Nobel prize for economics, New America Foundation President Anne-Marie Slaughter, and Fred Krupp, president of the Environmental Defense Fund, were among the 53 people who endorsed Banga.
No other contenders have been publicly announced, although Russia will try to slow the appointment process and is allegedly consulting with its allies about nominating their own candidate. Despite the Kremlin gyrations, we should have new Bank president by early May 2023.
Among the critics to Banga’s appointment, a few global foundations called for the appointment of a woman as the Bank has never had a woman president in its 77-year history. The exception being, the current International Monetary Fund Managing Director Kristalina Georgieva, the Bulgarian Economist acted as the Bank’s president for three months in 2019.
The insider views
Over the last 10 years, the Bank has worked towards it restructuring, to ensure that the Washington based organization is equipped with the tools to deal with today’s challenges in low-income and middle-income countries. Part of the restructuring aimed to create more innovative financial mechanism, provide more business expertise, promote technologies solutions, and focus on the most vulnerable countries. These countries fall under a regional practice known as Fragile, Conflict and Violence (FCV). The task has been dauting as the Bank has increasingly become the “jack of all trades” providing services across all sectors and all middle- and low-income countries (over 100 countries) via its traditional lending operations, technical assistance, and non-lending advisory services.
The restructuring has been challenging and has had mixed results as the World Bank struggles to become a nimbler and market friendly organization. Regardless of these challenges, the Bretton Woods organization is rapidly becoming a more technology driven organization, with stronger partnership with the private sector and with more capital market instrument to offer to its clients. Additionally, the Bank is strengthening its private investment branch, the IFC (International Financial Institution) to advance economic development and poverty reduction by promoting private sector growth in developing countries.
To succeed, Mr. Banga will have to find ways to meet the Global South needs. Failure to do so would undermine the Bank’s long-term viability; and jeopardize the West’s future ability to exercise its convening power. The Bank must continue mobilizing adequate resources to help countries fight climate, energy, food, and debt crises. The debt crisis is particularly critical as as we have over 60 low-income countries at risk of default. Only a leader with business, finance and diplomacy skills will succeed. And as Mr. Banga possess these skills, he can transform the Bank, into an engine of the green growth, promoting technology transformation, and inclusive cities development.