India’s New World Bank Chief: Real Change or Rebranding?

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BENGALURU, India — The new World Bank president was born in India and forged his first business successes there, a fact his supporters say gives Ajay Banga valuable insight into the challenges facing the developing countries the bank is meant to help. .

But not everyone is sure that Banga, who has spent the better part of the past two decades in the American business world, can shake up the bank the way some think she should.

US Treasury Secretary Janet Yellen discussed Banga’s credentials this week on the sidelines of the World Bank and International Monetary Fund spring meetings in Washington. Banga, currently vice president of private equity firm General Atlantic, has more than 30 years of business experience, including as CEO of Mastercard and on the boards of the American Red Cross, Kraft Foods and Dow Inc.

“He has the leadership and management skills, background and financial expertise to lead the World Bank at a critical time in its history,” Yellen said.

It came after President Joe Biden, on nominating Banga in February, announced his ‘critical experience’ dealing with pressing global challenges like climate change, even though his resume had little to do with the credentials. climatic.

The World Bank, the largest and oldest development bank in the world, has 189 member countries whose mission is to reduce poverty and promote prosperity in the developing world. The threat of climate change is a major concern, with the bank touting itself as the biggest funder of climate action in developing countries.

But leaders and activists in the poorest countries, especially those vulnerable to extreme weather conditions made worse by climate change, have called for massive reforms across the multinational development banking system. Led by Prime Minister of Barbados Mia Mottley and embraced by French President Emmanuel Macron, they pushed something called the Bridgetown Initiative, which would make it easier and faster for developing countries hit by weather disasters to get money with lower interest rates for recovery and to build to be more resilient.

Banga will replace David Malpass, a Donald Trump appointee who announced he would step down in June, a year earlier, after coming under pressure for refusing to say whether he agreed with the scientific consensus on the change. climatic.

Climate finance analysts are relieved that Banga at least thinks climate change is caused by fossil fuels. But many are skeptical that his background – which includes stints at Nestlé, Pizza Hut and Mastercard – is a natural fit for climate finance. And though he comes from a climate-constrained state of India, a nation that is simultaneously battling rising energy demands and the effects of climate change, his long career in America adds to their wait-and-see attitude.

Anit Mukherjee, a senior fellow at the Observer Research Foundation, a think tank devoted to India’s global development, called Banga’s rise “a proud moment for India”.

“Having grown up in India, Banga will likely understand the issues facing developing countries. It’s also clear that he understands markets around the world,” said Mukherjee, who has worked closely on multilateral development bank reform. “Whether he will understand the challenges of climate finance and development is not yet clear.”

Harjeet Singh, head of global policy strategy at Climate Action Network International, called Malpass’s departure a historic opportunity to “change the system”. But Banga is just old wine in a new bottle, Singh said.

“He has worked in companies whose main objective is profit. When it comes to development, especially climate change, it’s about justice and equity,” Singh said. Banga’s background “does not inspire confidence”, he said.

“We are facing multiple crises, including climate change, the debt crisis and the banking crisis. We cannot continue with the same systems that are responsible for these crises,” Singh said.

Luiz Vieria, coordinator of the Bretton Woods project, which oversees the World Bank and the International Monetary Fund, lamented the tradition that the United States usually appoints the head of the World Bank and Europe appoints the head of the IMF. Banga “does not even meet the basic criteria”, he said.

The son of an Indian Army officer, Banga was born in 1959 and educated in some of India’s finest institutions. When the Indian economy liberalized in the early 1990s, Banga was able to work and rise through the ranks of multinational corporations that burst into India.

Since arriving in the United States in the early 2000s, Banga has held prestigious positions in the corporate world, including at the head of Mastercard and as a director of Exor and Temasek, large holding companies including the portfolios are diversified and include media companies such as Mediacorp and The Economist. as well as automakers like Ferrari.

“Appointing someone like Banga is a great way to open the conversation with developing countries,” said Suranjali Tandon, assistant professor at the National Institute of Public Finance and Policy, a research institute affiliated with the Indian government. .

But Tandon wonders if Banga can or will radically change the way the World Bank works.

“His experience in the private sector allows him to take high risks and achieve high returns,” she said.

“Development finance, especially climate finance, is about high-risk, low-return investments. Given that, I don’t see the World Bank changing dramatically under his leadership.

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Fatima Hussein and Seth Borenstein in Washington, DC, contributed to this report.

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Follow Sibi Arasu on Twitter at @sibi123

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