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World Bank president reveals his masterplan

With criticism from both outside and inside the organisation, the World Bank Group has had to rethink its strategy and objectives in recent years. World Bank president Jim Yong Kim discusses these changes in an exclusive interview with The Banker, explaining why the institution remains a vital force on the world stage and how it plans to tackle pressing global problems such as poverty and climate change.
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World Bank president reveals his masterplan

The World Bank is the world’s leading institution in development expertise, fostering economic policy, financial and private sector development, poverty reduction, human development, environmental protection, rural development, infrastructure and governance, in more than 100 countries, including many of the world’s poorest. But, despite this expertise, the 188-member institution, many say, is suffering from a lack of strategic focus, inappropriate strategies, systems and processes to realise its goals and, according to its own evaluations, declining effectiveness.

Jim Yong Kim, a Korean-American and former global health expert, who has been president of the World Bank since July 2012, is aware of the challenges the institution faces. In an exclusive interview at the World Bank’s 18th and H Street Washington, DC, headquarters, he talks about the World Bank’s new anti-poverty and climate change goals, and some radical changes that he is implementing with a senior management team to reform the institution.

These include, for the first time, a central set of 'global practices' that may be accessed by all World Bank Group staff for their individual or cross-country work. The data will show which World Bank projects, loans or policies worked best, delivering which global goods, in which countries and under what conditions.

On top of that, a traditional 'one-size-fits-all' approach to development is being replaced by a more flexible 'science of delivery'. And the bank is realigning staff responsibilities and shifting the focus of its work towards impacts and outcomes.

Q. What is different about the anti-poverty goals that you have recently proposed and which shareholders have approved?

A. The two new goals are to end extreme poverty [in the world] by 2030, and to boost shared prosperity. And two things we are doing right away are particularly historic. One is that we are going to measure poverty every year and let the whole world know how different countries are doing in terms of eradicating poverty. And the other thing that we are going to do every year, which again has never been done before, is to measure the growth in income of the bottom 40% of the population in every country.

We know that there is no question that the key for every single country in the world is to have economic growth, but we think it is really important that our governors from 180-plus countries all agreed that this is what we should be doing, focusing both on ending poverty and on how the poorest are doing.

Q. What underlies the bank’s support for inclusive growth now? Is it the increasing inequality in the world?

A. The way I think of it is we are simply responding to the way in which the world is working right now. If you look at what has been happening in Brazil or all over the world – the Brazilians have had so much success lifting people out of extreme poverty but what do they want now? They want good health care. They want good educational services. They want social mobility. They want training that will allow them to have good jobs. They want economic growth that produces those kinds of good jobs. Lifting people out of poverty is not enough. With Twitter, social media, everybody knows how the middle classes live.

Q. Under your leadership, the World Bank is taking much more of a stand – and speaking out more – about the dangers of climate change. For instance, in a new energy strategy announced in June, the World Bank said for the first time that it will no longer finance coal plants in developing countries, except in rare circumstances. And in a recent report, the bank warned of “cataclysmic” consequences if action is not taken in the short term to stop the continuous rise in average global temperatures.

A. Yes. This is really serious. And, in a very real sense, there is no hope of us reaching our goal of ending extreme poverty by 2030 if we don’t simultaneously tackle climate change. By 2030, Bangkok could be under water. Coral reefs will be gone. The acidity in the oceans will have increased.

There are major things that need to happen and can happen in the short term. [These include] a stable price for carbon, whether through taxes or markets. Second, remove fuel subsidies; about $1900bn a year is spent on these subsidies and they are both polluting and regressive, usually. Third, is climate smart agriculture. Can we use agriculture in a way to put more carbon in the ground but also to preserve the carbon that is already there?

Q. The World Bank has also renewed its backing for large-scale hydroelectric projects around the world, especially in fragile, post-conflict countries. For instance, in May you and Ban Ki-Moon, the UN secretary-general, made the first ever joint visit to the Great Lakes region of Africa, where the bank’s concessional credit facility, IDA [International Development Association], pledged $1bn in new funding to Democratic Republic of Congo, Rwanda, Uganda and Burundi, half of it for large hydroelectric development and the rest targeting roads, agriculture, cross-border trade and health. What makes big hydro financing a smart move now?

A. What we are faced with is, on the one hand, we are in a position where we have to help countries get the energy they need to attract private sector investment, create jobs and end poverty. On the other hand, we have got to find sources of energy that are not going to put more carbon into the air. [This means] hydroelectric power.

Of course it has been controversial at times. But we feel that the technology around hydroelectric power has gotten so much better that we are really able to limit the environmental damage and the disruption of local communities. We think we know a lot more about how to do that. So for us, the dual aims of ending poverty and combating climate change naturally lead us to supporting hydroelectric power.

Q. In order to have a bigger development impact and even transform particularly stricken countries, are the different organisations in the World Bank Group working together more?

A. If there is one thing I have been pushing it is collaboration across the World Bank Group, bringing the public sector and the private sector together. Let me give you an example.

In Myanmar we are all desperate to show the people that there is a democracy dividend. And what we have to do [to encourage growth and reduce poverty] more than anything else, is to provide more electricity. So we have a 300-megawatt power project that is funded partly by our public sector concessional funds, or IDA funds, [to pay for public sector reform], partly by our private sector facility, so the International Finance Corporation [to bring in the private sector to invest in the electricity sector], and all of that work is guaranteed by MIGA, the Multilateral Investment Guarantee Agency, which provides political risk insurance [because these are risky markets for investors].

Q. There is a lot of competition now in the area of development work compared to when the first World Bank organisation, the International Bank for Reconstruction and Development was founded in 1944, or even just 20 years ago. What are the World Bank Group’s comparative advantages now?

A. I think no matter what other institutions arise, the BRICS bank [the Brazil, Russia, India, China, and South Africa Development Bank] for example, there will still be an absolutely central role for the World Bank.

There are countries that have come into lots of money but they have nowhere near the expertise we have. And there are regional development banks that are critical but don’t have our global reach. We think our ability to work across the public and the private sectors and bring the knowledge that we do have to bear, will keep us relevant for a very long time.

Q. According to a survey you did of the World Bank’s 15,000 staff, many reportedly said that there were multiple obstacles – some cultural, some procedural – preventing them from doing their best work and achieving their full potential. So what new business model are you introducing at the bank to make the bureaucracy and the institution work more effectively?

A: We have expertise in so many different areas that we feel in every country we can now provide knowledge, not only of what is in the scientific papers, but also of what has been successful in other countries. We feel that’s our great strength. Our unique value proposition is that we bring global knowledge and link it with local practice.

We did an organisational survey and what we found was that knowledge wasn’t moving from one country [office] even to the next country over, let along from one regional group [at the bank] to another regional group, let alone from one sector department – such as education – to another. It just wasn’t moving.

So, we are doing a major reorganisation where we are going to break up all the silos and then reconstitute in the form of what we will call global practices, which will be multi-disciplinary, cross-sector and organised in a way that meets the needs of what countries want. We don’t know what all the practices will be yet but we’ve taken the first step.

And, we’re going to say to every single knowledge worker [staff working on global issues] that somehow your work has to be relevant for countries and, moreover, we expect you to have your ideas circulating throughout the entire institution along with everyone else's, so we can pick and choose and get the best knowledge to the countries, to the projects, as efficiently and effectively as possible. So that’s the biggest reorganisation.

We’ve got to bring the [World Bank Group] together so that information flows from the coal face of delivery all the way to Washington as effectively as possible, and it doesn’t do this right now.

Q. As part of the changes you are introducing, there is also going to be more  emphasis on the results of the bank’s work in borrowing countries. There is talk about a 'science of delivery' being adopted. What does this mean?

A. I have been talking about the science of delivery for 15 years. The science of delivery, for me, is simply focusing our energy on actually getting the outcome. At the World Bank, for a lot of us up to now, the incentives have been focused on getting a large loan through the board, and not necessarily making sure the loan actually delivers on the ground and that every piece of the implementation of delivery is in place. So we are shifting our focus. Instead of just focusing on the volume of the input we are also going to focus on outcomes.

Q. Are you also going to change the bank’s corporate culture? You have said you do not want excessive risk aversion at the institution to get in the way of support for high-risk/high-reward operations, which potentially could transform a country.

A. It is clear. There is a very strong culture of risk aversion that has to change, step by step.

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