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Seven Challenges for US Nominee for World Bank President

Masood Ahmed is President of the Washington-based Centre for Global Development (CGD) & former Vice President, Poverty Reduction & Economic Management, at the World Bank

WASHINGTON DC, Mar 18 2019 (IPS) - All incoming World Bank presidents bring a public record of their views about the bank and about development more generally. David Malpass, who is on track to become the bank’s next president, has not been shy in criticizing the role and management of the institution he now plans to lead.

The commentary on his nomination has detailed how his vision of the World Bank’s role and his reservations about multilateral solutions to global development challenges are at odds with the views of the bank’s shareholders and staff and—most importantly—with the needs of its clients, developing countries.

Past statements need not predetermine the direction of the Malpass presidency. Through his initial pronouncements and actions, Mr. Malpass can demonstrate that he is now the leader and guardian of an organization of 189 member countries acting together to achieve shared goals and promote common interests.

A good starting point would be for Mr. Malpass to acknowledge that the 2030 Sustainable Development Goals and the Paris climate agreement provide a framework for action that most of the bank’s members have endorsed.

Recognizing the value added by multilateral, regional, and national development finance institutions acting as a system, not just in their own narrow interests, would also be an important step.

Here are the seven priorities for the World Bank that Mr. Malpass should consider endorsing in his initial statements and actions:

1. Support Africa’s development and integration into the world economy.

The central development challenge for the next two decades will be to help low-income Africa deal with its demographic, environmental, and developmental challenges. The success or failure of this endeavor will determine the future of the 2.5 billion people who will inhabit the continent by 2050—with major spillovers for every other region in an increasingly interconnected world.

The World Bank is already the largest multilateral financier of Africa’s development, but it can play an even stronger role to facilitate a more coherent approach by Africa’s other large development partners—including the European Union and China. In doing so, it needs to promote and finance country platforms for joined up development support and recognize that much of this development will come from private sector initiative.

2. Target the people left behind.

Development progress is always uneven. Even as countries move up to middle-income status, women, minorities, and disadvantaged regions disproportionately suffer from disease that is simple to prevent; struggle with basic numeracy and literacy, which is simple to teach; and lack human security that is taken for granted elsewhere.

And the transition from below to just above the poverty line is both fraught with challenges and easily reversed. More broadly, two billion people live in countries where sustainable development outcomes are affected by fragility, conflict, and violence, making delivering on the SDGs an intellectual and operational challenge.

Jim Kim—Mr. Malpass’s immediate predecessor—helpfully pushed the bank further into these spaces and Mr. Malpass would do well to confirm the institution’s continued focus on this agenda.

3. Help middle income developing countries make the right development choices.

Emerging markets and middle-income developing countries will increasingly drive global growth. The sustainability of their new infrastructure will define how livable our planet will be for the next century. Their economic success will provide markets for global exports and jobs around the globe.

The policy and investment decisions they make will impact our collective financial and environmental future. It would be a missed opportunity of historic proportions for the World Bank to watch these developments from the sidelines. It has a critical advisory and financing role in middle-income countries—not least as a catalyst for private finance.

Working with these countries also provides the bank with hands-on knowledge of development progress on the ground—knowledge that is essential for the bank to be a credible intellectual interlocuter for its low-income members.

So, it is important for Mr. Malpass to signal that focusing the bank’s financial support on where it has the most impact is not shorthand for pulling back from the vibrant partnership it enjoys with middle-income countries.

4. Mainstream work on global public goods.

Any number of knowledgeable observers, including a high-level group convened by the Center of Global Development (CGD) and an Eminent Persons Group set up by the G-20, have convincingly articulated why the challenge of development cannot be met without addressing problems—and opportunities—that span across countries in an increasingly interconnected world.

Whether it is preparing for the next pandemic; dealing with climate change; managing the ever-increasing flow of refugees; establishing an international tax regime that limits avoidance through tax havens; or coping with the regulatory and ethical challenges posed by big data, AI, and digital technology; action will need to be coordinated across countries and regions.

The Bank for good reasons, the bank has progressively become a major player in a number of these areas, but it still does this as an add-on to its main business, which continues to be organized around country-by-country lending.

Shareholders have not helped by creating a plethora of special facilities and trust funds that the bank manages on their behalf, which sometimes subvert the very priorities that they set for the institution when they meet in its the board to set strategy.

Mr. Malpass has the opportunity to rationalize the bank’s work on global public goods and to make this a core part of the Bank’s regular operations.

5. Be an active player in the debate on development pathways for the 21st century.

Every retrospective evaluation of the World Bank’s value add emphasizes the intellectual contribution it has made to furthering development thought and practice. That role is even more important given the widespread questioning of so much of what was taken as “good practice” in development cooperation.

Many countries are looking to China as the new model for shaping their own economic development strategy, and, no doubt, there is much to learn from China’s extraordinary journey over the past 50 years.

However, it is the World Bank as a global organization that should provide the home for discussing which of those lessons can be usefully emulated by others. Learning from China should be part of the World Bank’s intellectual agenda—not an alternative to it.

6. Engage actively with the other players who finance development.

Regional development banks are sometimes bigger players in their regions, national development banks are an underestimated force, and private foundations are major actors for driving innovation and a results-focus.

Private finance will be the key for making real the aspiration of ‘billions to trillions’ for development finance. Civil society provides ideas and holds the system accountable. The WB has a special role in making the development finance system be more than the sum of its parts. Mr Malpass needs to approach this task with serious commitment and a degree of humility. The results will be well worth the effort.

7. Don’t move around the boxes!

Every incoming president is tempted to reorganize the bank—partly to make it “their bank” and partly out of a genuine desire to make the machine work better. While no organizational structure is without its shortcomings, the cost of reorganization is often grossly underestimated.

The dust is only just beginning to settle on Jim Kim’s badly implemented and long drawn out reorganization; the last thing that an incoming president should do is embark on another round of moving boxes around.

Nor is this the moment for a wholesale changing of the guard at the senior leadership level just to show there is a new sheriff in town. The organization will deliver more and better with a bit of stability and continuity, albeit with the nudges that Mr. Malpass will want to give to align it better with his own vision.

The World Bank’s role as a multilateral development organization cannot be completely insulated from tensions among its major shareholders. Mr. Malpass comes from an administration that sees the World Bank as an instrument in a broader stand-off with China’s growing influence.

Perhaps the greatest challenge facing him will be to demonstrate that he has now moved to lead a multilateral organization that can be a “zone of mutual interest” where, with the cooperation and trust of all shareholders, he can advance global development goals that are in the interest of all.

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