MANDEVILLE, Jamaica, June 15 (Reuters) – World Bank President Ajay Banga wants to focus on improving the development lender so he can earn the right to push member states for more capital as the new chief takes his role in the fight against climate change, pandemics and other crises.
Banga said in an interview that he would wait to seek a capital raise until he has made progress by refocusing the bank’s development loans on more impactful projects, making the bank more flexible and boosting lending with its existing balance sheet.
“I don’t want to put the cart before the horse,” Banga told Reuters on Tuesday during his first trip abroad, to Jamaica and Peru.
“I think a better bank is important”. “And then I earn the right to come back and ask for a bigger sofa,” he said.
US Treasury Secretary Janet Yellen ruled out a capital raise at the congressional hearing in March, but with the caveat: “at this time.” Germany’s Development Minister Svenja Schulze told the Financial Times that if the World Bank’s reforms are substantial and tangible, “Germany is ready to enter into a discussion about more funding”.
International development experts say annual financing needs for the clean energy transition in the trillions of dollars will require more capital for the World Bank and massive private sector financing.
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 eradicating poverty “on a livable planet” – codifying its extended role.
The flow of the bank 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 vulnerability and food insecurity,” Banga said.
Its 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 afraid of COVID and you’re a refugee, and you can’t eat? “
On Wednesday, he visited a Jamaican greenhouse that uses abandoned bauxite mines to collect rainwater for drip irrigation, enabling 20 local farmers to grow peppers and tomatoes and sell some of it to resorts.
After helping plant some seedlings, he said the project, launched with a government grant backed by the World Bank, unites two main goals of his vision: sustainability and jobs.
“This would have been an eyesore. Instead you get water, fruits and veggies. That’s pretty cool,” he said.
Banga is seeking shareholder support for the new mission statement, but laid out its initial plans to start the bank’s transition. This includes promoting greater inclusion of women and youth in the bank’s development work, with a strong emphasis on job creation.
He also said he would soon work on efforts to leverage more private capital, which is considered essential for financing climate-related and other projects for developing countries.
On several occasions during visits to Peru and Jamaica, Banga said that the various divisions of the World Bank Group should work better together as “one bank”, saving countries the difficulties of dealing with them separately, and speeding up approval processes.
He wanted to measure success not by approved projects or pledged dollars, but by “tangible things that reflect development. How many girls went to school, how many dollars from the private sector did we get in for every dollar we invested? How many people have a better job?”
Banga also said he wanted to focus the bank on “scalable, replicable” projects in numerous countries, such as Lima’s bus rapid transit system and government-run legal aid centers for women across Peru.
Reporting by David Lawder Edited by Sonali Paul and Frances Kerry