Today marks a potentially pivotal moment for the world. Other than being National Fish & Chip Day in the UK, it also happens to be the day that Ajay Banga takes on his role as the new President of the World Bank Group. Congratulations to him on his first day! As the new President, Ajay has a unique opportunity to be a champion for people and planet.
We’re currently facing a polycrisis. You may have heard the term already, but broadly, it describes the interplay between global conflicts, climate change, the cost of living crisis and the aftermath of COVID-19. In short, we’re facing a multitude of challenges which can leave us feeling like we don’t know where to turn to. Unfortunately, all of these crises are also having negative impacts on the Global Goals.
As we approach the halfway point for the Goals, it’s clear that we’re way off track for 2030. It’s estimated that only about 12% of the Goals are actually on track and for the second year in a row, we’ve stopped making any progress towards them.
At our current pace, it could take 286 years to close gender gaps. In 2030, 575 million people could still be living in extreme poverty. And this year alone, as many as 350 million people could suffer from food insecurity.
Additionally, government revenue has declined in many countries since the pandemic and the cost of debt repayment has increased by over a third, leaving less to invest in development. What’s more, high-income countries are yet to meet their $100 billion climate pledge from 2009.
Now, that can all sound pretty overwhelming, but here’s where Ajay Banga and the World Bank come into play.
UPGRADING MULTILATERAL INSTITUTIONS
The world of today can be characterized by a single word: interconnectedness. Long gone are the times when the problems facing an individual country, especially a low-income country, didn’t affect the rest of the world.
In a world characterized by interconnected economies, global challenges, and the need for sustainable development, Multilateral Development Banks (MDBs), like the World Bank, play a crucial role.
And yet, the model that MDBs are built on, is still reflective of times gone by. You see, these institutions were created almost 80 years ago by a handful of Western countries. Today, these countries control billions of dollars and set the rules around borrowing, loans and debt.
MDBs are traditionally risk-averse and lack the institutional agility to respond to cross-border challenges like climate change and pandemics. This makes it difficult for countries, especially low-income countries, to access funds in a timely manner.
As a result, their ability to respond to emergencies is significantly impacted. In order to move faster, many countries turn to international markets to seek loans. However, the terms of these loans may ultimately be less favorable than those offered by MDBs.
On top of this, it is currently challenging for low- and middle-income countries to have a meaningful voice within the governing structures of MDBs, like on the World Bank’s Board of Governors. This Board is mostly governed by a small group of G20 countries, and has been since its creation.
Which brings us back to Ajay Banga’s first day and why it’s so important. In 2023, there is a growing movement and a window of political opportunity to upgrade the multilateral financial system.
If the World Bank upgraded its fund disbursement mode, it could free the funds we need to ensure a prosperous future for all nations. We believe that in his new role, Ajay Banga has the power to make the World Bank less risk averse, more inclusive and more attuned to the multiple crises facing the Global South.
However, he is just one man, and he cannot do this alone. In order to be successful Ajay Banga needs the full support of the G20 countries that make up the majority of the board.
These major shareholders need to act with speed and decisiveness, and work with borrower countries to show how increased finance would be used.
Under the banner of the ONE Campaign, more than 100 presidents, celebrities and economists – from the northern and southern hemispheres – have come together to propose a 10 point plan to reform the World Bank and make it fit for the 21st century. Today Project
Everyone is supporting global efforts to ensure that Ajay Banga is aware of this plan and feels our collective optimism and expectation of him as a changemaker. Join us and the ONE Campaign – welcome Ajay Banga to his new role and ask him to be a champion for people and planet.
Author: Celine Mulrean, Sustainability Consultant.