The World Bank is in the news because of the imminent change at its helm. That is an opportunity for the Bank to help countries confront the dangers of climate change, widening income gaps and hindrances to trade. But this chance might be squandered if U.S. President Donald Trump’s nominee for the presidency, David Malpass, an Under Secretary of the U.S. Treasury, is put there mainly to reverse climate action and limit the Bank’s developmental role.
The arrangement whereby an American always heads the World Bank, and a European leads the International Monetary Fund, is deeply flawed, not least because these institutions advise countries to follow merit-based governance. Be that as it may, the crucial question going forward is whether the Bank can help the world confront daunting challenges. The potential is huge given the size of its lending: $64 billion in 2018. Over the past 70 years, India is the largest recipient of lending from roads and energy to health and education.
The World Bank’s support for open markets and trade can be partly credited for parts of the developing world delivering high growth and poverty reduction. Estimated declines in extreme poverty have been striking over the past quarter of a century in China and India. But the Bank should also share the blame for the costly and often irreversible damage to the environment that accompanied the charge for growth. In addition, India’s daunting agenda also includes reducing huge inequalities, especially in access to education, health, water and sanitation.
A specific concern about Mr. Malpass is that he might not pursue the Bank’s plan to lend $200 billion over the next five years to fight climate change. This is an area where the private sector is doing too little and even governments are falling short of the modest goals they set at the Paris climate summit in 2015.
The World Bank also needs to couple financing with expertise in tackling problems of rapid urbanisation and gaps in service provision. Improving governance and tackling corruption are guaranteed silver bullets for progress in these areas.
One way to enable the World Bank to tackle the new development challenges, irrespective of who is at the helm, is to fortify its board of directors with strong development leaders. If there is a desire to avoid a situation where the Bank primarily serves U.S. interests, notwithstanding Mr. Malpass’s nomination, the board, comprising 25 directors, must be vastly strengthened. The Bank is a highly capable organisation. But to deliver on its potential, it must focus on the new challenges, blend financing with knowledge, and reform its governance.
The writer is a former Senior Vice-President for Independent Evaluation at the World Bank, and co-author of ‘Multilateral Bank and the Development Process’
