April 17, 2025 • 22 mins
World Bank Group President Ajay Banga says the best way to eliminate poverty is through job creation. As 1.2 billion young people in emerging markets enter the workforce, he emphasizes the importance of equipping them with the skills and opportunities they need to succeed. In an interview on The David Rubenstein Show: Peer to Peer Conversations, Banga also discusses the World Bank's close collaboration with the IMF and the possibility of lifting its ban on funding nuclear power projects. This interview was recorded March 20 at the Economic Club of Washington, DC.
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Speaker 1 (00:03):
After World War Two, the World Bank was set up
to help with the reconstruction of Europe. Currently, the World
Bank focuses on rehabilitating countries in the Global South. A
man from the Global South, a j Bannga, is now
the head of the World Bank. I had a chance
to sit down with him recently to talk about how
the World Bank is operating today and how it differs
from his previous job CEO of MasterCard.
Speaker 2 (00:25):
So for those.
Speaker 1 (00:25):
People that might be unfamiliar with the World Bank, what
exactly is the World Bank?
Speaker 3 (00:32):
The World Bank, David has five units in it. The
first unit that was created was the International Bank of
Reconstruction and Development IBID, and that was what was created
during the Bretton Woods conference if he spoke off.
Speaker 1 (00:45):
This is in the after World War Two that were
set up. Largely I thought.
Speaker 3 (00:49):
To reconstruct Europe and reconstruct Europe, and so there was
a big debate on the topic of should development be
added to the name or art because it is reconstruction
that is the primary focus. And eventually the pounding folks
who sat around there came to the conclusion that there
would be a mission for this that went beyond the reconstruction,
as it turned out that is what happened. The next
(01:10):
part of the bank that got created was IDA, the
International Development Association that caters to the poorest countries in
the world, seventy eight of them currently. But in history,
you know, South Korea was a recipient divider, China was
a recipient of IDEA India. Yes, so you know Turkey.
These are countries that have now prospered and grown. But
(01:30):
both IBID and IDA construed what people call the World Bank.
Then came IFC, which was the arm created to work
with the private sector and to help catalyze private investment.
Along came NIAGA, which is the insurance Guarantee Agency which
provides political risk insurance and other such insurances for people
like us in our old lives investing in countries. And
(01:52):
then the fifth part of it is called Exit. There
are plenty of acronyms in the bank. By the way,
there's a vice personal of acronyms hiding somewhere in the bank.
But the exit basically is a settlement of investment disputes.
So again, in our old lives, if you had a
dispute to the sovereign, that's where you would come to
for arbitration and settlement. Those are the five units put together,
(02:14):
we do about one hundred and twenty billion of lending
in a year across the five IDA provides grants. One
third of what it gives is pure grants to the
poorest countries. The others are all concessional or price loans.
Speaker 1 (02:28):
All right, So the World Bank Credit after World War
Two now has many different missions. You say, you lend
out about one hundred and twenty billion dollars a year take, Yeah,
And it's headquartered in Washington, DC, and it has a
very unusual governance structure. I don't know who set that up,
but what is the who came up with that idea
of Rube Goldberg or somebody?
Speaker 2 (02:48):
How does that work?
Speaker 3 (02:49):
If you were countries contributing capital and money in the
case of IBID and ifc capital comes once in a while,
bank earns money on the loans it gives to developing
two countries who borrow, and the repayment of those loans
more than covers the administrative expenses of the bank. So
it's actually not reliant on taxpayer funding for administrative expenses.
(03:10):
It is reliant on taxpayer funding for IDA because the
poorest countries, because they give away money to them every
third every year that needs money. The way there for
taxpayers that are involved in this whole thing, and I
think government's basically said that if they're going to be
putting money into this, we'd like to have some insight
into it. That created this structure where there are twenty
five executive directors full time who sit here in Washington,
(03:34):
DC with some staff. Each of them represents either one
country or a group of countries, depending on how much
capital is coming from them.
Speaker 1 (03:42):
Now, the tradition, as I understand is there are two
organizations set up after World War Two. One is the IMF,
the International Monetary Fund, and one is the World Bank.
Speaker 2 (03:51):
And there's an.
Speaker 1 (03:52):
Unspoken I guess rule or tradition that the IMF.
Speaker 2 (03:58):
Had is picked more or less by Europe.
Speaker 1 (04:00):
And the head of the World Bank is more or
less picked by the President United States and then ultimately
approved by their board. But the World Bank and the
IMF you have nothing to do with each other, or
you kind of work with each other, or there's completely
different purposes.
Speaker 3 (04:14):
I mean, the purposes are different, but when you put
them together on the ground, if you don't work well together,
you're not being very helpful to your client country. So
I believe very deeply that we must be great partners
in the ground. I mean, the challenges in the world systems,
David are too big for people to create silos and
try and solve them by themselves. So two plus two
(04:34):
is equal to five in this case. So what the
IMA focuses on is macro and obviously foreign exchange and
the flow of funds and financing in markets and credit
default swaps of countries and things that we understand. What
we try and do is actually developing. Vi'r truly a bank,
so we give longer term money. Our loans are anywhere
from twenty to fifty years in length.
Speaker 2 (04:55):
Fifty year loans. That's a long loan.
Speaker 3 (04:57):
So the IBRD after I came, I got a boat
to through fifty year loans for things.
Speaker 2 (05:01):
Like one of those fifty year loans.
Speaker 4 (05:03):
I like thin get one of absolutely, although you'll have
to be around to enjoy it.
Speaker 3 (05:08):
The fifty alan was designed to cater to things that
you you know, if you think about a country trying
to invest in its healthcare or in its education and
skilling systems to create the right kind of people for
the future of the jobs they're going to create. It's
very difficult to think of that as a payback in
ten and twenty years.
Speaker 1 (05:27):
So many of your predecessors have said that the bureaucracy
in the World Bank is unbelievable, and as a result
they often reorganize the World Bank, and every new president
World Bank reorganizes. Are you reorganizing or you just accept
what it is and just dealing with other things.
Speaker 3 (05:44):
I mean, my view is very simple. The institution grew
in a certain way with these five different pieces. That
creates its own silos, and that's fine. I don't believe
in driving a car by looking in the rear view mirror.
I'm focused on the front. To me in the front.
If you're going to create jobs with those three pillars
I spoke of, you have to work together. You have
(06:06):
to have one country plan, which is coosynchronous. You have
to have one direction, which is I'm going to do
these jobs. You have to one ability to work on
the ground with your client. If you're going to get
the client, we talk about public private partnerships. If the
client needs a public private partnership, it needs to come
to three parts of the bank to get their loan
and go through three project management systems, and three due
(06:27):
diligence systems and three environmental and safety scare go. I
whan they will go crazy. If they had so many
people to deal with us, they wouldn't be in the
condition they're in. So we have to turn from You
can call it bureaucracy, you can call it processes and
systems built by years of experience.
Speaker 4 (06:43):
That's yesterday. I've just focused on tomorrow now.
Speaker 1 (06:46):
Historically, at least in the last couple of years, the
World Bank has been focused a bit on climate change. Today,
the zeitgeist in Washington is not as favorable for that phrase. Perhaps,
So how has the World Bank adapted to that change?
Speaker 4 (07:02):
Good question.
Speaker 3 (07:03):
So what I've done over the last few months, not
just now from the election but earlier, is to go
to people in the Hill and now people in the
administration and tell them what's inside that climate change. I
understand the words can be not what you want, but
let's talk about what's inside it. First fact, we said
we would try and get to about forty five percent
of our financing every year going to what qualifies in
(07:25):
the world is climate financing. When I joined, by the way,
my successor had done a terrific job and already got
it past thirty, which was the commitment he had made.
But he was past thirty, so I kind of said,
I think we can get to this forty five. But
what's inside it? Half of it is designed to go
for what you would call resiliency or adaptation, which is
(07:45):
heat resistant, varieties of seeds, drip irrigation, a school roof
painted white, not left wrecked in so it's eight degrees
schooler inside, you know, a road that doesn't wash away
in a monsoon, and a school that's hurricane resistant. That's
actually what our clients want because they're dealing with this.
They want to invest in education, but they don't want
the school to get washed away. They want to invest
(08:07):
in roads, but they don't want the road to get
washed away in a rain. They want to invest in agriculture,
but obviously they don't have the same amount of water
to use. So this is all Frankly, we should have
this in large parts of the develop ald too. That's
one part of it. The other half, which we're trying
to do is what you would call mitigation. Five percent
of that twenty two and a half percent of that
(08:28):
half is what goes to energy. Every Spring and October meeting.
I get demonstrations outside the bank with my portrait on
an oil barrele calling me the fossil fuel guy, which
is interesting because of that five percent, one percent goes
to natural gas and financing for it, four percent goes
to renewables, but the other seventeen and a half percent
(08:50):
is to do what build a rail corridor in Africa
called Lobito, So instead of transporting goods by truck, you're
doing it by rail, which is ecologically more friendly. When
you go the Amtrak here, you hear them telling you
how much you saved versus the flight you could have taken.
Speaker 4 (09:05):
Same idea. So once you explained this to folks, you.
Speaker 3 (09:09):
Get a very different understanding of what we're actually trying
to do with climate and even an energy. We're financing
all of the above, if you know what I mean.
I'm the one thing we don't do is school financing,
which we stopped years before I joined. But I have
raised the topic with the board last year in August
or something about re getting into nuclear because to me,
small nuclear reactors could be transformative and safe and a
(09:32):
great way to get to renewable energy. For data centers
in Ai.
Speaker 1 (09:36):
Well, the World Bank traditionally was not in favor of
financing nuclear and you're now changing now.
Speaker 3 (09:41):
Actually the World Bank had a specific policy of not financing.
It's the board policies that got passed.
Speaker 4 (09:46):
I raised it.
Speaker 3 (09:47):
I didn't kind of make too much progress in the
first meeting because people went off into their camps.
Speaker 4 (09:51):
But the good news is the board.
Speaker 3 (09:53):
Has come together and said we're willing to discuss. They
told me then come back by June next year with
a thoughtful policy that lays out everything from gas to nuclear,
to geothermal, to hydro to solar and win and help
us understand the context of energy in the context of
the country. The idea, David, is affordable accessible energy. Just
like I said, the poverty is a state of mind,
(10:14):
not just an in a state of being. Electricity is
a human right. We just need to understand that there's
six hundred million people in Africa with no elecxity. Six
hundred million, not brownout and blackouts, no elexity. I have
said we will reach three hundred million of them in
partnership with the African Development Bank by twenty thirty with affordable,
(10:36):
accessible elecxity, enough for them to not just get two
lanterns from a solar cell, but to actually get what
you call tier three elecxity, which is productive use.
Speaker 2 (10:46):
Let's talk about how you get to be the head
of the World Bank.
Speaker 1 (10:49):
Presidents of the United States more or less recommend to
the Board of Governors. I guess it is of the
World Bank. You are appointed by a president United States
or recommended the board approve you. But what were you
doing before? I mean, how do you get qualified to
be the head of the World Bank.
Speaker 3 (11:03):
My background, as you know, well we've known each other
some years, is that I am a private sector guy.
I grew up in India and joined NESLE, worked there
for a few years, ended up at PEPSI for a
couple of years, joined City Bank. I worked there for
fourteen years and ended up running all of Asia during
the financial crisis, and then quit and became the CEO
of MasterCard for the next twelve to thirteen years.
Speaker 2 (11:26):
So you're minding your own business.
Speaker 1 (11:27):
You're running MasterCard, it's doing pretty well, and all of
a sudden somebody says, how would you like to be
the president of the World Bank?
Speaker 2 (11:32):
And you said no.
Speaker 3 (11:33):
It actually didn't work that way. MasterCard says that I
was there those twelve years. You and I have discussed this.
I'm very lucky. I had a great run. I joined
when a year after the IPO and the firm was
about twenty billion in valuation. I left at three hundred
and sixty. It's not about five hundred plus. So the
company is doing well. It's in a great spot and
well run and scaled over the years. I had told
(11:55):
my board that I would give them ten years. I
joined at fifty and at sixty I wanted to think
of something else through my life. We had a great
succession process. I stepped away, became executive chair, and then
stepped down all together and joined General Atlantic as vice chair,
and became the chair of the Fiat Families holding company XOR,
and joined the board of Tamasek. And I had this
(12:16):
portfolio approach to my life until I got cold in
February of twenty twenty three, and then a few days
later they announced that I was the candidate.
Speaker 1 (12:24):
So now you're the head of the World Bank, and
the approval process is the President recommends you, and then
the Board of Governors has approved you.
Speaker 3 (12:32):
Yes, So essentially they were ninety days between the recommendation
and the election, and I spent that period traveling and
visiting almost ninety three country leaders and CSOs and companies,
and then they have to get together in vote. I
got all the votes other than an abstention from Russia
at that time.
Speaker 1 (12:49):
So in the long history of the World Bank, you're
the only person who's been the president came from a
developing country.
Speaker 4 (12:53):
Is that right? Yeah?
Speaker 3 (12:57):
Probably true. I haven't thought of it that way, but
that's probably true. Okay, I'm just going back in names.
Speaker 1 (13:01):
Yeah, when you're running MasterCard, you're probably dealing with CEOs
and in developed markets. Now you're dealing with people in
not less developed markets, right, And was at a big
culture shock?
Speaker 2 (13:12):
No?
Speaker 4 (13:12):
No, So this is that's a great question.
Speaker 3 (13:14):
So even in master can't remember my business was growing
in all kinds of locations. You end up going to
developing and developed countries. That's kind of where the future
and the current are. The difference is what you go
in with as a perspective in whom you meet and
the circumstances you're dealing with. I've been there almost two years.
I've made fifty odd trips overseas. I would say make
(13:34):
a fair number of trips, David to the big shareholders
in the developed world because making sure that you're aligned
with them is important. The developed world has had a
great deal of political change in the last seven or
eight months, and so my biggest shareholders, the governments have
changed over making sure that you can help to understand
what they're looking for and you answer what they think
you could be doing. It's kind of important in this job.
(13:57):
You're dealing with very different challenges. But at the end
of the day, at the end of the day, what
I'm trying to do is to get the institution to
focus in the developing countries on young people and their future.
Speaker 1 (14:10):
What is the problem with young people in their futures
that you're trying to address.
Speaker 3 (14:15):
One point two billion young people in the emerging markets
are coming through the pipe in terms of a demographic bulge,
and they will be ready for a job in their
age profile in the coming twelve to fifteen years. Most
people think of this over the history of development. When
you get this kind of a demographic bulge, they call
it a demographic dividend, and that is true. If these
(14:37):
people get clean air, clean water, education, health care, and
they're growing up, skilling and once they're grown, they should
get a chance to get a job, either at a
small firm or a big firm, or an entrepreneur or something.
Because if that doesn't happen, these young people now are
without hope and without optimism.
Speaker 4 (14:56):
And without earnings.
Speaker 3 (14:58):
If our business is to eliminate power, you cannot eliminate
poverty just by building a school or a bridge or
an airport. That's important. Their inputs the output of eliminating poverty.
The single best way to do it is earning jobs.
You know, a friend of mine once told me that
poverty is both a state of mind and a state
of being, and a job eliminates both those aspects, gives
(15:21):
you dignity and gives you earning.
Speaker 4 (15:24):
And I'm just very convinced. I'm just very.
Speaker 3 (15:29):
Convinced that this young population can be the driver of
growth for all our Western companies and our children and
our grandchildren if we get them productive employment with the
dignity that that brings.
Speaker 1 (15:42):
The gap between the developed market youth and the undeveloped
market now called maybe the Global South by some is
getting bigger, not smaller. And they also don't have access
to the internet as much as maybe people in developed
markets do, so how are.
Speaker 2 (15:57):
You trying to bridge this gap?
Speaker 4 (15:58):
Great question.
Speaker 3 (15:59):
So I mean, look, you know, opportunities are not everywhere,
but talent is. The problem is the past has been
that you kind of move. That's why talent moves to
find its opportunity. What we're trying to do here is
to change that equation a little bit. What we've looked
at in the theory of creating jobs in a country
or development is there are three things that need to happen.
The first one is you need to have the enabling infrastructure,
(16:21):
whether it's bridges, roads, airport, schools, healthcare, eleccity, digital connections
that you know that thing. Then you need to have
the right regulatory policies land labor, bankruptcy law, anti corruption,
some concept of what elecxity will costing get paid that
you will get paid back, laws in the system, right
kind of governance. That's the second pillar. The third pillar
(16:44):
is to allow the private sector is basically creates jobs.
Government doesn't create jobs. Government is the enabler of the
private sector to do so. Right, from small businesses and
small farmers all the way to companies that we are
active with. You've got to get those three pillars in place.
That's what I'm working on. IBID and I are my
two public sector arms that work on that infrastructure part.
(17:04):
We have what's called the knowledge bank, which to me
is even more important than the money bank.
Speaker 1 (17:08):
How do you compare the satisfaction you're getting out of
doing this compared to MasterCard or General Atlantic or PEPSI
are just more satisfying or you.
Speaker 4 (17:19):
Know, there's a time and life for everything.
Speaker 3 (17:21):
When I look back from where I am today, even
though it's hard work and it's different from what I thought,
I am so privileged to have this opportunity. I want
to be able to look my grandchildren in the eye
and said.
Speaker 2 (17:33):
I tried, you haven't any grandchildren yet? Three three, okay.
And they're not interested in the World Bank that much.
Speaker 4 (17:39):
They're interested in the World Bank because I'm there.
Speaker 3 (17:41):
They're not interested in the World Bank person That, by
the way, is one of the interesting issues I believe
that I want to start up programmers having in the
middle of designing is to get people from the donor countries,
young people like our children and grandchildren who are going
through the time between an undergrad and a postcrad and
give them a chance to come work with us for
a couple of years country where we're doing real work.
(18:02):
Let them get exposure to what the Bank really is,
let them see what life in a Zimbabwe or a
Congo or a Vietnam and the kind of work we're
doing there, and let them come back with a better
appreciation of why the World Bank is important for them.
Speaker 1 (18:14):
At the World Bank today, as you go forward, how
would you measure your success?
Speaker 2 (18:18):
What is your standard?
Speaker 4 (18:20):
I want to be called the ultimate plumber.
Speaker 3 (18:22):
I fix the plumbing of the World Bank, because you
can keep building a new house on top of plumbing
that's not working, and as we all know in our
respective homes, that's a recipe for disaster. If you fix
it the right way, beautiful houses get built and stay
a long time. And I think the Bank is at
a juncture when fixing the plumbing is really important. Whether
it is the speed, whether it is the partnership with
(18:44):
other multilateral banks, because together one plus one is equal
to three, whether it is the partnership with the private sector,
which I'm cultivating very carefully. I just believe there isn't
enough money in the MDB and government.
Speaker 4 (18:58):
Worlds to do it.
Speaker 3 (18:59):
You need the privates to be a part of that solution,
whether it is this pivot to jobs and what it
can do for cutting down illegal migration and building opportunities
all that. Nothing is possible without fixing the plumbing. Transparency
is my friend. I won't get it all right, I
will screw things up, but you should evaluate me by
how I fix things when I get to know, rather
(19:20):
than just a point of time. Jobs is what I
want to be seen as the transition of the bank,
for I want to move this bank from working on
input to working on the output of jobs, because that's
the ultimate way to put a nail in the coffin
of poverty.
Speaker 1 (19:36):
So if you go to a cocktail party and somebody says, well,
what do you do? You say, I'm the President of
the World Bank. What's the immediate reaction?
Speaker 4 (19:44):
They say, mostly they say oh wow. And then I said,
I don't say oh what do you know? What I do?
Not really? And then you kind of explain what the
bank does and these five things in the though.
Speaker 1 (19:53):
I mean, you have to have a business card, says
president World Bank, or they know who you are. You
don't need a business.
Speaker 4 (19:57):
Card, Actually I do. Would you like to have a
business card?
Speaker 2 (19:59):
Yeah?
Speaker 4 (20:00):
Wow? Wow.
Speaker 1 (20:01):
Okay, yeah, wow, okay present World Bank.
Speaker 2 (20:05):
Great, it's a great business card.
Speaker 1 (20:07):
So if somebody says, what is the World Bank accomplished,
what would that best example be?
Speaker 3 (20:12):
If you go back over the last five or ten years,
It'll be very simple things. One hundred million people connected
to elecxity, you know, more than three to four hundred
million people with access to improved healthcare.
Speaker 4 (20:22):
That kind of thing.
Speaker 3 (20:23):
Where I'm going now is I've made a few specific commitments.
Three hundred million people in Africa connected to Eric City
by twenty thirty.
Speaker 4 (20:31):
I think it changes how Africa works.
Speaker 3 (20:33):
One point five billion people connected to better primary healthcare
by twenty thirty. That is to fight off what I
believe are the diseases of prosperity. You know, heart attacks, diabetes,
blood pressure, things that are creeping up in these countries
and which cannot be solved without distributed rural health centers
with nurses and medical diagnostic reader as its own. That's
(20:56):
the second big thing they're focused on. And the third
thing I'm focused on is getting eighty million women in
the emerging markets access to equity to open businesses by
twenty thirty. Equity not debt, and those three things are
just examples. We've got others in the pipe to do
with this nine billion dollars to be focused on small
(21:17):
hold of farmers because I believe that if you don't
make small hold of farmers an interesting job for young people,
they will all go to the cities and a lot
of them will end up in urban poverty. To keep
them in that farm and earning well, you need to
create the right conducive environment, cooperatives that help them. They
can access markets, fertilizer, seeds, better technology.
Speaker 4 (21:38):
That kind of work is what we're trying to do.
Speaker 1 (21:40):
Abraham Lincoln famously said God must love poor people because
he made so many of them. But you don't think
it's inevitable. There have to be so many poor people
in the world, right.
Speaker 3 (21:48):
I think it's very challenging to change this and bend
the arc. But what are you here for if you're
not going to try so.
Speaker 1 (21:55):
The main message you want to convey to people about
the World Bank is that it's in good shape, You're
on top of it, and that it's going to get
better and the world will be happy for the World
Bank doing what it's doing.
Speaker 2 (22:06):
Is that right?
Speaker 3 (22:07):
The main message I want to communicate is that there's
a lot of good people trying to fix this place,
to make it even more relevant in that job's approach.
We have to get there. We're not there, We're a
work in progress. But I feel very proud of what
we're trying to do. And it's a real privilege, David,
it's a real privilege.
Speaker 1 (22:27):
Thanks for listening to hear more of my interviews. You
can subscribe and download my podcast on Spotify, Apple, or
wherever you listen.
After World War Two, the World Bank was set up
to help with the reconstruction of Europe. Currently, the World
Bank focuses on rehabilitating countries in the Global South. A
man from the Global South, a j Bannga, is now
the head of the World Bank. I had a chance
to sit down with him recently to talk about how
the World Bank is operating today and how it differs
from his previous job CEO of MasterCard.
Speaker 2 (00:25):
So for those.
Speaker 1 (00:25):
People that might be unfamiliar with the World Bank, what
exactly is the World Bank?
Speaker 3 (00:32):
The World Bank, David has five units in it. The
first unit that was created was the International Bank of
Reconstruction and Development IBID, and that was what was created
during the Bretton Woods conference if he spoke off.
Speaker 1 (00:45):
This is in the after World War Two that were
set up. Largely I thought.
Speaker 3 (00:49):
To reconstruct Europe and reconstruct Europe, and so there was
a big debate on the topic of should development be
added to the name or art because it is reconstruction
that is the primary focus. And eventually the pounding folks
who sat around there came to the conclusion that there
would be a mission for this that went beyond the reconstruction,
as it turned out that is what happened. The next
(01:10):
part of the bank that got created was IDA, the
International Development Association that caters to the poorest countries in
the world, seventy eight of them currently. But in history,
you know, South Korea was a recipient divider, China was
a recipient of IDEA India. Yes, so you know Turkey.
These are countries that have now prospered and grown. But
(01:30):
both IBID and IDA construed what people call the World Bank.
Then came IFC, which was the arm created to work
with the private sector and to help catalyze private investment.
Along came NIAGA, which is the insurance Guarantee Agency which
provides political risk insurance and other such insurances for people
like us in our old lives investing in countries. And
(01:52):
then the fifth part of it is called Exit. There
are plenty of acronyms in the bank. By the way,
there's a vice personal of acronyms hiding somewhere in the bank.
But the exit basically is a settlement of investment disputes.
So again, in our old lives, if you had a
dispute to the sovereign, that's where you would come to
for arbitration and settlement. Those are the five units put together,
(02:14):
we do about one hundred and twenty billion of lending
in a year across the five IDA provides grants. One
third of what it gives is pure grants to the
poorest countries. The others are all concessional or price loans.
Speaker 1 (02:28):
All right, So the World Bank Credit after World War
Two now has many different missions. You say, you lend
out about one hundred and twenty billion dollars a year take, Yeah,
And it's headquartered in Washington, DC, and it has a
very unusual governance structure. I don't know who set that up,
but what is the who came up with that idea
of Rube Goldberg or somebody?
Speaker 2 (02:48):
How does that work?
Speaker 3 (02:49):
If you were countries contributing capital and money in the
case of IBID and ifc capital comes once in a while,
bank earns money on the loans it gives to developing
two countries who borrow, and the repayment of those loans
more than covers the administrative expenses of the bank. So
it's actually not reliant on taxpayer funding for administrative expenses.
(03:10):
It is reliant on taxpayer funding for IDA because the
poorest countries, because they give away money to them every
third every year that needs money. The way there for
taxpayers that are involved in this whole thing, and I
think government's basically said that if they're going to be
putting money into this, we'd like to have some insight
into it. That created this structure where there are twenty
five executive directors full time who sit here in Washington,
(03:34):
DC with some staff. Each of them represents either one
country or a group of countries, depending on how much
capital is coming from them.
Speaker 1 (03:42):
Now, the tradition, as I understand is there are two
organizations set up after World War Two. One is the IMF,
the International Monetary Fund, and one is the World Bank.
Speaker 2 (03:51):
And there's an.
Speaker 1 (03:52):
Unspoken I guess rule or tradition that the IMF.
Speaker 2 (03:58):
Had is picked more or less by Europe.
Speaker 1 (04:00):
And the head of the World Bank is more or
less picked by the President United States and then ultimately
approved by their board. But the World Bank and the
IMF you have nothing to do with each other, or
you kind of work with each other, or there's completely
different purposes.
Speaker 3 (04:14):
I mean, the purposes are different, but when you put
them together on the ground, if you don't work well together,
you're not being very helpful to your client country. So
I believe very deeply that we must be great partners
in the ground. I mean, the challenges in the world systems,
David are too big for people to create silos and
try and solve them by themselves. So two plus two
(04:34):
is equal to five in this case. So what the
IMA focuses on is macro and obviously foreign exchange and
the flow of funds and financing in markets and credit
default swaps of countries and things that we understand. What
we try and do is actually developing. Vi'r truly a bank,
so we give longer term money. Our loans are anywhere
from twenty to fifty years in length.
Speaker 2 (04:55):
Fifty year loans. That's a long loan.
Speaker 3 (04:57):
So the IBRD after I came, I got a boat
to through fifty year loans for things.
Speaker 2 (05:01):
Like one of those fifty year loans.
Speaker 4 (05:03):
I like thin get one of absolutely, although you'll have
to be around to enjoy it.
Speaker 3 (05:08):
The fifty alan was designed to cater to things that
you you know, if you think about a country trying
to invest in its healthcare or in its education and
skilling systems to create the right kind of people for
the future of the jobs they're going to create. It's
very difficult to think of that as a payback in
ten and twenty years.
Speaker 1 (05:27):
So many of your predecessors have said that the bureaucracy
in the World Bank is unbelievable, and as a result
they often reorganize the World Bank, and every new president
World Bank reorganizes. Are you reorganizing or you just accept
what it is and just dealing with other things.
Speaker 3 (05:44):
I mean, my view is very simple. The institution grew
in a certain way with these five different pieces. That
creates its own silos, and that's fine. I don't believe
in driving a car by looking in the rear view mirror.
I'm focused on the front. To me in the front.
If you're going to create jobs with those three pillars
I spoke of, you have to work together. You have
(06:06):
to have one country plan, which is coosynchronous. You have
to have one direction, which is I'm going to do
these jobs. You have to one ability to work on
the ground with your client. If you're going to get
the client, we talk about public private partnerships. If the
client needs a public private partnership, it needs to come
to three parts of the bank to get their loan
and go through three project management systems, and three due
(06:27):
diligence systems and three environmental and safety scare go. I
whan they will go crazy. If they had so many
people to deal with us, they wouldn't be in the
condition they're in. So we have to turn from You
can call it bureaucracy, you can call it processes and
systems built by years of experience.
Speaker 4 (06:43):
That's yesterday. I've just focused on tomorrow now.
Speaker 1 (06:46):
Historically, at least in the last couple of years, the
World Bank has been focused a bit on climate change. Today,
the zeitgeist in Washington is not as favorable for that phrase. Perhaps,
So how has the World Bank adapted to that change?
Speaker 4 (07:02):
Good question.
Speaker 3 (07:03):
So what I've done over the last few months, not
just now from the election but earlier, is to go
to people in the Hill and now people in the
administration and tell them what's inside that climate change. I
understand the words can be not what you want, but
let's talk about what's inside it. First fact, we said
we would try and get to about forty five percent
of our financing every year going to what qualifies in
(07:25):
the world is climate financing. When I joined, by the way,
my successor had done a terrific job and already got
it past thirty, which was the commitment he had made.
But he was past thirty, so I kind of said,
I think we can get to this forty five. But
what's inside it? Half of it is designed to go
for what you would call resiliency or adaptation, which is
(07:45):
heat resistant, varieties of seeds, drip irrigation, a school roof
painted white, not left wrecked in so it's eight degrees
schooler inside, you know, a road that doesn't wash away
in a monsoon, and a school that's hurricane resistant. That's
actually what our clients want because they're dealing with this.
They want to invest in education, but they don't want
the school to get washed away. They want to invest
(08:07):
in roads, but they don't want the road to get
washed away in a rain. They want to invest in agriculture,
but obviously they don't have the same amount of water
to use. So this is all Frankly, we should have
this in large parts of the develop ald too. That's
one part of it. The other half, which we're trying
to do is what you would call mitigation. Five percent
of that twenty two and a half percent of that
(08:28):
half is what goes to energy. Every Spring and October meeting.
I get demonstrations outside the bank with my portrait on
an oil barrele calling me the fossil fuel guy, which
is interesting because of that five percent, one percent goes
to natural gas and financing for it, four percent goes
to renewables, but the other seventeen and a half percent
(08:50):
is to do what build a rail corridor in Africa
called Lobito, So instead of transporting goods by truck, you're
doing it by rail, which is ecologically more friendly. When
you go the Amtrak here, you hear them telling you
how much you saved versus the flight you could have taken.
Speaker 4 (09:05):
Same idea. So once you explained this to folks, you.
Speaker 3 (09:09):
Get a very different understanding of what we're actually trying
to do with climate and even an energy. We're financing
all of the above, if you know what I mean.
I'm the one thing we don't do is school financing,
which we stopped years before I joined. But I have
raised the topic with the board last year in August
or something about re getting into nuclear because to me,
small nuclear reactors could be transformative and safe and a
(09:32):
great way to get to renewable energy. For data centers
in Ai.
Speaker 1 (09:36):
Well, the World Bank traditionally was not in favor of
financing nuclear and you're now changing now.
Speaker 3 (09:41):
Actually the World Bank had a specific policy of not financing.
It's the board policies that got passed.
Speaker 4 (09:46):
I raised it.
Speaker 3 (09:47):
I didn't kind of make too much progress in the
first meeting because people went off into their camps.
Speaker 4 (09:51):
But the good news is the board.
Speaker 3 (09:53):
Has come together and said we're willing to discuss. They
told me then come back by June next year with
a thoughtful policy that lays out everything from gas to nuclear,
to geothermal, to hydro to solar and win and help
us understand the context of energy in the context of
the country. The idea, David, is affordable accessible energy. Just
like I said, the poverty is a state of mind,
(10:14):
not just an in a state of being. Electricity is
a human right. We just need to understand that there's
six hundred million people in Africa with no elecxity. Six
hundred million, not brownout and blackouts, no elexity. I have
said we will reach three hundred million of them in
partnership with the African Development Bank by twenty thirty with affordable,
(10:36):
accessible elecxity, enough for them to not just get two
lanterns from a solar cell, but to actually get what
you call tier three elecxity, which is productive use.
Speaker 2 (10:46):
Let's talk about how you get to be the head
of the World Bank.
Speaker 1 (10:49):
Presidents of the United States more or less recommend to
the Board of Governors. I guess it is of the
World Bank. You are appointed by a president United States
or recommended the board approve you. But what were you
doing before? I mean, how do you get qualified to
be the head of the World Bank.
Speaker 3 (11:03):
My background, as you know, well we've known each other
some years, is that I am a private sector guy.
I grew up in India and joined NESLE, worked there
for a few years, ended up at PEPSI for a
couple of years, joined City Bank. I worked there for
fourteen years and ended up running all of Asia during
the financial crisis, and then quit and became the CEO
of MasterCard for the next twelve to thirteen years.
Speaker 2 (11:26):
So you're minding your own business.
Speaker 1 (11:27):
You're running MasterCard, it's doing pretty well, and all of
a sudden somebody says, how would you like to be
the president of the World Bank?
Speaker 2 (11:32):
And you said no.
Speaker 3 (11:33):
It actually didn't work that way. MasterCard says that I
was there those twelve years. You and I have discussed this.
I'm very lucky. I had a great run. I joined
when a year after the IPO and the firm was
about twenty billion in valuation. I left at three hundred
and sixty. It's not about five hundred plus. So the
company is doing well. It's in a great spot and
well run and scaled over the years. I had told
(11:55):
my board that I would give them ten years. I
joined at fifty and at sixty I wanted to think
of something else through my life. We had a great
succession process. I stepped away, became executive chair, and then
stepped down all together and joined General Atlantic as vice chair,
and became the chair of the Fiat Families holding company XOR,
and joined the board of Tamasek. And I had this
(12:16):
portfolio approach to my life until I got cold in
February of twenty twenty three, and then a few days
later they announced that I was the candidate.
Speaker 1 (12:24):
So now you're the head of the World Bank, and
the approval process is the President recommends you, and then
the Board of Governors has approved you.
Speaker 3 (12:32):
Yes, So essentially they were ninety days between the recommendation
and the election, and I spent that period traveling and
visiting almost ninety three country leaders and CSOs and companies,
and then they have to get together in vote. I
got all the votes other than an abstention from Russia
at that time.
Speaker 1 (12:49):
So in the long history of the World Bank, you're
the only person who's been the president came from a
developing country.
Speaker 4 (12:53):
Is that right? Yeah?
Speaker 3 (12:57):
Probably true. I haven't thought of it that way, but
that's probably true. Okay, I'm just going back in names.
Speaker 1 (13:01):
Yeah, when you're running MasterCard, you're probably dealing with CEOs
and in developed markets. Now you're dealing with people in
not less developed markets, right, And was at a big
culture shock?
Speaker 2 (13:12):
No?
Speaker 4 (13:12):
No, So this is that's a great question.
Speaker 3 (13:14):
So even in master can't remember my business was growing
in all kinds of locations. You end up going to
developing and developed countries. That's kind of where the future
and the current are. The difference is what you go
in with as a perspective in whom you meet and
the circumstances you're dealing with. I've been there almost two years.
I've made fifty odd trips overseas. I would say make
(13:34):
a fair number of trips, David to the big shareholders
in the developed world because making sure that you're aligned
with them is important. The developed world has had a
great deal of political change in the last seven or
eight months, and so my biggest shareholders, the governments have
changed over making sure that you can help to understand
what they're looking for and you answer what they think
you could be doing. It's kind of important in this job.
(13:57):
You're dealing with very different challenges. But at the end
of the day, at the end of the day, what
I'm trying to do is to get the institution to
focus in the developing countries on young people and their future.
Speaker 1 (14:10):
What is the problem with young people in their futures
that you're trying to address.
Speaker 3 (14:15):
One point two billion young people in the emerging markets
are coming through the pipe in terms of a demographic bulge,
and they will be ready for a job in their
age profile in the coming twelve to fifteen years. Most
people think of this over the history of development. When
you get this kind of a demographic bulge, they call
it a demographic dividend, and that is true. If these
(14:37):
people get clean air, clean water, education, health care, and
they're growing up, skilling and once they're grown, they should
get a chance to get a job, either at a
small firm or a big firm, or an entrepreneur or something.
Because if that doesn't happen, these young people now are
without hope and without optimism.
Speaker 4 (14:56):
And without earnings.
Speaker 3 (14:58):
If our business is to eliminate power, you cannot eliminate
poverty just by building a school or a bridge or
an airport. That's important. Their inputs the output of eliminating poverty.
The single best way to do it is earning jobs.
You know, a friend of mine once told me that
poverty is both a state of mind and a state
of being, and a job eliminates both those aspects, gives
(15:21):
you dignity and gives you earning.
Speaker 4 (15:24):
And I'm just very convinced. I'm just very.
Speaker 3 (15:29):
Convinced that this young population can be the driver of
growth for all our Western companies and our children and
our grandchildren if we get them productive employment with the
dignity that that brings.
Speaker 1 (15:42):
The gap between the developed market youth and the undeveloped
market now called maybe the Global South by some is
getting bigger, not smaller. And they also don't have access
to the internet as much as maybe people in developed
markets do, so how are.
Speaker 2 (15:57):
You trying to bridge this gap?
Speaker 4 (15:58):
Great question.
Speaker 3 (15:59):
So I mean, look, you know, opportunities are not everywhere,
but talent is. The problem is the past has been
that you kind of move. That's why talent moves to
find its opportunity. What we're trying to do here is
to change that equation a little bit. What we've looked
at in the theory of creating jobs in a country
or development is there are three things that need to happen.
The first one is you need to have the enabling infrastructure,
(16:21):
whether it's bridges, roads, airport, schools, healthcare, eleccity, digital connections
that you know that thing. Then you need to have
the right regulatory policies land labor, bankruptcy law, anti corruption,
some concept of what elecxity will costing get paid that
you will get paid back, laws in the system, right
kind of governance. That's the second pillar. The third pillar
(16:44):
is to allow the private sector is basically creates jobs.
Government doesn't create jobs. Government is the enabler of the
private sector to do so. Right, from small businesses and
small farmers all the way to companies that we are
active with. You've got to get those three pillars in place.
That's what I'm working on. IBID and I are my
two public sector arms that work on that infrastructure part.
(17:04):
We have what's called the knowledge bank, which to me
is even more important than the money bank.
Speaker 1 (17:08):
How do you compare the satisfaction you're getting out of
doing this compared to MasterCard or General Atlantic or PEPSI
are just more satisfying or you.
Speaker 4 (17:19):
Know, there's a time and life for everything.
Speaker 3 (17:21):
When I look back from where I am today, even
though it's hard work and it's different from what I thought,
I am so privileged to have this opportunity. I want
to be able to look my grandchildren in the eye
and said.
Speaker 2 (17:33):
I tried, you haven't any grandchildren yet? Three three, okay.
And they're not interested in the World Bank that much.
Speaker 4 (17:39):
They're interested in the World Bank because I'm there.
Speaker 3 (17:41):
They're not interested in the World Bank person That, by
the way, is one of the interesting issues I believe
that I want to start up programmers having in the
middle of designing is to get people from the donor countries,
young people like our children and grandchildren who are going
through the time between an undergrad and a postcrad and
give them a chance to come work with us for
a couple of years country where we're doing real work.
(18:02):
Let them get exposure to what the Bank really is,
let them see what life in a Zimbabwe or a
Congo or a Vietnam and the kind of work we're
doing there, and let them come back with a better
appreciation of why the World Bank is important for them.
Speaker 1 (18:14):
At the World Bank today, as you go forward, how
would you measure your success?
Speaker 2 (18:18):
What is your standard?
Speaker 4 (18:20):
I want to be called the ultimate plumber.
Speaker 3 (18:22):
I fix the plumbing of the World Bank, because you
can keep building a new house on top of plumbing
that's not working, and as we all know in our
respective homes, that's a recipe for disaster. If you fix
it the right way, beautiful houses get built and stay
a long time. And I think the Bank is at
a juncture when fixing the plumbing is really important. Whether
it is the speed, whether it is the partnership with
(18:44):
other multilateral banks, because together one plus one is equal
to three, whether it is the partnership with the private sector,
which I'm cultivating very carefully. I just believe there isn't
enough money in the MDB and government.
Speaker 4 (18:58):
Worlds to do it.
Speaker 3 (18:59):
You need the privates to be a part of that solution,
whether it is this pivot to jobs and what it
can do for cutting down illegal migration and building opportunities
all that. Nothing is possible without fixing the plumbing. Transparency
is my friend. I won't get it all right, I
will screw things up, but you should evaluate me by
how I fix things when I get to know, rather
(19:20):
than just a point of time. Jobs is what I
want to be seen as the transition of the bank,
for I want to move this bank from working on
input to working on the output of jobs, because that's
the ultimate way to put a nail in the coffin
of poverty.
Speaker 1 (19:36):
So if you go to a cocktail party and somebody says, well,
what do you do? You say, I'm the President of
the World Bank. What's the immediate reaction?
Speaker 4 (19:44):
They say, mostly they say oh wow. And then I said,
I don't say oh what do you know? What I do?
Not really? And then you kind of explain what the
bank does and these five things in the though.
Speaker 1 (19:53):
I mean, you have to have a business card, says
president World Bank, or they know who you are. You
don't need a business.
Speaker 4 (19:57):
Card, Actually I do. Would you like to have a
business card?
Speaker 2 (19:59):
Yeah?
Speaker 4 (20:00):
Wow? Wow.
Speaker 1 (20:01):
Okay, yeah, wow, okay present World Bank.
Speaker 2 (20:05):
Great, it's a great business card.
Speaker 1 (20:07):
So if somebody says, what is the World Bank accomplished,
what would that best example be?
Speaker 3 (20:12):
If you go back over the last five or ten years,
It'll be very simple things. One hundred million people connected
to elecxity, you know, more than three to four hundred
million people with access to improved healthcare.
Speaker 4 (20:22):
That kind of thing.
Speaker 3 (20:23):
Where I'm going now is I've made a few specific commitments.
Three hundred million people in Africa connected to Eric City
by twenty thirty.
Speaker 4 (20:31):
I think it changes how Africa works.
Speaker 3 (20:33):
One point five billion people connected to better primary healthcare
by twenty thirty. That is to fight off what I
believe are the diseases of prosperity. You know, heart attacks, diabetes,
blood pressure, things that are creeping up in these countries
and which cannot be solved without distributed rural health centers
with nurses and medical diagnostic reader as its own. That's
(20:56):
the second big thing they're focused on. And the third
thing I'm focused on is getting eighty million women in
the emerging markets access to equity to open businesses by
twenty thirty. Equity not debt, and those three things are
just examples. We've got others in the pipe to do
with this nine billion dollars to be focused on small
(21:17):
hold of farmers because I believe that if you don't
make small hold of farmers an interesting job for young people,
they will all go to the cities and a lot
of them will end up in urban poverty. To keep
them in that farm and earning well, you need to
create the right conducive environment, cooperatives that help them. They
can access markets, fertilizer, seeds, better technology.
Speaker 4 (21:38):
That kind of work is what we're trying to do.
Speaker 1 (21:40):
Abraham Lincoln famously said God must love poor people because
he made so many of them. But you don't think
it's inevitable. There have to be so many poor people
in the world, right.
Speaker 3 (21:48):
I think it's very challenging to change this and bend
the arc. But what are you here for if you're
not going to try so.
Speaker 1 (21:55):
The main message you want to convey to people about
the World Bank is that it's in good shape, You're
on top of it, and that it's going to get
better and the world will be happy for the World
Bank doing what it's doing.
Speaker 2 (22:06):
Is that right?
Speaker 3 (22:07):
The main message I want to communicate is that there's
a lot of good people trying to fix this place,
to make it even more relevant in that job's approach.
We have to get there. We're not there, We're a
work in progress. But I feel very proud of what
we're trying to do. And it's a real privilege, David,
it's a real privilege.
Speaker 1 (22:27):
Thanks for listening to hear more of my interviews. You
can subscribe and download my podcast on Spotify, Apple, or
wherever you listen.
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