World Bank needs updating, says new boss

Bank president Ajay Banga wants to focus on improving the development lender so he can press member countries for more capital, as  he looks to expand its role in fighting climate change, pandemics and other crises.

Banga said in an interview he will  seek a capital increase  only after he has made progress re-focusing the bank's development lending on more  effective projects, made it more nimble and boosted lending with its existing balance sheet. “I don’t want to put the cart before the horse," Banga told Reuters  while heading to Jamaica and Peru, his first foreign trip.

“I think a better bank is an important thing” to achieve. “And then I earn the right to come back and ask for a bigger bank,” he said.

US treasury secretary Janet Yellen ruled out a capital increase in March, but international development experts say that annual clean energy transition financing needs in the trillions of dollars will require more capital for the World Bank and massive funding from the private sector.

Banga said his first task in improving the 78-year-old institution is to talk to shareholders about a change to the lender’s mission statement to focus on eliminating poverty “on a livable planet” — codifying its expanded role. The bank’s mission statement refers to ending extreme poverty within a generation and promoting shared prosperity.

“What I mean by livable is climate, but also pandemics, and also fragility and food insecurity,” Banga said.

His first two destinations, Jamaica and Peru, both face climate threats while nearly a quarter of their populations  live in poverty. “How do you eliminate poverty if you can’t breathe, you don’t have clean water, you’re scared of  Covid and you’re a refugee, and you can’t eat? I don’t understand how these are either-or. To me, they’re together.”

On Wednesday, he visited a Jamaican greenhouse farm that uses abandoned bauxite mining pits to collect rainwater for drip irrigation, allowing 20 local farmers to grow peppers and tomatoes, selling some to resorts.

After helping plant some seedlings, he said the project, launched with a World Bank-supported government grant, marries two main goals of his vision: sustainability and jobs. “This would have been an exposed eyesore. Instead, you end up with water, fruits and vegetables. That’s pretty cool,” he said.

Banga is seeking buy-in from shareholders on the new mission statement, but laid out his initial plans to start the bank’s transition. They includes promoting more inclusion of women and youth in the bank’s development work, with a strong emphasis on job creation. He said he would start work soon on efforts to harness more private capital, seen as essential for financing climate-related and other projects, for developing countries.

Banga said  the various divisions of the World Bank Group need to work together better as “one bank”, saving countries from the difficulties of dealing with them separately, and speeding its approval processes.

He wants to measure success not by projects approved or dollars committed, but by “tangible things that are reflective of development. How many girls went to school, how many private sector dollars did we crowd in for every dollar we invested? How many people got a better job?”

Banga also said he wants to focus the bank on “scalable, replicable” projects in numerous countries, such as Lima’s bus rapid transit system and government-run legal aid centres for women throughout Peru. — Reuters