Ajay Banga, President of World Bank Group.

Summary

In a captivating session organized by The Economic Club of Washington, D.C., Ajay Banga, the President of the World Bank Group, shared extensive insights into the operations of the organization and his transformative vision. Banga detailed the World Bank's history, unique structure, and its critical role in global development, especially in aiding the poorest countries. With a humorous yet earnest approach, Banga emphasized the importance of building long-term, sustainable solutions to global poverty through job creation and infrastructural development, particularly focusing on the needs of young populations in developing countries. He highlighted the World Bank’s commitment to climate change adaptation, energy accessibility, and the empowerment of women through financial inclusion. Banga’s leadership vision is clear: transforming the World Bank to focus more on development outcomes, particularly job creation, as a sustainable path out of poverty.

Highlights

• Ajay Banga humorously discussed his personal journey from the private sector to leading the World Bank. 😂
• He described the World Bank's multi-faceted approach in providing financial aid and promoting global development. 🌎
• Banga emphasized the integration of private sector investments to address development challenges. 💡
• He illuminated the complex structure of the World Bank and its different arms aiding global missions. 🏦
• Ajay Banga shared his commitment to improving institutional efficiency and execution. 🚀

Key Takeaways

• Ajay Banga is keen on transforming the World Bank to focus on job creation as a core solution to poverty. 🌍
• He is prioritizing long-term loans up to 50 years to help countries build sustainable infrastructures. 🏗️
• Collaboration with the private sector and other organizations is crucial for effective global development. 🤝
• Banga aims to streamline operations and reduce bureaucracy, focusing on efficient results. ⚙️
• The World Bank is increasingly focusing on climate change adaptation and energy accessibility, particularly in Africa. 🌿

Overview

Ajay Banga's tenure at the World Bank marks a phase of evolution and adaptation. Coming from a robust private sector background, leading giant corporations like MasterCard, Banga brings a pragmatic approach to global development issues. His humor-laden discussion at The Economic Club touched upon various crucial aspects of the World Bank's operations, its foundational history post World War II, and its current missions. He highlighted how this global institution functions economically responsibly, covering its administrative costs from loan interests while securing grants for the world's poorest via taxpayer funding.

Banga's strategy at the helm of the World Bank revolves around fostering sustainable growth by heavily investing in human capital. Particularly, he aims at bolstering the youth and their employment opportunities across developing nations, viewing this demographic bulge not as a challenge, but a potential dividend for future growth. By committing the World Bank to focus sharply on job creation initiatives, Ajay Banga seeks to curb poverty by creating economic opportunities that empower communities, thereby enabling human welfare intertwined with economic vitality.

Another defining aspect of Banga’s leadership is the Bank's increased orientation towards climate change action and energy accessibility. He aims to tackle the pressing issues by expanding the reach of basic utilities and infrastructure to underserved regions, particularly in Africa, aiming for 300 million people connected to electricity by 2030. His forward-thinking vision involves creating an impactful change, breaking away from the traditional approach, and daringly proposing nuclear energy discussions as part of the climate agenda. Banga is determined to propound a future where strategic thinking, collaborative ventures, and ambitious projects carve a roadmap to sustainable development.

Chapters

• 00:00 - 00:30: Introduction to Ajay Banga and the World Bank This chapter introduces Ajay Banga, the president of the World Bank, and touches upon the purpose and function of the World Bank organization.
• 00:30 - 05:30: Overview of World Bank's Structure The chapter begins with a humorous exchange, with the speaker expressing mock disappointment at not being invited to a 40th anniversary event, a joke made to someone named David, with whom the speaker shares a personal and humorous rapport. The main focus then shifts to discussing the World Bank, highlighting that it comprises five units. Specifically, the chapter notes that the International Bank of Reconstruction and Development (IBRD) was the first unit created within the World Bank.
• 05:30 - 10:00: World Bank's Financing and Governance The chapter discusses the origins of the World Bank, which was established during the Breton Woods conference after World War II. The initial focus was on reconstructing Europe and Japan. However, there was significant debate on whether 'development' should be included in the institution's mission. Eventually, it was decided that the bank's mission would extend beyond mere reconstruction, leading to the establishment of additional arms like Ida.
• 10:00 - 15:30: Differences between World Bank and IMF The chapter discusses the roles and contributions of different arms within the World Bank and how they differ from the International Monetary Fund (IMF). It highlights the International Development Association (IDA), a World Bank arm focused on the poorest countries, and notes countries like South Korea, China, India, and Turkey that were once beneficiaries but have since developed. It also mentions the International Finance Corporation (IFC), which collaborates with the private sector to promote private investment.
• 15:30 - 21:00: Ajay Banga's Background and Career Ajay Banga has a diverse background and career, having worked with insurance and investment guarantee agencies such as migga. migga focuses on providing political risk insurance among other services, which benefits individuals involved in investments in foreign countries. In the domain of investment disputes, migga also provides settlement services through arbitration. This chapter explores these facets of Banga's career, highlighting his involvement with acronyms-filled environments and handling of sovereign investment disputes.
• 21:00 - 30:30: Challenges in Global Development and Youth Employment The World Bank, established after World War II, now undertakes a wide array of missions. It lends around $120 billion annually across its five units. The International Development Association (IDA), a part of the World Bank, provides a combination of grants and concessional or lower-priced loans to the poorest countries. Approximately one-third of the IDA's contributions are pure grants. Moreover, the World Bank employs around 25,000 full-time staff members.
• 30:30 - 37:00: Addressing Global Inequalities and Infrastructure The chapter discusses the structure and function of a major international organization based in Washington DC, which is involved in managing global inequalities and infrastructure. It mentions the organization's unique governance structure, comparing it to a 'Rube Goldberg' design due to its complexity and possibly inefficient setup. The chapter hints at the challenging aspects of managing and distributing capital among member countries, particularly in the context of institutions like the International Bank for Reconstruction and Development (IBRD).
• 37:00 - 45:00: Climate Change and Energy Policies at the World Bank The chapter discusses how the World Bank finances its operations and supports energy policies, especially in the context of climate change. It highlights the fact that the World Bank earns revenue through the interest on loans provided to developing countries, which covers its administrative expenses. Meanwhile, the International Development Association (IDA) part of the Bank relies on taxpayer funding to provide financial support to the poorest countries, which involves grants rather than loans. This taxpayer funding is essential to help these nations develop sustainably, especially in terms of addressing climate change challenges.
• 45:00 - 54:00: World Bank Loan Processes and Timelines The chapter begins by discussing the structure of the World Bank, particularly the involvement of governments who invest money and desire insight into the operations. It explains that the World Bank has 25 full-time executive directors based in Washington D.C. These directors may represent individual countries or groups of countries, based on their capital contribution. Additionally, the chapter touches on historical context post-World War II, mentioning the formation of two major financial organizations: the International Monetary Fund (IMF) and the World Bank, and highlights an unspoken rule between them.
• 54:00 - 66:00: Personal Reflections and Leadership Approach of Ajay Banga The chapter delves into the traditional practice of selecting leaders for major global financial institutions, specifically focusing on the International Monetary Fund (IMF) and the World Bank. Despite their different purposes, there is a notable tradition where the IMF head is picked predominantly by European countries, whereas the head of the World Bank is chosen by the President of the United States, subject to board approval. Historically, it has been observed that American presidents have been able to select their preferred candidates for the World Bank leadership. The chapter touches upon the distinct roles and purposes of these institutions but hints at potential areas of collaboration or connection between them.
• 66:00 - 78:00: Future Directions and Goals for the World Bank The chapter discusses the importance of collaboration and partnership on the ground to effectively support client countries. It emphasizes that global challenges are too significant to be addressed in isolation, highlighting the need for integrated efforts. The narrative positions the IMF's focus on macroeconomic factors such as foreign exchange, market financing, and credit default swaps, while also implying the complementary roles of different entities in tackling these global issues.
• 78:00 - 87:00: Audience Q&A and Closing Remarks The chapter titled 'Audience Q&A and Closing Remarks' features discussions on long-term loans provided by a bank described in the transcript. The loan terms range from 20 to 50 years, with special emphasis on the 50-year loans which were recently approved by the board after the speaker arrived. A light-hearted exchange is shared among attendees regarding the length of the loan, humorously noting that recipients must live long enough to enjoy them.

Ajay Banga, President of World Bank Group. Transcription

• 00:00 - 00:30 [Music] so our special guest today is the president of the World Bank uh AJ banga thank you very much for being here pleasure to be so for those people that might be unfamiliar with the World Bank what exactly is the World Bank
• 00:30 - 01:00 what a way to start by the way thank you for not inviting me to your 40th anniversary but I won't take that personally it hasn't happened yet but uh you might be a special guest there too I'm just kidding David and I have known each other some years and I'm very well prepared for his sense of humor so okay um the World Bank David has uh five units in it the first unit that was created was the International Bank of reconstruction and development ibrd uh
• 01:00 - 01:30 and that was what was created during the Breton Woods conference that we spoke of this was in after World War II this was set up largely I thought to to reconstruct Europe and Japan reconstruct Europe and so there was a big debate on the topic of should development be added to the name or not because it was reconstruction that was the primary focus and eventually the founding 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 part of the bank that got created was Ida the
• 01:30 - 02:00 International Development Association that caters to the poorest countries in the world 78 of them currently but in history you know South Korea was a recipient of Ida China was a recipient of Ida India yes so you know Turkey these are countries that have now prospered and grown but both ibr and IA constitute 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
• 02:00 - 02:30 Along Came migga which is the insurance guarantee agency which provides you know political Risk insurance and other such insurances for people like us in our old lives investing in countries and then the fifth part of it is called exit there plenty of acronyms in the bank by the way there's a vice president of acronyms hiding somewhere in the bank right but but the the exit basically is a settlement of investment disputes so again in our old lives if you had a dispute with the Sovereign that's where you would come too far arbitration and
• 02:30 - 03:00 settlement those are the five units put together we do about 120 billion of lending in a year across the five Ida provides grants onethird of what it gives is pure grants to the poorest countries the others are all concessional or priced loans all right so the World Bank created after World War II now has many different missions um you say you lend out about $120 billion dollar a year give or take yeah okay and how many employees do you have 4 ,000 25,000 full-time employees and
• 03:00 - 03:30 about 15,000 who come and go depending on what's going on and it's headquartered in Washington DC headquarter in Washington DC not far from you and it has a very unusual governance structure um I don't know who set that up but uh what is the who came up with that idea of rub Goldberg or somebody how does that work well if you were if you were countries contributing capital and money in the case of ibrd and FC Capital comes once
• 03:30 - 04:00 in a while we the bank just one thing you should know the bank earns money on the loans it gives to develop buying to 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 it is reliant on taxpayer funding for Ida because the poorest countries because they give away money to them uh every you know third every year that needs money the way therefore taxpayers are
• 04:00 - 04:30 involved with this whole thing and I think governments basically said that if they're going to be putting money into this we'd like to have some insight into it that created the structure where there are 25 executive directors full-time who sit here in Washington 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 now the tradition as I understand is there are two organizations set up after World War II one is the IMF the international monetary fund and one is the World Bank and there's an unspoken I guess rule or
• 04:30 - 05:00 tradition that the IMF um head is picked more or less by Europe and the um head of the World Bank is more or less picked by the president of United States and then ultimately approved by the board but it's always been the case that the American president's gotten who they wanted so forth so um the World Bank and the IMF you have nothing to do with each other or you kind of uh work with each other or there just completely different purposes I mean the purposes are different but when you put them together
• 05:00 - 05:30 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 on the ground I mean the challenges in the in the world system David are too big for people to create silos and try and solve them by themselves so 2 plus 2 is equal to five in this case so what the IMF focuses on is macro and 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
• 05:30 - 06:00 and do is actually develop it we're truly a bank so we give longer term money our loans are anywhere from 20 to 50 years in length the 50 year loans that's a long loan so the ibrd after I came I got our board to approve 50e loans for things can I get one of those 50y year loans I'd like to get one of those absolutely although you'll have to be around to enjoy [Laughter] it so so you and I won't be around buddy that long so so uh the 50y loan it's actually a really good point the 50y
• 06:00 - 06:30 loan was designed to cater to things that you you know if you think about a country trying to invest in its health care 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 10 and 20 years these things take longer to payback so the idea was to take the Yoke of a short-term payback issue off the neck of countries and enable them to think longer term about these kinds of public goods but the
• 06:30 - 07:00 presumption is by an average person I say in the United States is that these loans don't get repaid all that much the truth is most of them do get repaid oh not just most 99 something per. so over the course of the existence of the World Bank group the whole five units you know you've given out about a trillion and a half plus of loans over this period our loans in nonacral effectively non-paid are about 2 and a half billion out of that out of which a billion is Belarus
• 07:00 - 07:30 that stopped paying after the Ukraine War Began about a billion is Zimbabwe which is a country which is quite severely challenged and about 15 odd million is Syria which had not repaid before things went belly up so um let's talk about uh how you get to be the head of the World Bank um I have no idea so I most I still don't know why I'm here but I am most of the people who trying to do a good job every day for presen United States uh more or less
• 07:30 - 08:00 recommend to the Board of Governors I guess it is of the World Bank and every time that President United States has recommended somebody that person has been approved sometimes a little more uh delayed but got approved um so um you are appointed by a President of United States or recommended your board approved you but what were you doing before I mean how do you get qualified to be the head of the World Bank as I said I have no idea my my background as you know well we've known each other some years is that I'm a private sector guy I
• 08:00 - 08:30 grew up in India and joined Nestle worked there for a few years ended up at Pepsi for a couple of years joined City Bank and have a couple of City Bank colleagues here as well I worked there for 14 years and ended up running all of Asia during the financial crisis and then quit and became the CEO of MasterCard for the next 12 to 13 years and then for a year thought I had retired and was doing things in private Equity essentially retired for making more money than when I was actually working um and so what's difference between MasterCard and Visa is there
• 08:30 - 09:00 really a difference between the two of them absolutely MasterCard is the much better comp really yeah and it and it doesn't have four letters it's fantastic really okay um what about American expresses how was that that also has four letters but it's a good company too all right so you're mining your own business you're running MasterCard and all a funny story about full eras in the old marketing and branding World a brand with four letters is SE to be easier to communicate to people so Coca-Cola became Coke for that reason and and I
• 09:00 - 09:30 think there's a lot of value in shorter brand names but that's got nothing to do with so why didn't you shorten MasterCard then yeah I couldn't think of anything to call it okay all right so you're minding your own business 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 and you said no it actually didn't work that way Master Card said I was there those 12 years we you and I have discussed this I was very lucky I had a great run I joined when a year after the IPO and the firm was about 20 billion in in in valuation I left at 360 it's now at about 500 plus
• 09:30 - 10:00 so the company is doing well it's in a great spot and well-run and scaled over the years I had told my board that I would give them 10 years I joined at 50 and at 60 I wanted to think of something else to do my life as it turned out at was 12 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 uh the Fiat family's holding company exor and joined
• 10:00 - 10:30 the B of task and I had this portfolio approach to my life until I got called in February of 2023 and then in few days later they announced that I was the candidate and then so U the company Master Card was worth 10 billion dollar when you 20 20 billion something went to 300 360 and did you get 20% of the profits of that that's why I said now when I started working at private Equity I understood I made a mistake done that okay okay so now you're the head of the World Bank um and the the approval
• 10:30 - 11:00 process is the president recommends you and then the Board of Governors has approved you yes so essentially there were 90 days between the recommendation and the election right and I spent that period traveling and visiting almost 93 country leaders and csos and companies and and then they have to get together and vote I got all the votes other than an exstension from Russia at that time so in the long history of the World Bank you're the only person who's been the president who came from a developing country is that right uh um yeah probably true I haven't
• 11:00 - 11:30 thought of it that way but that's probably true okay I'm just going back in names yeah all right so unless you would think of Australia as a developing country uh which which Kevin might disagree with so when you're um all right so when you you take over the world Bank um and the best and that's one of the best titles in the world you know uh president of the World Bank that's a great title so um I mean I think founder and something else of car is a Bad Thing Grand Puba of Kal is a great title
• 11:30 - 12:00 resent World bank's a great title so what did you do your first year you run around the world um and and pretty much and you say here's I gotta you know you're you're you know you have to get to know a lot of people but you you know 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 that a big culture shock no no so this is that's a great question so even in MasterCard remember my business was growing in all kinds of locations you end up going going to developing and developed countries
• 12:00 - 12:30 that's kind of where the future and the current are the difference is what you go in with as a perspective and whom you meet and the circumstances you're dealing with so I've spent the last I've been there almost two years I've made 50 our trips overseas I would say I make 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
• 12:30 - 13:00 sure that you can help to understand what they're looking for and you answer what they think you could be doing is kind of important in this job then there's the issue of your real clients the borrowing countries and who you got to meet there and that takes up a lot of your time and it's the combination of the two that I'm trying to do it is a different experience 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 development in countries on young people and their
• 13:00 - 13:30 future and I would love to talk about that all right well let's talk about it so what is the problem with young people in their Futures that you're trying to address 1.2 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 12 to 15 years most people think of this over the history of development when you get this kind of a demographic bulge they call it
• 13:30 - 14:00 a demographic dividend and that is true if these people get clean air clean water Education Health Care when they're growing up Skilling and once they grown they should get a chance to get a job either a small firm or a big firm or an entrepreneur or something because that if that doesn't happen these young people now are without hope and without optimism and without earnings if our business is to eliminate poverty you cannot eliminate poverty just by building school or a bridge or an
• 14:00 - 14:30 airport that's important their inputs the output of eliminating poverty the single best way to do it is earnings 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 you dignity and gives you earning and I'm just very convinced I'm just I'm just very convinced that this young population can be The Driver of growth for all our
• 14:30 - 15:00 Western companies and our children and our grandchildren if we get them productive employment with the dignity that that brings and I'm trying to make the bank Focus From the inputs are important that's how we deliver but what I really want to get to is the output of creating hope and opportunity for Young People by the way that reduces illegal immigration which I think will tear our societies apart it creates opportunities for our firms in those countries it does a lot of things in the right direction so the gap between the developed Market
• 15:00 - 15:30 Youth and the undeveloped market now called maybe the global South by some uh is getting bigger not smaller isn't the gap between opportunities in other words um for example during covid we saw that the um Global South had a hard time getting the vaccines yes and they also don't have access to Internet as much as um maybe people in the developed markets do so how are you trying to bridge this Gap great question so I mean look you know opportunities are not everywhere but Talent is the problem is the past
• 15:30 - 16:00 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 my my 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 whether it's Bridges roads airports schools Healthcare electricity digital connections that you that thing then you need to have the right regulatory policies uh and labor
• 16:00 - 16:30 bankruptcy law anti-corruption some concept of what electricity will cost and get paid that you will get paid back laws in the system right kind of governance that's the second pillar the third pillar is to allow the private sector which basically creates jobs government doesn't create jobs government is the enabler of the private sector to do so TR from small businesses and small farmers all the way to companies that they are active with you got to get those three pillars in place that's what I'm working on ibrd and Ida are my two public seor seor arms that work on that infrastructure part we have
• 16:30 - 17:00 What's called the knowledge bank which to me is even more important than the money Bank we've got really talented people who understand and through sh experience of being on the ground have seen regulations and policies we help governments put them together we put our money to work against them we do what's called pay for results meaning you can you make these policy changes and we will help you with budgetary support and then the last part is IFC Mega that can create the environment for that private sector not alone but that's what I can
• 17:00 - 17:30 do so many of your predecessors have said that the uh bureaucracy in the World Bank is unbelievable and as a result they often reorganize the World Bank and every new president of the World Bank reorganizes are you reorganizing or you just accept what it is and just dealing with other things 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'm not I don't believe in driving a car by
• 17:30 - 18:00 looking in the rear view mirror I'm focused in 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 to have one country plan which is co- synchronous you have to have One Direction which is I'm going to do these jobs you have to have 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 and needs to come to three parts of the bank to get their loan and go through three project management systems and three due
• 18:00 - 18:30 diligence systems and three environmental and safety scare and they will go crazy if they had so many people to deal with us they wouldn't be in the condition they're in right so we have to turn from you can call it bureaucracy you can call it processes and systems built by years of experience that's yesterday I'm just focused on tomorrow okay so today um the World Bank has how many employees total 25,000 full-time 15 you're getting you're forgetting things are you asking I want to I got to help
• 18:30 - 19:00 you with this no so full-time have 40,000 25,000 full 25,000 and parttime is Consultants 15,000 okay and but it has an unusual structure which is that you have people who are on the board but they also work there isn't that unusual they work there in the sense they're full-time uh in the in the institution they don't work there as in they're not helping us either Implement projects or design them on the ground in countries they're part of the governance system
• 19:00 - 19:30 they represent their countries or their shareholders to ensure that their shareholders interests are available here the shareholding is important the United States is 177% of the ibrd which is the mothership uh the the uh EU put together is about 22 odd per but they don't operate together the Japanese are 7 odd perc the Chinese are five and that's the mix of show so um each is that every three years you have to go get replenishment of your capital for Ida not only for Ida for the part of the
• 19:30 - 20:00 institution that goes to the poorest countries remember we give away those grants there but you go to each of the major countries that are the provider providers of the capital and you ask them for money and they usually get you get what you want usually well get what you want as an interesting topic what you want is you know the demands from these client countries are obviously much higher than what we can Finance or frankly that they have the capacity to do this is not just about money being available on the ground you have to have capacity to execute projects that'll be
• 20:00 - 20:30 done well against that money it's kind you're trying to you're trying to do that titration to get the mix right now historically there's one thing David you should you should know on this money if ibrd gets a dollar of capital ibrd gets Capital last Capital injection to IB was 2018 but because we're profitable as an institution we keep adding to retained earnings the most important thing is we have a AAA rating and therefore we can take that Capital base and leverage it in the case of ibrd 10 times from the bond markets and that
• 20:30 - 21:00 enables us to have a multiplier effect on what we do in the case of Ida the one that goes to poorest countries that Leverage is only four because the denominator is smaller you're giving away onethird of the money so you can only leverage what's left that's the now historically uh at least in the last couple years the World Bank has been focused a bit on climate change um today the Zeitgeist in Washington is not as favorable for that phrase perhaps so how has the the World Bank adapted to that
• 21:00 - 21:30 change good question so i' 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 45% of our financing every year going to what qualifies in the world is climate financing when I joined by the way my successor had done a Terri job and already got it past 30 which was
• 21:30 - 22:00 the commitment he had made but he was past 30 so I kind of said I think we can get to this 45 but what's inside it half of it is designed to go for what you would call resiliency or adaptation which is you know heat resistant varieties of seeds drip irrigation a school roof painted white not left red tin so it's 8 deg cooler inside you know a road that doesn't wash away in a monsoon and a school that's Hurrican resistant that's actually what our clients want because they're dealing
• 22:00 - 22:30 with this they want to invest in education but they don't want the school to get washed away they want to invest 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 world too that's one part of it the other half which we trying to do is what you would call mitigation 5% of that 22 and a half% of that half is what goes to energy we every Every Spring and October
• 22:30 - 23:00 meeting I get demonstrations outside the bank with my portrait on an oil barrel calling me the fossil fuel guy which is interesting because of that 5% 1% goes to natural gas and financing for it 4% goes to Renewables but the other 17 and a half% is to do what build a rail Corridor in Africa called lito so instead of transporting goods by truck you're doing it by rail which is ecologically more friendly when you go
• 23:00 - 23:30 on the Am track here you hear them telling you how much you saved versus the flight you could have taken same idea so once you explain this to folks you get a very different understanding of what we're actually trying to do with climate and even in energy we financing all of the above if you know what I mean I'm the one thing we don't do is cold 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 uh small nuclear reactors
• 23:30 - 24:00 could be transformative and safe and a great way to get to renewable energy for data centers and Ai and well the World Bank traditionally was not in favor of financing nuclear and you're now changing that actually the World Bank had a specific policy of not financing it's a board policy they got passed I raised it I didn't kind of make too much progress in the first meeting because people went off into their camps but the good news is the board has come together and said they're willing to discuss they told me then come back by June next year with a thoughtful policy that lays out
• 24:00 - 24:30 everything from gas to nuclear to geothermal to hydro to solar and wind and help us understand the context of energy and the context of the country the idea David is Affordable accessible energy I mean just like I said that poverty is a state of mind not just an in and a state of being electricity is a human right we just need to understand that there's 600 million people in Africa with no elex 600 million not brown outs and blackouts
• 24:30 - 25:00 no elex I have said we will reach 300 million of them in partnership with the African Development Bank by 2030 with affordable accessible electricity enough for them to not just get two lanterns from a solar cell but to actually get what you call tier three electricity which is productive use computers start a little business in your house that kind of thing I you're not going to do that by thinking like yes you have to change that Paradigm and that's the kind
• 25:00 - 25:30 of thing that I think is really important affordable accessible lity you can't do that by saying I won't Finance the grid because it's connected to natural gas that's bunk well you got to do it somebody wants to get a a borrow money from the World Bank how long does it typically take from some the time a country might propose it till the World Bank approves it and do you have to approve every single major loan yourself great oh God I hope not so so uh one of the things I tried to work on is
• 25:30 - 26:00 speed and efficiency in the bank it used to take us 19 months on the average to go from a conversation beginning with the country to actual approval by the board and I said I'd bring it down to 12 months by middle of 25 which is two years in we're at 14 right now I don't know if I'll get to 12 but I had no scientific factor to choose 12 12 was just one of those things you put out there we're going to try to get there what has happened inside the 14 is there are loans that are now being improved in 30 days which are more repetitive and
• 26:00 - 26:30 then there are loans like a hydroelectric power plant which frankly should take 3 years because the the implications of how you construct that and what you do with the communities you displace and the lands you use are pretty serious and so inside this mix of 14 months are now loans that are getting approved in 30 days and loans that are getting approved in three years making the right progress right direction how do you compare the satisfaction you're getting out of doing this compared to MasterCard or chano Atlantic or or uh
• 26:30 - 27:00 Pepsi or this more satisfying or I mean you know there's a time in life for everything 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 don't want to be an armchair critic D I've never had saying an armchairs but I don't want be an armchair critic I want to be able to look my grandchildren in the eye and said I tried and I'm tried you have any grandchildren yet three
• 27:00 - 27:30 three okay and do they are they interested in World Bank or anything like that at the age of one month one year and three years they think like you know the World Bank is their future for mankind okay so um let's go back to your background what city did you grow up in my kids by the way had no idea what the World Bank was when I first told them they were like what are you talking about Dad what's the World Bank I thought you worked at City Bank and MasterCard what's this how many how many children you have I got two girls two girls okay and they're not interested in the World Bank that much they're interested in the world bank because I'm
• 27:30 - 28:00 there they're not interested in the World Bank per se okay so um that by the way is one of the interesting issues I believe that I want to start a program which I'm 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 a undergrad and a postgrad and give them a chance to come work with us for a couple of years in a country where we're doing real work 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
• 28:00 - 28:30 we're doing there and let them come back with a better appreciation of why the World Bank is important for them otherwise you create a disconnect between this generation and guys the best way to get an approval of a loan from the World Bank is if to go top down where that somebody meets with you and then you tell your people look at this or is it bottom up and no so the best way to get a connection at a country level we're doing this the Argentinian Ambassador is here I I've been meeting his president and his Finance Minister since the time he first got elected and
• 28:30 - 29:00 at that time his policies were thought to be very radical and the the Ambassador will tell you that I was the guy who went and told him if he keep doing the same thing and hope that Argentina will change that won't happen I think you're on to something and I'll back you the first thing he asked was would find a way to make his loans net positive flow that year because they weren't they were paying us back more than they were getting from us we've reworked all the loans to make that possible now we're in the midst of
• 29:00 - 29:30 Designing a whole new financing package with them because I think they're on a role now that conversation happens at the C most level with me and I put my weight behind what I want to do there there or in in Egypt a little while ago or in Turkey when erdogan and Meed ssek began to rework but the actual work or which project in Argentina is the best one to do that that his Finance Minister and his government will work with my team on the ground to make that decision I'm not even qualified to decide that well enough I can decide that this makes
• 29:30 - 30:00 sense to put some weight into Argentina that I'm committed to so I oberved over the years that the head of the World Bank gets to go sometimes to the G20 meetings with all the heads of state and the Prime Minister and so forth what is that like is that fun or actually not that interesting what do you think um depends on uh what role they give you but I don't know I guess uh I guess it's probably okay you enoy okay so now what's city did you grow up in in in U
• 30:00 - 30:30 India so David I was born in Pune that my dad was in the Army so we kind of moved every couple of years born in Pune and lived all over India and ended up finishing from a wealthy family or you were not a middle class would be the best way to describe an army guy in India all right so all right so you are a Sheik yes and for those who aren't familiar with that can you describe what that is there's one more here okay and so I'm actually glad to see one more in the audience watching on television or elsewhere uh it's a religion that's
• 30:30 - 31:00 close 400 OD years old it was founded uh in those days undivided India as an offshoot of uh many religions put together it it basically is uh it operates through a holy book there were 10 gurus but when the 10th Guru died he basically said You shall not have other gurus you shall have the holy book bit like a Torah uh the most important aspect of the secret religion that matters to me is that in the first few paragraphs of the holy book are two
• 31:00 - 31:30 things that I believe my life is important with the first one is that there is only one God and that God is truth and the second one is that you reward Yourself by serving others not a bad way to do all right so um but siks often have U the kind of head the paraphernalia yes is that hard to put on the paraphernalia is a good point it was uh there were five symbols of the seek religion that got carried forward and one of those is hair one of those is this beautiful bracelet which all these were designed during Warrior
• 31:30 - 32:00 and War times they were designed for that just you know this is very useful to open a beer bottle if you try hard I can't really kill you with this these days right and then there's a a a sword that you would carry which I don't carry because I know I'll probably get arrested every 3 minutes which is I don't want I don't look good in an orange jumpsuit that I figured out some years ago but is that hard to to get that every day that thing done oh yeah five minutes of time it's uh this takes me 5 minutes the beard and angle because I keep it long and I don't cut it it
• 32:00 - 32:30 takes another 10 15 minutes so so I do I can't get up and run off to a meeting the way you would looking unshaven and unkempt I have to kind of look like a decent guy but do you ever want to just say I want to just walk around and not have anybody look at me so I'm a seek I'm just gonna do something different that ever happen so I I I tell you what I view this difference as actually an asset I have spent years of travel overseas meeting people who ask me who I am and why I look like this I've made
• 32:30 - 33:00 friends in that process even today I have at least 15 or 20 friends across the world who write to me that I met randomly at an airport or at a train station asking me about my religion so I'm perfectly comfortable you know life is not about what you look like or where you came from life is about what you do and how you do it that's all I care about I'm very relaxed for okay all right so um today uh what your main uh Mission at
• 33:00 - 33:30 the world bank today as you go forward is to make some of the change you've talked about but how would you measure your success let's suppose somebody says after a number of years or so uh here's what you did how would you measure your success what is your standard so somebody asked me this question when I was new actually Froman at the CFR right and my answer was I'm really what what would your legacy be differently worded and I said I want to be called the ultimate plumber I fix the
• 33:30 - 34:00 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 other multilateral Banks because together 1+ 1 is equal to three whether it is the partnership with the private sector which I'm cultivating very
• 34:00 - 34:30 carefully I just believe there isn't enough money in the MDB and government world to do it you need the private sector 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 we used to have in our corporate scorecard 155 items to measure I brought that down down to 22 I put it on a web you can click on each of
• 34:30 - 35:00 those it'll click you down to individual projects to see how the project is doing Vis A what we said we would do 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 than just a point of time and I am committed to that as what I'm trying to do I'm trying to fix the the way it works so that it's the ultimate vehicle of growth for this jobs idea jobs is what I want to be seen
• 35:00 - 35:30 as the transition of the bank for I want to move this Bank from 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 that's what I going do so how do you relate to the Congress of the United States they approve money I guess for you yes time the time every year on that Ida part every year and it's fun going up and talking to the members of the Congress are not so much it's as much fun in
• 35:30 - 36:00 going regularly to G20 and G7 meetings right same same type of fun the reality is you know I I view this as it is taxpayer money and therefore that's their responsibility and it's not my Birthright and so I've had this belief long back you engage some people will agree with you some won't but so long as you engage with respect you will more or less get people to back you and I've been trying to do that from the day I came in here and just what I do is I talk to them about why is it important
• 36:00 - 36:30 that the bank is useful what is it doing and I don't think governments do charity I think governments do National interest and I'm a Believer in that I don't think we should be talking about charity this is not charity charity I'm not a charity bank that's the development there are lots of humanitarian organizations and the government can decide how much of it budget in any country it wants to put into that I'm a Development Bank my job is to provide equity and Loans in an effort to create the right environment an opportunity for those jobs so I have
• 36:30 - 37:00 no problem explaining that and talking about it 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 that they say mostly they say oh wow right and then I said don't say over word do you know what I do and they say not really and then you kind of explain what the bank does and these five things people I mean that's you have to have a business card says president of World Bank or they know who you are you don't need a business card actually I do would you like you have a business card yeah yeah wow okay wow okay president of World Bank
• 37:00 - 37:30 great it's a great business card um so what is your family say you you're making a fair amount of money you're running MasterCard then you're General Atlantic and then all of a sudden you go cold turkey and you make I assume a lot less money now I forgot how much less but you don't care I I spend way beyond that to be able to live in this beautiful city so that the my family think I'm a dumb cluck probably in the beginning but at the end of the day once they understood what I was getting up to I have nothing but support from them my
• 37:30 - 38:00 sons-in-laws both of them who were you know born here natur American citizens and a Jewish kid and an Irish Catholic kid I mean that their families my kids the amount of encouragement I get from them for what I'm doing is amazing wow that's yeah when you're grandchildren they're part Sheik part Jewish and really smart right yeah I mean well the the the the the smart we can discuss where where the smart part came from but
• 38:00 - 38:30 you know so um now are your are your parents did your parents live to see your No so I lost my uh my mom died about eight or nine years ago at the age of 93 my dad passed away a few years before that so that was before they were I was at MasterCard when both of them passed away and you have siblings I have a brother who lives in London and a sister who lives in Houston are they impressed that you're the head of the World Bank or they tell people that your brothers their brothers had the World Bank
• 38:30 - 39:00 they're both Elder than me so a little difficult to say they're impressed with their younger brat who's now 65 years old but my I have a terrific my my brother and I have gone through the corporate careers together I think of him as a true role model and he's done an amazing job Not only was he at youa and then Clayton duilia rice for M for a long time but he also does a lot of work with the UK government on managing their Investments through their Treasury and other places is Big philanthropist he's not like you but he's not the president
• 39:00 - 39:30 of the World Bank anything not he's not so um if you were starting the World Bank over it again the noo how would you change the structure how would you change what it does yeah I think if I had to land from Mars and start again one I probably would think very carefully about how to create a much more common balance sheet their legal Vehicles create enormous complexities and I would find it because at the end of the day clients one solutions that cut across the different things we can offer finding a way to make that simpler
• 39:30 - 40:00 is what I'm doing trying to do today I would probably have done a lot more work on that the second thing I'm trying to do which I would have done in starting is to move more people out of Washington DC closer to the clients so for example regional vice presidents are currently based here we have announced that we're going to move them out into the regions closer to their CLI is that popular U I have no idea but we're doing it and so because I just believe believe that that uh if you're going to be 15 hours flying
• 40:00 - 40:30 time away from your nearest client that's a problem I don't want the regional vice president to believe their job is to manage me or the board their job is to be where the client is and I think it's a fundamental premise that designing the organization and its construct for being client focused rather than managing the system and the bureaucracy and the board that's a change of focus I'm having to get it done it would be so much easier if that was how it was built on day one okay so
• 40:30 - 41:00 and you know there are good reasons for why we've ended up the way we have don't get me wrong it's just that I wouldn't do it this way today the second thing I think is this this private sector around the mobilization of private Capital IFC the international Finance Corporation mobilizes about a dollar and a half for every dollar of its own balance sheet I and I understand if we keep doing it even better maybe we'll get to two two and a half the challenge is the amount of private Capital that's required in the Emerging Markets to do
• 41:00 - 41:30 all the things we're talking about is not going to be done with two and a half you're going to need 20 that means business has to be different not just better and I think one of the biggest differences there David is we used to be an equity shop and back in 070809 when the financial crisis had we're subject to Gap accounting the equity shop took a lot of hits that created the need for the shareholders put Capital back in that's not a pleasant discussion for obvious reasons right and so that led to the bank swinging towards becoming more of a debt shop debts important but if
• 41:30 - 42:00 you take women in the Emerging Markets they don't have Assets in the name you give them debt they'll raise some more Capital you give them Equity they'll raise a lot more and you know this Equity is worth much more than debt in terms of mobilization we've got to find a way to become a better balance between how much Equity how much debt we've got to find a way to have a better balance between originating one project at a time versus being more like a a private bank or a a Morgan Stanley or something where you you know guys like you and I can go in and see products that are not
• 42:00 - 42:30 just manufactured by Morgan Stanley by many others and you can pick and choose what you want to invest in with different fees and maturities and so on think of us if you could play that role if I could originate these loans be the Catalyst who commits the money to it bring it into a digital platform and expose it to 200 investors Sovereign wealth funds Pension funds the family officer David Rubenstein and so on right and then really catalyze money those are the kinds of things I'm trying to get to change the model and Paradigm from
• 42:30 - 43:00 trying to do what we're doing better but change it to actually what I think will mobilize private Capital at a scale that is very different from today there is just not going to be enough money from shareholders through donations and capital contributions to do this without getting the private sector into it so when you're the head of Master Card you can fly around I assume on a corporate jet now you fly commercial yes um and although master car didn't have its own corporate jet we had Net Jets contracts
• 43:00 - 43:30 okay all right whatever you had um now you're you're making connections here and there and your time you get to the place you want to go you might have the two connections welcome to my life so um um is that frustrating that takes forever to get to these places it is what it is and I said it is what it is I just take it and move forward we there are places where you would use a private jet for example uh I went to a little island called tuvalu in the Pacific island Kevin is very familiar with it and it's a critical Island because one it's sinking but two the Pacific Islands
• 43:30 - 44:00 are quite an important neighborhood for many countries in that region and have a strategic and geopolitical opportunity as well so I went there to visit them no World Bank president had ever been there the last World Bank president to visit the Pacific Islands was 40 50 years ago I just believe that's wrong you got to get there now it's damn hard to get there but you can fly to Australia easily you can get to Solomon Islands or Fiji you want to get it toal you're going to have to use a plan that's fine so when you got there did you say what am I doing this for or
• 44:00 - 44:30 you're happy you got there no I actually I will tell you I was very disturbed when I landed in talu by what I saw because I saw an 11,000 person Island which is essentially inexorably sinking into the sea and that's 11,000 people the question is what resources level would you like to put into that to somehow fight off what's happening with the rising sea level in that area and the erosion but there are people they have hopes and aspirations the government of Australia has agreed to
• 44:30 - 45:00 take a number of people from there every year to help them resettle into a safer place and I think that's valuable but at the end of the day this is just one Island you go to Fiji instead Fiji is bigger it's a million people it doesn't have this challenge it's got challenges of Health the single biggest challenge there is diabetes it's killing people and creating am so there's different problems that I saw what I'm trying to do is not get bogged down by the individual problem but bring back my head head here and say okay what can I do to help those young people I saw in
• 45:00 - 45:30 talu how can I get them opportunities for gainful dignified employment that's the way I'm trying to think right if that includes building a seaw wall so be it if it includes building a better sea connection so be it if it includes helping them when they resettle somewhere else so be it that's the so um when you're not being the head of the World Bank you just want to relax for a weekend or something what do you have any hobbies Sports what do you do to stay in shape I you go to the Kenny Center or anything like that you think
• 45:30 - 46:00 I'm in shape I think you're in good shape okay good I must tell my wife that so the the uh I I work out four days a week religiously really right I do that four days a week and even what kind of workout is up yeah in a gym at home or where I'm traveling in a hotel so I've discovered over time that there's a there's a secret sauce and that is that around 5:00 whether you're on a private company or the World Bank nobody really wants to have you around any longer they've had you all day or appear in the ass when you go away and then at 7 o'
• 46:00 - 46:30 they want you know when there's a formal dinner they want you back again so you're the guy will come make a speech and kiss babies right so you got to do that I get those two hours so I tend to run away to the hotel run to the gym work out come back shower tie that turban and things again and then go back out again okay so um when you have days week I assume you have a lot of dinners when you're the head of the World Bank so how do you stay in shape because every night you got to have a dinner and all that I watch very carefully what I eat you're vegetarian your abs are no no I I eat everything that used to move if
• 46:30 - 47:00 it's currently moving it's a problem but if it used to move I'm good with it the but uh you abs are made in the kitchen I don't have ABS but I'm just saying it's aspirational it's aspirational so so you got to focus on your diet as much as in your exercise that's just hey I'm 65 I want to be healthy and capable of leading a good life as long as I can very focused on that that's a teenager to me it's young you don't have any gray hair you don't you don't know what gray hair is yet I have I've got gray hair
• 47:00 - 47:30 that's not much um okay so 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 is that right 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 jobs approach we have to get there we're not there we a work in progress but I feel very proud of what we're trying to do and therefore
• 47:30 - 48:00 you think the money that the United States Congress and others are giving is well spent and not wasted or things like that I'm sure we waste some of it I would be how would I tell you that every project we're doing is being done the best possible way cannot be right now something in the system is going wrong I know that the question is will I fix it when I find it and will I learn from it and I think that I'm quite confident so this job you're finding as as satisfying as your previous jobs just a different kind of thing you're not absolutely absolutely it's and and and it's a real
• 48:00 - 48:30 privilege David it's a real privilege so every year there's the World Bank IMF meetings that occur yes and I think they're coming up relatively soon so is that a tortuous thing for you you got all these people from all over the world coming in and you got to entertain them and host them or is it a fun thing to see all these people who um want to tell you how to do your job so the lightest side of this is we have what's called an annual meeting in in in October and normally when you hear called an annual meeting you think there'd be one a year but we have found a way to have a second
• 48:30 - 49:00 one it's called a spring meeting right and so so that's an intelligent use of words right a spring meeting and an annual meeting now the spring meeting is what is coming up now the annual meeting is in October uh there's slightly different Focus the annual meeting is open to much more people and a much wider audience the spring meeting has got people but it's smaller it's very focused on the governors and what we're doing with them but also other stuff the uh I'm very focused in this spring meeting on the topic of jobs in fact we have a jobs Council which I created
• 49:00 - 49:30 because I think we can't we not the smartest guys on everything so I asked for outside help like I did for the private sector I created a private sector lab here we've created a jobs Council it's run by President Thurman of Singapore and former president Michelle bashy of Chile number of CEOs economists and a few NOS are on it and I'm actually learning a great deal about the theory of jobs and what we can do and that's where those three ideas those three pillars came from we've also got a thesis of what kind of jobs will get created s in Africa and that's the kind
• 49:30 - 50:00 of focus of the spring meeting getting people to engage with that I enjoy that part I do entertain one day during these meetings at home which is informal all these Finance ministers and Central Bank Governors and local folks like you will show up and we'll have fun so so if somebody says what has the World Bank accomplished and you can say here's an example of something the World Bank achieved over X number of years that we're really proud of what would that best example be you go back over the last 5 or 10 years it would be very simple things 100 million people
• 50:00 - 50:30 connected to electri City you know more than 3 to 400 million people with access to improv healthare that kind of thing where I'm going now is I've made a few specific commitments 300 million people in Africa connected to ER City by 2030 I think it changes how Africa Works 1.5 billion people connected to better Primary Health Care by 2030 that is to fight off what I believe are the diseases of prosperity you know Health heart attacks diabetes blood pressure
• 50:30 - 51:00 things that are creeping up in these countries and which cannot be solved without distributed rural health centers with nurses and medical diagnostic readers and so on that's the second big thing we're focused on and the third thing I'm focused on is getting 80 million women in the Emerging Markets access to equity to open businesses by 2030 Equity not debt and those three things are just examples we've got others in in the pipe to do with this $9 billion to be focused on small holder
• 51:00 - 51:30 Farmers because I believe that if you don't make small holder Farmers a 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 need to create the right conducive environment cooperatives that help them they can access markets fertilizer seeds better technology that kind of work is what we're trying to do so Abraham Lincoln they all focused on the jobs Abraham Lincoln famously said God Must Love poor people because he made so many
• 51:30 - 52:00 of them but you don't think it's inevitable there have to be so many poor people in the world right I think it's very challenging to change this and bend the ark but what are you here for if you're not going to try well very impressive job want to thank you very much for the job you're doing and giving up uh the wealth of your private sector career and uh I got some with me don't worry about it so let me did let me give you a gift thank you very much thank you congratul [Applause]
• 52:00 - 52:30 this is a map the District of colia all right we'll send it to your office Senor office okay thank you