[Rose Kimeu Craigue] Welcome, everyone. It is wonderful to see you all here, and a warm welcome to those that are joining us online. My name is Rose Craigue, and I’m the World Bank’s Lead for Stakeholder Engagement. I will be your moderator for today, and I am looking forward to spending the next hour with you. Before we start, I’d like to just make a couple of announcements. The first is that this session is being recorded. It is available on World Bank Live in English, Arabic, Spanish, and French. Number two, after Ajay’s opening comments, we will have an opportunity for Q&A. Now, for the Q&A, we ask that you please raise your hand. You do not need to leave your seat. The mic will come to you. And as we have always encouraged you to be succinct. Remember to be succinct because I will have to interrupt you if you go beyond two minutes. And the reason for that is because we’d like to hear from as many of you as possible. Last comment is, if you would like to make a petition or a lengthy statement, please note that this is not the right forum for it. I will be happy to receive all your petitions after the Townhall, and I’ll make sure that I pass it along to Ajay. Now, before I welcome Ajay to the podium, I’d like to acknowledge and mention that we are joined by the Bank’s leadership team, as well as the Dean and the Co-Dean. So, without much further ado, I’d like to welcome to the CSO Townhall, the President of the World Bank Group, Ajay Banga. The floor is yours. [Applause]
[Ajay Banga] Sorry, I need my glasses. You can see I’m getting older. I used to be able to read speeches with big type without glasses. Now the big type has become so big that I’ll have to have 72 pages instead of 16. Age catches up. Good morning, everybody, and welcome to our Annual Meetings this year in 2024. We’ve got a whole of our entire management team, my leadership team is sitting here. I’ve also got the Dean, Matteo [Bugamelli], here, and I think he’s going to be meeting all of you at about 12 or so as well, or at least some of you. If you’d like to ask him questions, then you can then. If you’d like to ask him now, you’re more than welcome. I’m happy to give him at least one hour of my time so he can be the guy talking to you. I’m just kidding. Let me update you on the work we’ve been trying to do over the past 16 months, and then we can take questions. When I joined 16 months ago, it was the mandate from our shareholders and clients to engineer the evolution of this Bank within and with the dedicated people of the institution. During that time, we’ve been on this journey to what we call “the better Bank.” I think we’ve advanced that work at the fastest pace we possibly could. I think we’ve got some meaningful improvements across the institution, and I’m encouraged that we are moving in the right direction. We’ve got measurable milestones. I’m mindful that the road ahead will require a lot of change because the landscape is changing around us very rapidly. A few summary points in that on speed, which is to become a better Bank. As you know, we’ve decreased our average time for approval of a project from 19 to 16 months, and that’s being led by Anna [Bjerde], and we’re trying to work towards a 12-month period. I think we’re starting to see some of that manifest in reality. For example, recently, using a platform approach, we were able to approve a set of health projects across five countries in Africa, in Burundi, and DRC, Malawi, Rwanda, and Zambia, each in under 100 days. In fact, DRC and Burundi came in at 30 days. Similarly, I was in the Pacific Islands recently, and we just approved a correspondence banking effort with seven countries in the Pacific Islands who are facing the departure of correspondence banks in their countries, which obviously leads to great challenges. We were able to get that approved within 10 months. Now, that’s a change from the 19 earlier. The problem is there are other projects that are taking longer, so the average is still at 16, and our task is to get the 16 to 12. On simplicity, earlier this year, we appointed 21 joint country representatives across the IDA, IBRD, IFC, and MIGA. I think it’s been going well, I just met with all of them a few days ago again. I’m quite optimistic that we will expand this approach shortly to add another 20 countries or so. Now, while it’s still early, what I do see in this shift is a new level of collaboration among management and staff, and the initial feedback from our clients in the countries has been very encouraging about how much easier it is for them to connect with different people in our institution. We’ve also continued our work to widen the partnership with other MDBs, and to date, we have bilateral agreements and projects going with a number of them, the Inter-American Development Bank, the Islamic Development Bank, EBRD, the Asian Infrastructure and Investment Bank, and the Asian Development Bank. But more interestingly, across a set of 10 MDBs, including a few others like KfW and others who are participating, we have now produced an online co-financing platform. What it does is it allows MDBs to easily share projects for joint financing and discuss them securely transparently. So, what this means is lower administrative burden, transaction costs, better coordinated financing; and ultimately, I hope, better development impact. In six months, we’ve got about 100 projects in that platform. The first few are beginning to get co-financed. So, let’s see how that goes. On the knowledge bank, we’ve overhauled our knowledge bank structure with the right people in place, leading those five verticals of people, prosperity, infrastructure, planet, and digital. Each have clearly defined expertise, but the thing is they are bound by a common mandate, and that mandate is to bring knowledge expertise to the forefront of our country-driven model. I want them to participate in the construct of the Country Partnership Frameworks. One Country Partnership Framework across the World Bank Group, more and more, and they should participate in that construct so we can create focus and strategic direction for the CPF right from day one, so our resources are put to focused ideas. But then they should help us to create bankable projects and even help in their implementation because a lot of the countries at the other end of this effort don’t have the capacity, very often, to be able to do this themselves. So, if we can help some of our people divert some of their attention to this, then that’s a good outcome for us. With regard to our financing and the work around the Capital Adequacy Framework, just this last week on Tuesday, we announced a package of financial measures that will boost our lending capacity and make loans from the IBRD more affordable. What are the two key elements? The first is we reduced our loan to equity ratio from 19 to 18. We had gone from 20 to 19 at the Spring Meetings the year before I joined, a few months before I joined. Now we’re down to another one percentage point, and that generates lending capacity. Together with all the prior actions on our balance sheet optimization and the new financing instruments of hybrid capital and portfolio guarantees that a number of shareholders have supported, we think we can get to about 150 billion in additional financing capacity over the coming decade. We’re looking for more improvements, looking for additional optimization, but that’s where we are today. The second is we’ve taken some fairly substantial action on IBRD pricing with the help of the Board to ensure that middle-income countries that borrow from us will be able to do so on better terms. I think this will help countries like India, and Indonesia, and Turkey, and others. More affordable financing is obviously partnered and paired with World Bank knowledge. That’s what I think creates the powerful engine for development. Part of this pricing adjustment allows small states which are already eligible for the climate resilient debt clauses that we had launched to borrow at the lowest tier of pricing that we offer at IBRD. There’re two things here. There’s the overall pricing reduction, but also there’s this special piece for the small states. Finally, our new scorecard. I know this is a particular importance and interest. Many of you have helped us design and work on this with Anna. She, as I said, led this effort in the construction of this tool. Let me spend a bit of time on it. To me, this scorecard is a yardstick of accountability. It is our guidepost that our teams can rally around and work toward. We spent many months working to build a focused scorecard that for the first time is shared across the entire institution. It’s also simplified. We’ve moved from 150 plus items to 22 indicators. I want to be clear with you, this is not about reducing our ambition. It is actually about sharpening our focus. By concentrating on what truly matters, we empower our staff to engage meaningfully, to see the impact of their work, and to avoid getting lost in a sea of data. This simplified set of indicators allows us to better evaluate our progress. I think it feeds the culture shift we are driving our working across the institution to get an institution-wide approach, and to concentrate our collective efforts to maximize our impact. There are three ways in which this contributes to that. First, I think it drives outcome-oriented thinking. It expands our focus from solely measuring input, like the number of projects or dollars spent, to also measuring output, like how many girls went to school because the schools we opened, or how many carbon tons of emission we have avoided. Second, I think it feeds transparency and accountability. The scorecard, the data, the formulas are all public for you all to see, project by project. In doing so, we’re giving shareholders, clients, and taxpayers the ability to clearly see the impact we are delivering and where we need to do more. Third, I think it helps to unify the World Bank Group. It focuses on the broader outcomes that require multiple departments and institutions to work together. I think it will foster much more collaboration across the organization. Last week, we published the baseline results for 20 of these. We also shared the formulas we used. We’re going to keep improving how we present that data to make sure it is simpler and simpler, and easier and easier to understand and navigate, but we’re on our way. Finally, before I open to questions, I want to take a moment to thank you for being here, and I want to let you know my continuing commitment to be fair and direct with you. We don’t have to agree on everything. That’s okay. But we all care about this place, and we care about this work, and we want to create a world free of poverty and a livable planet. Count on me to be part of that effort with you. Count on our senior team to care about this, and I’m happy to take questions. Rose, I’ll give it back to you.
[Rose Kimeu Craigue] Thank you, Ajay. We will start with a Q&A, and I will start with my left. We are going to take one question at a time. Remember, just raise your hand. The mic will come to you and be succinct. We’ll start with the lady… Great, yes. The mic is coming to you.
[Angela Pashayan] Good morning. It’s a pleasure to be here. My name is Dr. Angela Pashayan. I teach at American University here in Washington, DC. Before I taught, I was a practitioner, and so my hand is always in the practitioner’s pouch. My work is in informal settlements. And so, my concern, which has been my concern for over 10 years, is do we have a plan for the informal settlements across the continent of Africa? Knowing, for example, that in Nairobi, 70% of people who live in Nairobi live in informal settlements. 70% is a very large number, and 30% of Nairobi cannot continue to keep up that country. And so, the story goes across many countries in Africa. And so, I’m looking for when will there be a shift towards what I call settling the informal settlements. [Rose Kimeu Craigue] Thank you. Ajay?
[Ajay Banga] I actually... Can you hear me? Yeah. I actually have no clue how to answer that question because I haven’t focused on it myself directly. There may be people here who know better than I do. The way I think about it is that one of the things we’re trying to do is this electrification in Africa. I suspect a larger part of that work will end up also helping informal settlements. Having grown up in India, I’m familiar with the concept of these, and I’m familiar with how challenging it is if you allow them to proliferate, to later on go back and do something that is more constructive with the people there, and how difficult it is to then make headway. So, I understand that part. The work we’re doing on reaching 300 million people with the African Development Bank, and the Rockefeller Foundation, and others on energy will, I’m sure, help some of that. I know we’re doing work on drinking water. I know we’re doing all that. Do I know whether there is a way to put this together, aimed at informal settlements versus the verticals? I don’t, but Anna will know better. So, let me give it to the person who actually knows what she’s doing as compared to me, right?
[Rose Kimeu Craigue] Ajay, there’s a mic for Anna.
[Anna Bjerde] Thank you so much for the question, and good morning, everyone. I very much share the concern that informality is actually one of the main challenges to sustainable development and to poverty reduction. We do see it in many regions around the world. Africa is particularly prominent. We address it in several ways. One, of course, in our diagnostic work and the policy dialog we have with our government counterparts, we talk about the benefits of moving from informality to formality, both in terms of a person’s assets, but also because formality allows better social safety nets to be delivered. It also allows for people to be part of the formal economy, which also makes them part of the exchange, if you will, on a domestic research mobilization, you get them into the system. So, it’s a big part of our dialog. Secondly, we do address it through our projects and our programs. As Ajay explained, through Mission 300, we have a huge push to electrify the population in Africa, so that will also help on the formality, but also through urban upgrading projects, through land administration projects we work on. And thirdly, through our environmental and social framework, where the issues around informality is a big part of the focus that we give on the inclusion agenda. So, it is not a finished agenda for us by any stretch of the imagination. Population growth in Africa is particularly challenging, so we have to be aware of the demographics, but we do have a number of ways that we can engage on this and try to make a good progress. Thank you.
[Ajay Banga] I think you’re on to an interesting topic, which is when we start discussing strategy with our Board of different issues, what I find is we can get past the programs and the things we do to actually creating a holistic view of specific verticals. Maybe this is a vertical that one day we should address specifically with our Board and put it out there. We now put out something on gender, and you will see in this week, we’re going to announce some specific items on gender. I find that to be useful to bring everybody’s thinking together. I’ll take that away with that thinking as well. In addition to what Anna said. Maybe you can help us when we write that up. Is that okay? Okay, good. I’ll count on that. Don’t back off. Okay.
[Rose Kimeu Craigue] Thank you, Ajay and Anna. We’ll take the next question from this side. And we will take the question from the lady, yellow blouse. Yes. Mic is coming to you.
[Woman 1] Thank you. We are now 10 years of the anniversary of the Paris Agreement and the pledge to make every effort to keep global warming below 1.5 degrees. So, given the evidence of the climate impacts globally, shouldn’t the World Bank realign its Paris Agreement methodology with the goal and exclude all fossil fuels from its finance and its policy? Thank you.
[Ajay Banga] So, let me just step back for you and lay out what we’re doing, so you can figure out where we’re going. I think there’s a lot of things that could clarify with that. The first is, if we took just last year alone, our total financing for renewables was around 3 billion, a couple of billion from IBRD and IDA, and about a billion plus from IFC and MIGA. I’m rounding off. It’s probably a little more than three. And off that, not off that, but separately, our total financing from gas, basically, is 530 million. It used to be 4 billion when the Paris Agreements were signed. That 530 million, a large majority of it is going to maintain current natural gas facilities. Like in Bangladesh, 300 million is gone to prevent the unanticipated leaks of methane from pipes and systems that go to both, industries and homes. I don’t know whether that’s something in your mind we should not be doing or we should be doing. In my mind, we should absolutely be doing it because I believe that fighting methane leaks is actually critical, and ignoring them would be a mistake. As you know, at the COP28, we announced a lot of effort around methane, also in other areas, on agriculture, on waste management, in rice, and so on, but also on fighting leaks across the system. I think methane is a gas that we cannot afford to ignore given its propensity to cause damage. So, there’s that aspect of it. There is the aspect of trade financing in IFC. Now, the 150-odd million dollars went into trade financing, mostly to do where somebody is either importing oil or of that platform for purposes of an agricultural pump or water pumps or a truck system or a transportation system. That’s come down a great deal over the years. I think you’ll see it coming down further. The question is, at which point are we denying something that’s important versus following one aspect and denying the other? That’s the balance we’re trying to find. I know you would like us to be completely zero in all our equity financing from IFC and MIGA, the equity-like guarantees, we’ve committed that we will not give money to financial institutions that don’t have a plan to phase out their call, either to zero or near zero their financing by 2030 and to increase their renewables. We’re trying to move this in a direction where a transition makes sense for everybody. That’s all we’re trying to do. That’s what we’re up to.
[Rose Kimeu Craigue] We are going to… [Ajay Banga] Anybody from the management team want to add something different? Okay, good.
[Rose Kimeu Craigue] Okay, we are going to switch to our World Bank Live audience. I already have two questions that have come in. Ajay, the first question comes from Swayamprabha, Emmanuel and Yvan, and they have the same question, what is the World Bank’s framework for engaging civil society, especially youth in ending the cycle of poverty in developing countries?
[Ajay Banga] Look, first of all, I think engaging with civil society is important for every one of us at every level. And that message is clearly out in the Bank, and I hope you will see over the years an engagement level on the ground in every topic that we can engage on. That’s important to me. There is the issue of putting it into our corporate scorecard as well, which actually came from civil society when we were consulting with you on the new scorecard. And so, there is now an indicator there that refers to the quality of our engagement with citizens and with civil society. So that will allow you to also find a way to monitor what we are doing or not doing. Then, of course, there’s the whole issue of funding. And there was a vehicle that I understand, whose name I forget, which used to be for funding. And there’s a new vehicle, our Bank and our people, and all of you love acronyms. The new one is called CIVIC, which I think is very appropriate, but that’s the one that will be worked on right now. And hopefully, you will see the results of that coming through with the team in a little while. So that’s the two or three different things we’re doing in the space.
[Rose Kimeu Craigue] Thank you. And we will take the next question from World Bank Live. This comes from Sylvia Muhoro from Red Cross in Kenya, and she’s asking, “How does the World Bank plan to increase funding and support for education initiative? Particularly in low-income countries where resources are scarce?”
[Ajay Banga] It’s not just about funding and support for education, although that is a critical element. I think on the whole, what we are trying to do with our funding and support in lower-income countries, which is where IDA is focused. IDA is focused, as you know, on the bottom 77 countries that are challenged. We’re going through an IDA replenishment cycle right now. December, first week is the time when we will meet in Seoul for getting everyone to commit to what they’re willing to put forward. We’ve made real efforts over this last period to explain to the donor countries the value of IDA and what it does. I will happily put it together for you because maybe your voice can add to the voice that we have; but essentially, IDA, at the end of the day, in the last decade, if you just forget the numbers of dollars and inputs, I’m trying to get away from that to the outcome. 117 million people got connected to electricity in this decade through IDA. 94 million people got connected to clean water during that same decade. 18 million farmers, small farmers, got access to different kinds of inputs for their land in that same decade. And you will see over the course of the next few days, an announcement on agribusiness that builds on the small farmer idea. And then, if you look at health care, close to 900 million people over this decade have benefited from the work we’re doing, primarily on neonatal and maternal care with IDA, vaccinations, all that. These don’t happen in the isolation of funding, but also of people who understand success transfers, and can help what I was saying earlier, build capacity in these countries. Our need to get the right level of resources for IDA is very acute. We had last year in IDA20, last time, a total envelope of what, 93 billion. That came from about 24 billion that came from the donors, which was leveraged by us, as you know, three and a half to four times, and that allowed us to get to an envelope of 93 billion. The reason that that leveraging is lower than that of IBRD is because we give a lot of IDA money away as grants. In fact, that is one of the most important aspects of IDA, which is the affordable financing. About 20% to 30% of IDA every time goes into pure grant. No repayment of interest, no repayment of principle. The rest is highly concessional. And so, the issue really is the more you give away as grants, the less you to leverage in the bond market to be able to raise private money to get to a higher number than the 93. I would hate to get to a higher number by reducing grants. That is the wrong answer. And therefore, what we have to do, what we’re trying to do in this IDA, just to keep it flat in terms of real terms to the 93, we’ve got to get to 105. That’s going to need incremental funding from the developed world, but the developed world is going through enormous challenges on fiscal and other challenges. The good news is Denmark has come out with a 40% increased announcement. The UK and Spain have indicated they will announce with a higher contribution, which is good. Other countries are more stressed with their budgets. And so, somewhere in this mix, we need to work really hard to get to a number that is north of an envelope of 100, 105, so we can at least be a real partner for these countries with their challenges. What IDA brings is three things. It brings this affordable financing that I talked about, the grants and the concessional financing. It brings knowledge because we learn from one country to the other. I was giving the example at the Bretton Woods meeting yesterday. I visited this personally in China. I saw them work on taking coal and wood out of home cooking and replace it with solar. But they did it very intelligently, both in terms of the subsidies that they provided on the solar energy, but also the manner in which they helped with financing of the solar cookers. You can see the difference in these households. I met people who in their time had moved from coal and wood to solar. I could see the difference in their homes and the way they were constructed. It’s the same home. They actually filled up the empty roofs that they had to leave open to allow the exhaust to go out for their own health. That’s the learning that we’ve got. We can help many countries with that one example, but there’s other examples from other countries. That knowledge transfer… As I say, our knowledge bank is as important as our money bank. That’s the second big part of IDA. The third part of IDA is the leverage, taking a dollar and multiplying it three and a half to four. One of the things I hear often when I’m traveling in the rich countries is that they have a commitment to their overseas development assistance. A number of them are quite dedicated to bilateral aid. I understand that because countries use bilateral aid to suit their specific purpose as well as their political needs, and it is their tax payers’ money. So, they are going to use it the way they think suits their country. All I tell them is, if you’ve got ten dollars for ODA, by all means use six for bilateral. Give me four because your four, I can make 16. And the 16 plus the six is 22 versus the 10. There is no other government program in any government that takes 10 dollars and makes it 22. Most of them take 10 and make it 5. And so, I need your help. I need your help to not just tell me what I need to do, but go back to these countries and ask them if they would be willing to step up at this time to show the solidarity that our world needs for these 77 countries, a number of whom are dealing with impacts of things that they did not directly contribute to. And so, working this the right way is really important. While you’re on that topic, since I’m asking you for help, I need your help on another couple of things. One of those is we’ve got a fund called the Livable Planet Fund, which currently has been funded with our Board’s approval from our own retained earnings from IBRD. The Livable Plan… And some three countries have also contributed money. That’s why I would be incorrect if I don’t recognize. I know Japan has, Germany has, and one more. Japan, Germany, and one more have gone to. Who else? Latvia, the coupons. So, three countries have put some money in. The idea of the Livable Planet Fund is for middle-income countries or IBRD eligible countries who work on global public goods, meaning the benefit of their work will be received not just in their borders, but also outside their borders. So, how do we incentivize them to do the right thing on climate, and other, and pandemics and health care and the like? Is there a way for us to incentivize them? And the Livable Planet Fund is a way to buy down that cost for them if they do so. We also use it to buy down our Pay for Results initiative, which today are almost half of our money is going to pay for results, meaning they get paid if they deliver. As you know, we announced for Uruguay, if they exceed their nationally-determined contributions on methane emission by a certain amount, we’ll buy down their loan. That buy-down comes from this fund. The fund is really important. I would love to get more money into it. I will plan every year to put IBRD earnings into it so that you know that we are in it with our own. But I would also like to get not just countries, but donors and philanthropies to help us because this is a chance to take that money and multiply its impact. And that’s what I’m looking for. Thank you.
[Rose Kimeu Craigue] Thank you, Ajay. We’ll take one more question from the online audience, and then we’ll come back to the auditorium. So, Ajay, the next question is about jobs, and this question comes from Mozambique. So, we have the question from Isaura from Mozambique, and she asks, what strategies does the World Bank have to ensure that women in developing countries have access to job opportunities, and decent wages, and access to finance, particularly in national development projects financed by the Bank?
[Ajay Banga] Let me first answer for women, because we’re going to be making some announcements in the next couple of days around gender, both in terms of access to finance, and in terms of access to broadband and in terms of access to social safety nets, all of which are designed towards the economic empowerment of women. But there are things underlying that which won’t be in these announcements that have to do with working with countries on regulatory reform. What do I mean by regulatory reform? Everything from the ownership of assets to the right to open businesses. You will see we produced a report out of our system on Women, [Business] and the Law, and you will see that shows you that their rights under legal frameworks are not quite the same in many parts of the world. So regulatory frameworks need work, but also you need work for women on childcare and safe travel to work and back. You will find a lot of the work we do in countries around rapid transit systems and the like is designed to enable women to get to work in a safer way and come back in a safer way, so they can feel that they can go to work without being endangered every minute of their journey. And the idea of childcare is similarly to enable them who bear an unfair burden of managing homes and families to be able to also move past that burden to get access to the opportunities they deserve. That’s all part of gender. There’s a bigger issue in jobs that I want to use the opportunity to address. You will see us during this Annual Meeting say that while, yes, I understand that our critical role at parts of the Bank, the IBRD and IDA in particular, is education, skilling, healthcare, climate, adaptation, mitigation, those things. Those are the building blocks. But beyond that, our role is to work with the public sector, both in terms of the jobs they provide in the emerging markets, but also, most importantly, in terms of the enabling environment they can produce for the private sector, in particular, small businesses will generate between 70% and 80% of the jobs in every country, including in the developed world. 70% to 80% of the jobs come from small businesses. Having the right regulatory environment, the right public policy environment in place to make that happen is important. I believe, again, IBRD and IDA, with their regular ability, along with other MDBs, and the IMF and the like, to influence regulatory policy is quite important. And then IFC and its connections to the private sector can help businesses and farmers, and small farmers and large ones, do the right things in terms of creating the employment that jobs will come from that basic infrastructure of education, skilling, health care, climate, roads, bridges, and so on. Getting this virtual cycle to work well, orient the Bank Group towards jobs, not just the inputs of the foundation, but towards the output of jobs is important. And the reason I say that is 1.2 billion people in the emerging markets are going to become eligible for a job over the coming 15 years. Roughly 1.2 billion. Current forecast for the same emerging markets is to generate about 420 to 450 million jobs. Forecasts are not destiny. I get that. But to change destiny, you have to do something actively. A gap between 4.50 and 1.2, even if you’re all wrong by some number on forecast, is too large a gap to countenance. If you want to take the opportunity of this demographic dividend in the emerging markets, not just for the emerging markets, but for all of us in the developed world, if we invest in those people, they will also, in turn, create consumption, create marketplaces, both for products, produce, and intellectual property. And in turn, that feeds the virtual cycle that we all have relied on. The last 30, 40 years of growth has not happened without a number of emerging markets growing their consumption and growing their ability to therefore attract business and consumption in their countries, which has also benefited all of us. So, I think we have an opportunity on the positive, and we have a challenge if we don’t do something about jobs. You will see us saying, “We are really interested in the output of jobs built off the building blocks of all the work that we do across different parts of the Bank.”
[Rose Kimeu Craigue] Thank you, Ajay. We’ll take the next question from my left, towards the back. Gentlemen, yes. You, light blue. Yes.
[Abraham Rugo] Good morning. My name is Abraham Rugo. I work with Bajeti Hub. That’s Swahili for “Budgets” from Kenya. [Ajay Banga] She’s from Kenya, too. [Abraham Rugo] Good. It’s good to see many Kenyans here. I really appreciate all your presentation, but so far, we are still talking about development as a technical issue, as something that just needs to be done in a good environment. But I’m concerned about the governance aspects that most of our countries are operating in, questions around corruption, questions around rule of law. Employment creation is not just a technical decision, it is also under guarded by the form of governance. I’m interested to know from your perspective, where does governance fall? Does it actually matter? And to what extent does it matter? Because if we are putting in a good project for a road or for electricity, but the system is actually leaking, literally, we are putting water into a leaking bag and then putting more water. I think we are... But we’ll be getting ourselves wrong. So, I’ll be interested to hear that because from where I sit, all questions, particularly from Kenya, where I work, governance is the big challenge. It is not so much a question of techniques and the numbers. Thank you very much.
[Ajay Banga] I hope you heard me talk about the importance of regulatory policy and the enabling environment. That is actually all addressed to that. Next time, I’ll use the word governance so you know I’m talking about it. That’s exactly what I’m referring to. I’m referring to the ability to create an environment in a country where, finally, if you want countries to grow, there is not enough money in the public sector or public finances or with people like us or with philanthropies. You have to get the private sector of a country becoming the growth engine of that country. It comes from small businesses, but it comes only when the right environment exists for them. That environment has to do with governance, it has to do with rules, it has to do with policies, the rule of law, regulation, all that. That’s why I think it’s such an important thing for us to work on. We do it already today. If you look at what we are trying to do with Mission 300, which is a code word, once again we’ve got a code word and acronym for these 300 million people we want to reach in Africa for power with the African Development Bank. The first thing we are doing is sitting with 15 countries right now and going through an energy compact plan. That energy compact plan will be presented by the heads of state in the end of January at a summit in Tanzania, where they will present this to not just people like us and other multilateral banks, but investors and civil society who have been invited, are being invited to that event. And if you’d like to attend, come across and meet Anna and give her your name, and hopefully we can invite you there. And because you’re a budget guy, you understand the numbers, come across. The idea is for these heads of state to commit to what policy and governance they are committing to for that energy compact to be executed. Because to do 300 million people, it will probably take 30 billion of public finances from IDA plus also some money from the governments, which we are trying to do through the IMFs, what’s it called? This RST. What does RST stand for? Something, something, trust [Resilience and Sustainability Trust]. Okay, that Trust. There’re so many acronyms in this development world. I don’t know how you guys keep track of them. It’s just a pool of money, which is the STRs that some of the countries are given back from the money they didn’t use during COVID when the STRs were generated. The idea is the IMF Board will help us. They cannot fund projects, but they can fund the fiscal headroom for countries to do what they think is appropriate. So, if we go to them and say, “In Nigeria, I would like to do this, and the government in Nigeria would like headroom of a billion dollars to be able to get the utilities to be liquid and so on and so forth,” that’s where the IMF can step in. But then the rest of the money has to come from the private sector. And there is no private sector organization that will come in without regulatory policy and governance and clarity. So, that’s one example of things. Second is, Axel [van Trotsenburg] has recently launched something called the Academies. My interest in the Academies, which I know is his, is to raise the quality, raise the level of the water in the river rather than lower the bridges. Meaning raise the quality of work in the countries on different topics. So, his Academies are being launched in a series of topics. Governance is embedded in a number of them. And the objective is to try and educate government employees, bureaucrats and others, on the right way to do things. Now, that doesn’t always work out because if somebody’s intentions are not appropriate, you can keep telling them they’re not going to listen. So, at the end of the day, there are two other tools which we can work with. One of those is all our work is done after assessing countries on their quality of work in transparency and accountability. The countries that do better on the scale tend to get more support from us. The countries that don’t do as well tend to get guarded support from us because we’re nervous about how that money cannot be used. Even ministries, let’s say I’m doing an education project somewhere, the Ministry of Education of that country will be evaluated for the same purpose as a way of ensuring that we can put more capacity at work in that Ministry to help them if they need it. After that, we will still get complaints, and we have our internal investigation group plus our own people. And the idea is I want our people to be very alert to these things. As I said inside the Bank, good news should take the staircase, and bad news should take the elevator. It sounds very simple. It is not simple to live with. Most people, human nature, wants to give good news to people. I need the bad news because then I can make a difference. And so, if our culture is one of bad news taking the elevator and good news taking the staircase, then management will be responsive, quicker and faster on these things. But after that, complaints come into our internal investigation team. I’ll give you a set of numbers. In the last five years, 200 plus complaints have come in. A 190 odd companies and individuals have been barred from working not just with us, but with any other MDB. In a number of them, we’ve also taken recourse of taking money back from countries where we felt it was not properly used. So, there is a series of tools and instruments. They’re on a declining scale from carrot to stick, as you can imagine. That’s how it should be, it’s not perfect. If you have more advice for us, come on and tell us. Thank you.
[Rose Kimeu Craigue] Thank you, Ajay. The next set of questions we’ll take from someone on the right side towards the back because the last question was from the front. I think I will take the question from… I see you, lady. Yes. We’ll come to you because we took the question from the front. So yes, the lady with your hand up. Yes, that’s you. The mic is coming to you.
[Woman 2] Hello, Ajay. Happy to see you in person. And also, I’m very happy that last year you just visited Indonesia during the ASEAN Summit. [Ajay Banga] Sorry, I can’t see very well. [Woman 2] Okay. Yeah. I think I want a broad question about the coal issue here, specifically in energy. As we know, the World Bank has a commitment, I think, like a decade for no more coal financing projects; but unfortunately, we still find out a couple of projects in Indonesia through your financial intermediary. That is the big loophole in your commitment. So, my question for you is, what’s your comment, or what’s what your to do to overcome this issue? Thank you.
[Ajay Banga] As I said just a little while ago, I’ll say it again. We have basically agreed that we would not give equity or equity-like financing to financial institutions that do not agree to sign off on the fact that they will phase down coal to zero or near zero by 2030 and increase their renewable lending. You could tell me, turn it off like a tap tomorrow morning. That’s the real discussion I was having with the lady who asked me this question earlier. I think the issue really is of figuring out a transition. Your country is one of the first participants in a just energy transition. The logic of transition is you got to give people a chance to move their way out. The Western world is having a transition because after all, the Western world is consuming fossil fuel and is getting a chance to transition out. Why should the developing world not get a chance to transition out? I don’t understand.
[Woman 2] I mean, we can have more of a discussion. Also, we just [have] a couple of reports on that that we can share with you. [Ajay Banga] Okay. [Rose Kimeu Craigue] Thank you for that question. We will take one question from the online audience. Ajay, this question is about callable capital. It comes from Sunday... [Ajay Banga] Callable capital. [Rose Kimeu Craigue] Yes. This is from Sandy Majola from Sharing Strategies. Her question is this, partners around the world are supporting the push on an ambitious IDA, and we need the World Bank to keep pushing on the issue of callable capital. Is there an update on that? [Ajay Banga] Yes. Maybe I should get Anshula because she’s the expert in this to explain it. Anshula [Kant], our CFO. [Anshula Kant] Who was it who asked the question? [Ajay Banga] It’s an online question. [Anshula Kant] Oh, okay. Yeah, thanks for that… [Ajay Banga] That’s the voice from God.
[Anshula Kant] Thanks for that question. We’ve been working together with other MDBs to see how we can bring, ascribe more value to the callable capital. And very recently, we’ve launched a new instrument called Enhance Callable Capital, which can actually... This capital can be called earlier than the regular callable capital to prevent a downgrade in our rating, and it can be leveraged to release more resources. So, it is being put to good use. We are now looking to our shareholders. They’ve approved the instrument. We are looking for them to commit to this new instrument which can enable enhanced capacity. And just to add, IDA does not have callable capital, it’s just IBRD which has the callable capital.
[Ajay Banga] The only thing I’ll add to that is the Board has approved the use of this instrument. The Board has approved the fact that it can be leveraged the way other IBRD capital is leveraged, which is all excellent. The reality is the countries that have got this opportunity to put Enhanced Callable Capital to work have to get approval from their system. In some cases, that might require approvals from their parliament or congress and go through their budgetary process. That’s It’s actually not that different from any other capital to come in. If it doesn’t, then it’ll be easier. I’m not quite sure where this will go. I’m not sure it’s a slam dunk yet. It’s hard, but the instrument is ready, and now we’ve got to see what comes in from shareholders.
[Anshula Kant] Ajay, just if I may add, it does not require additional resource contribution. It’s repurposing the existing resources. Yes. [Ajay Banga] Am I wrong that it might need a? [Anshula Kant] You are absolutely right.
[Rose Kimeu Craigue] We’ll take the next question from the lady with a yellow hat. Yes. Please, move the mic very quickly.
[Nia Khan] Thank you very much for this. My name is Nia Khan. I’m the CEO for a Pan-African organization that’s based in Kenya. We do women… [Ajay Banga] Another Kenyan? [Nia Khan] Yes. [Ajay Banga] All right. [Rose Kimeu Craigue] I didn’t recognize her… [Nia Khan] Yes. We do women economic empowerment. [Ajay Banga] You were all here because Rose personally invited you. [Nia Khan] Yeah, we work a lot in inclusive policy, formulation, and realignments. Women, youth, and SMEs, economic empowerment, because these are key drivers of our economy. My question to you, Mr. Ajay, is this, and it’s a question and a proposal, too. This is a Townhall with civil society, which means you want to partner with us. Now, I would like to either ask if you have a framework or propose that you have a framework where you organize for our inputs in your strategy that you want to implement in national and regional-focused strategy so that you have our voices inside there. It is more focused, efficient, and gives you the intended outcomes, not unintended outcomes, even if they’re positive. And then, the other thing that I’d like to ask is how you would include civil society’s voice in the creation of some of the blueprints that you’re creating for our nation, especially when you’re looking at all the infrastructure, energy, projects, education, and their effects, so that you’re having proactive inputs on what those effects would have on community, on livelihoods, and on engagement of the people? Thank you.
[Ajay Banga] Thank you. First of all, I think the place where this engagement is best organized is through the construction of that Country Partnership Framework. This document inside the Bank, across the institution, is used as the way for the next, normally three years, but Anna is on a journey to make it five years, at least. In some countries, she’s going as far as 10. I’m not sure what the right answer is in each country because you may need to change it along the way if things change. But a longer term seems a little better than a shorter term because it’s meant to be a strategic document of intent of where should our focus areas go? I’m trying to connect the knowledge bank experts into that as well. If we are talking about focusing on education in a country, and let’s say what we’re really talking about is skilling as compared to college education. I’m just picking a topic. I don’t know if that’s the right answer. Just picking a topic. Then we should have that discussion at that stage with others in the country who can be involved in that conversation. Currently, that discussion tends to happen with governments. We are saying to bring you guys in as well. Let me get Anna to tell you what she’s doing.
[Anna Bjerde] Thank you so much, and thank you for the interest. Let me just start by really thanking civil society organizations because you’re making a huge difference in the countries that you work and you help us do our work in a better way. I want to start by really thanking you. As Ajay described, there are certain processes dialogs that we’re in where civil society input is absolutely critical. Already today, there’s quite a bit of engagement on the preparation of the Country Partnership Framework, but now we want to improve this framework to be longer term, to be able to, one, address really pressing, difficult development challenges that take longer, and frankly, also are not necessarily aligned with political process because we don’t want them changed all the time because some development issues need that longevity; but they also need that regular check-in, which is why we need to be able to be adaptive and flexible. We already have civil society engagement on that, but I think we can do more. So, that’s my first point. My second point is that pretty much all of our instruments, whether it is an investment loan, whether it is a development policy loan, whether it’s program for results, our policies do include consultation with civil society, but I like to go a step further. Actually, we have now examples where we work with you on some of the really difficult issues we deal with. Let’s say it’s a grievance redress mechanism where we’re trying to reach a vulnerable group or a marginalized group that doesn’t necessarily feel comfortable using a grievance redress mechanism that’s in the system. We would like to partner. We have examples now in countries where we are partnering to have a civil society help us to actually encourage the safe use, if you will, the safety of the grievance redress mechanisms or the hot lines that we put in place for citizens to be able to engage with us in case there’s something that’s not going right on our projects. And the third thing I wanted to say, as Ajay pointed out, the scorecard does now have an indicator in our dashboard of the scorecard to make sure we measure the quality of engagement with civil society as well as citizens across the countries that we work in. But just to say, development takes more than one party. It takes everyone to make change, and civil society is a key partner for us in this endeavor. Thank you.
[Ajay Banga] From the IFC’s point of view. [Makhtar Diop] Thank you very much. Let me think first before talking about IFC, talk about my own experience. I was for 20 years at IBRD, and actually, I lived three years… [Ajay Banga] In Kenya. [Makhtar Diop] In Kenya. I lived in Kenya for three years. [Ajay Banga] I have my own hidden Kenyan now. I was telling him, he used to [unintelligible].
[Makhtar Diop] No, I lived in Kenya. So, what is this issue about Kibera, about civil society? I’m quite a bit familiar with that. It was a very long time ago. So, it seems it might have changed. But after that, I continued working on Africa. For six years, I was Vice President for Africa. First of all, engagement happened in country. I think that a big thing that we have been doing in shifting is engaging more national domestic civil society organizations. I thought personally, that it was important to have the voice of NGOs who are grounded in the country, which are having people of the country to give the sensitivity of the country on the topic. Otherwise, you have a very generic approach. That is something that is happening more and more often. Secondly, in my own experience, I’ve seen the values of engaging with you guys in Nairobi. I’ve seen an issue related to informal settlements, to an issue related to governance, and it helps to have difficult conversations, sometimes with authorities in some context. But you were next to us, and we did it together. I think this is what Ajay is talking to do more and more systematically, not to do it on an ad hoc basis and do it depending on individual. I think that for that we need your contribution. We need your contribution. Why? Because issues are complex to solve. Development is difficult. We talk about informal settlement. When we start talking about it, we see how complicated it is, but it means that you have to come and tell us what is the solution, and together we find the solution. I think the change of approach that Ajay is suggesting is that when a problem is before us, instead of you looking at it from your side and us from our side, together we say, this is a problem, what is your solution? And together we have. And you will realize that often we don’t think differently on the issues that we want to address issues. So, this is my take on it, on IFCs, we’re trying to do it.
[Ajay Banga] I think preferably do it at the time of the Country Partnership Framework. It’ll provide a really good structured way. I appreciate that question, ma’am. By the way, Anshula gave me, I was mistaken in the countries that contributed to the Livable Planet Fund. Two were correct, Japan and Germany. The other two were Denmark and Iceland. So, thank you for your correction, ma’am. Okay, what else?
[Rose Kimeu Craigue] Thank you, Ajay. So, we’ll take one question from the right. [Ajay Banga] These young kids, they’ve been looking at me since I entered. [Rose Kimeu Craigue] Yes. So, from the young kids, red jacket. [Ajay Banga] You’re part of the same team, right? [Yassin Fathali] Hello, everybody. Can I speak in Arabic? It would be easy for me if I can. [Rose Kimeu Craigue] Yes. Hold on. [Yassin Fathali] If it’s okay, I’d like to speak in Arabic, it might be easier for me. [Ajay Banga] This is much better than my... I think so.
[Yassin Fathali] Thank you. My name is Yassin Fathali from Tunisia. I represent the [unintelligible] Foundation. As we see wars continue to break out, especially conflicts in the Arab world and in Africa, and the challenges that they present in terms of security and in terms of the environment, how can you mitigate or limit poverty and empower youth and women in conflict areas such as Palestine, Yemen, and other areas in the region? Are there programs to contain and help youth and women in those conflict zones in the Arab world? What are the goals, development goals of the World Bank in those areas? Thank you for that.
[Ajay Banga] Essentially, just for everybody else, I’ll translate that back. Basically, the question was about conflict in different parts of the Arab world, and what can the Bank do to help both with women and young people, both, I guess, manage through that period, but also after. I’m going to let Anna again answer a little bit of this, but let me tell you what I think we are doing. The first part is our Board used to set aside a certain amount of money every year from our IBRD earning to put into Palestine. That used to be a number. This time, this year, they’ve put six times that number to help with the immediate issue of helping through the first current challenges. Our problem is we’re not a humanitarian organization, we are a development organization. So, the question is, what’s our role in that situation? What we are doing is we’ve put together a group of experts, Jordanians, Israelis, Palestinians, Egyptian, American, European. They’re working with Anna to deliver to us a report which should be ready in the coming month or two, which we will publicize. So, there’s no secrets. And that report will say if there is a secure piece on the ground, when and if, which I don’t know how to predict because it’s an ongoing unfolding situation every day. But if there a secure piece on the ground, what should the World Bank do in the first six months and in the first five years? Differently, because in the five years, we should be talking about investing in real development. What kind of development? To give you an example, which is in my mind all the time, there is no digital land ownership registry in Palestine. If people in Palestine cannot own property in their name, it is very difficult to create a living, breathing capitalist society in the future. Should the Bank in the next five years, focus a great deal of energy and attention to getting that done so that we facilitate the mindset of each Palestinian of the ownership of what is their asset and enable them to use that asset through a digitized registry to do something with it? Today, that does not exist. As one example, or are we better off devoting our energy to rebuilding schools, roads, and homes which have been devastated in this period. I don’t know the either/or, or both or what, but that’s the work we’re trying to do. Meanwhile, we, along with the UN and the EU, have made estimates of the loss and damage in these countries. We have done this for Ukraine, we’ve done it for Gaza, but our estimate is now six months old or longer. I don’t know what that number today would be, and I don’t know what the additional number in Lebanon would be. But at that time when we did it, it was between 14 and 15 billion dollars, roughly. That would be the cost of reconstructing what had already been damaged in Gaza. Anna?
[Anna Bjerde] No, that’s the question. Do you hear me okay? Yes. I think, Ajay, you said it very well. I think the reality is the world is increasingly fragile, and unfortunately, we are seeing an increase in the number of countries that are also in conflict. And what that has meant for us as an institution is that we have also, because we want to work with the most vulnerable, the poorest countries, we, of course, also have increased our focus and our assistance to those countries, but very much in line with the development mandate. Now, what does that mean? It means that first and foremost, very importantly, we remain engaged. Even when the situation gets difficult, we remain engaged. So, today we are engaged in Yemen. We have actually increased our support to Yemen, very much focused on making sure that we preserve what we call human capital. So, we focus a lot on education, health, and social safety nets, which by definition also targets women and girls, very much so. And we do this through existing projects, and we often do it by working with civil society and to some extent also UN agencies that are on the ground, but we also have a small presence in Yemen. In the case of Palestine and West Bank and Gaza, we have remained engaged. And as Ajay said, we are now increasing quite significantly our resources to be able to do much more because the needs are huge. We are continuing to do projects. We are continuing to support existing projects that focus on basic infrastructure, municipal development, human development sectors. And in the case of Gaza, we did choose to go through humanitarian agencies to provide immediate relief while we also set the stage for what we can do when it comes to more medium-term development. I think two things that stand out for the World Bank is also our knowledge work here. And these damage and needs assessments that we do for countries around the world are important because they keep an eye on what are the immediate needs and what is also the medium term needs to be able to recover, for countries to recover. Another piece of work that we do on the knowledge side, which many countries and donors and the international community appreciate this, that we never stop doing economic and social impact analysis to make sure that we actually have that set of data to be able to work with, and that’s something that I think the World Bank is quite unique in doing. I should also say that we are still engaged, it’s difficult, in Sudan with some very specific interventions through our country team and again, through partners that we can work with, whether it’s CSOs, international CSOs, working also alongside local CSOs, or indeed UN agencies, as well as to the extent we can our own teams. But the reality is this work will not stop for us. Fragility and conflict is something that is more and more pressing, and it’s important for us to be able to remain engaged, but ideally with a medium-term outlook to be able to reconcile it with our overall development mandate. Thank you.
[Ajay Banga] Last question. [Rose Kimeu Craigue] Yes, lady in a white blouse. Last question.
[Luisa Fernanda Gómez] Thank you so much for the space. Luisa Fernanda Gómez at the Center for International Environmental Law. In the last decade, there has been a rise in threats and murders against human rights, land, and environmental defenders. Unfortunately, rather than decreasing, violence has increased in the context of development projects, including those funded by the World Bank. In 2020, civil society welcomed the Bank’s public commitment against reprisals, but years has passed without the Bank fulfilling this commitment. The legal reality for defenders cannot wait. What actions is the World Bank taking to protect environmental defenders? It’s my question. Thank you.
[Ajay Banga] Anna, you want to talk about that? No, she’s talking about retaliation and reprisals. What are we doing to help against reprisals?
[Anna Bjerde] Thank you. So, inclusion and non-discrimination are pillars of our environmental and social framework. For us, if we find ourselves in a situation where our projects or our programs, our efforts cannot reach everyone, for us, that’s problematic. When we have problems on our projects, which from time to time we do, of exclusion, violence, we, of course, take measures. We look into it. Sometimes we have to suspend our projects or the financing our projects. Often it also involves referring, and maybe this is specifically to your question, it means referring, if it’s criminal cases, to also the domestic criminal procedures. That’s a partnership that we seek with the governments that we work with because at the end of the day, we finance projects, and actually our clients are in charge of implementing the projects with our support. But in the case of being able to follow through on any criminal cases there are, we are very alert and vigilant on identification of issues. We’re very open to hearing grievances to make sure we can take action. And then, the actual criminal follow-up or criminal case follow-up is referred to in the domestic criminal process.
[Ajay Banga] If you have other things you’d like to talk about, I got to go to another back-to-back. Why don’t you contact Anna and talk to her? Is that okay? Okay. Guys, thank you all very much. Thank you.
[Rose Kimeu Craigue] Thank you, colleagues. That’s all the time we have for today. But we hope you can join us in the ED Roundtable that’s going to be starting at 12:30. That’s another opportunity to ask questions and get answers. Thank you.
