Urgewald on the inauguration of World Bank President Ajay Banga: "No sign of real transformation"

Berlin 02.06.2023

The moment has come: today Ajay Banga takes office as World Bank President. The U.S. nominated the top executive at the end of February following the surprise resignation of David Malpass. Since the founding of the Bretton Woods institutions, as the World Bank and International Monetary Fund (IMF) are known, it has been accepted that the U.S. appoints the head of the World Bank, while European countries pick the leader of the IMF. This undemocratic practice continues to this day. There was no opposing candidate – let alone a female opponent. Despite strong criticism from civil society, on May 3, the 25 World Bank Executive Directors from the 189 member countries, including Germany, cleared the way for Banga after he had spent the last months holding talks in many countries.

The pressure on the World Bank is high. Change is sorely needed because the Bank itself is part of the problem in many crises, such as large-scale fossil fuel projects, forced resettlement, lack of gender equality or the loss of biodiversity. Unfortunately, the current reform process, the so-called "Evolution Roadmap," does not address the structural problems in the World Bank itself. If internal incentives do not change and if transparency and accountability do not improve dramatically, negative impacts are all but guaranteed. 75 years after the Universal Declaration of Human Rights, the latter play no role in the reform process. The belief that "more (private) money helps more" seems to be unbroken among shareholders and is driving the reform in the wrong direction. So far, Germany has little to show in achieving its objective to create a better World Bank in terms of quality and effectiveness.

"The problems of the World Bank will not be solved by a new president alone. Ajay Banga was selected in an undemocratic process and has only private sector experience in companies such as Nestlé, Citigroup, Mastercard and others. A public institution like the World Bank is probably foreign to him. This crossover is cause for alarm, since the growing involvement of the private sector in development work requires standards and rules which are currently missing. That is why we at Urgewald view critically the inauguration of the new World Bank President Ajay Banga. So far, there are no signs that he is willing to end investment in coal, oil and gas or to enforce more transparency over the Bank’s climate measures. Given the ongoing catastrophes brought on by global warming, this would be the only right thing to do," says Ute Koczy, Senior Advisor on World Bank Campaigns at Urgewald.