As we learn that Ajay Banga, the former CEO of Mastercard was chosen as the World Bank new President, it will be interesting to learn more about the process for this selection as well as the positive implications for such a bold move. The Bank’s President (this is what practitioners call the Bretton Woods Organization) is chosen by the United States which is the Bretton Woods largest shareholder, while the Bank’s sister organization, the IMF is normally led by a European Managing Director. The second largest shareholder is Europe followed by China.
While many development practitioners and global poverty reduction activists have criticized the selection of a Wall Street leader such as Mr. Banga, time has come for the Bank to be led by a senior professional with strong private sector expertise. What is more, Mr. Banga, Indian born, started his professional career in the Global South forging public and private partnership across digital payment, food and finance sectors.
The Bank needs private sector solutions
When I left the Bank in 2016, after 9 years leading Disaster Risk Management for the Washington DC based organization, the Bank was led by President Kim (a political appointee chosen by President Obama). Under his leadership, the Bank went through a complete overhaul which lasted 2 years. Part of the effort aimed at ensuring that the Bretton Woods organization became a more market friendly entity, tapping into private equity and investment funds models to provide cutting edge investment solutions to fight poverty reduction and climate change. While this effort had many shortcomings, it was part of a longer-term process of moving from analysis to action. And in so doing President Kim promoted shared prosperity via digital banking, climate finance, and entrepreneurship support just to name a few areas of his focus.
The New President Mr. Banga has plenty of capital markets and private sector experience to bring to the table. He will be particularly welcome by the Bank’s clients base, ie. Ministers of Finance which are happy to embrace force-multiplying solutions and move away from the over-analytical data driven lending products the Bank continues to produce in massive quantities. This will also make the donor community more appreciative of this new “risk taking culture” being promoted to reduce poverty. Rest assured though, there will be unhappy people. I remember when the Bank hosted a panel in 2011 which was provocatively called…Should the World Bank President be a CEO? While I attended the panel with enthusiasm, I was shocked by the level of outrage among the thousands of people that attended. Nobody seemed to appreciate the important role the private sector could play in addressing development challenges.
November once again packed with global events in the Middle East
As Mr. Banga gets acquainted with his new job’s responsibilities, Morocco announced that it will host the 2023 Annual Meetings of the World Bank Group and the International Monetary Fund (IMF). This prestigious event brings together the Minister of Finance, Central Banks Governors, global leaders, policymakers, and financial experts from around the world. Similar to Davos Economic Forum, the Bank and IMF Annual Meetings discuss the world economic outlook, poverty eradication, economic development, and aid effectiveness.
The summit will take place in the city of Marrakech, a vibrant and culturally rich destination that has long been a crossroads of global trade and exchange. This event will be followed by the COP28 global climate summit which is hosted by the hydrocarbon rich Abu-Dhabi. For the second year in a row, the Middle East hosts a COP event. Last year it was Egypt to host the summit without producing any significant climate finance breakthrough. This year is up to Abu-Dhabi to showcase its climate credentials and the Emirate state is expected to showcase its Green Hydrogen and clean tech investment leadership.
Final Thought: Based on his background, we should all expect the new World Bank President hitting the road-running right away. He will continue to bring private sector skills, instruments, and financial rewards to the development tools the World Bank uses. These are not only needed but will be high in demand by recipient countries which are eager to tap into the capitalist system to get out of poverty and increase their prosperity. Expect a lot of changes in the Bank business model, the re-skilling of the Bank staff, as well as the use of capital markets tools to deliver competitive services to its emerging markets clients.