Private sector funding key to climate transition, World Bank chief says
FILE PHOTO: World Bank Group (WBG) president Ajay Banga attends a press conference on the third day of the annual meetings of the WBG and the International Monetary Fund (IMF) in the Moroccan city of Marrakesh on 11 October 2023. (Photo by FADEL SENNA / AFP)
The World Bank is working to slash how long it takes to get financing projects off the ground as part of a push to speed up and scale up the 79-year-old development lender, its president told AFP on Wednesday.
It currently takes 27 months, on average, before "the first dollar goes out the door," Ajay Banga said in an interview in his brightly lit office in the Bank's headquarters close to the White House.
"If I can bring it down by one-third over the first couple of years, that would be pretty good," he said. "The Bank needs to change and evolve."
Banga, an Indian-born, naturalized US citizen who previously ran the payments company Mastercard, took over the management of the bank in June on a pledge to boost its lending firepower by encouraging greater private investment in the fight against climate change.
In the seven months since, the 64-year-old has made some big changes, altering the development lender's mission statement to include a reference to climate change, and setting up a private sector advisory body to recommend solutions to address the "barriers to private sector investment in emerging markets."
He's also explored new ways to "sweat" the bank's existing balance sheet in order to boost lending capacity without additional funding from donor countries.
On Wednesday, Banga repeated a previous pledge to "fix the plumbing" of the World Bank and said he plans to "create the credibility" needed for the developed world to increase its capital investment in it.
"For that you have to become a better bank. You have to be quicker, faster, more focused on impact, less focused on input," he said. "Then you can say with credibility, 'I'm now ready to absorb more capital.'"
Climate or development?
As part of a push to increase its climate financing, the World Bank Group recently raised its target for climate-related projects from 35 percent of its annual financing to 45 percent.
"I think people in the global south recognize very well that you cannot fight poverty without fighting climate change," Banga said. "The only difference is, what do you mean by climate change?"