World Bank needs a new playbook to boost private investment in emerging markets: Banga

The World Bank must use “informed risk-taking” to encourage private investors to become more involved in helping developing countries cope with climate change and move away from fossil fuel energy sources, its new president said on Sunday. Ajay Banga.

Banga told CNN’s “Fareed Zakaria GPS” that ongoing efforts to expand the World Bank’s lending capacity and revamp its business model could potentially unlock “tens of billions” of dollars, not trillions of dollars. estimated dollars needed to ensure fair energy. transition.

Capital from the private sector was critical, as funds from governments, philanthropic organizations, the World Bank and other MDBs would never be enough to help poor countries adapt to and mitigate climate change, he said. Banga, a former Mastercard chief executive who took over on June 2. .

“The only way forward is to find a way to make the private sector believe that this is part of their future,” said Banga, who will visit Peru and Jamaica this week as part of a tour to visit countries in all regions where he operates. the bank.

“What I think we have to do is… find ways in the MDB system to think about a different playbook, to take the risks that they can’t take,” he said, noting that private companies were required to generate benefits. for shareholders and could not bear the risks involved, but the bank could help.

“That’s something we can do with informed risk-taking,” Banga said, noting that renewable energy was now cheaper in many cases than fossil fuels due to improvements in storage and duration.

The Indian-born executive was nominated by the United States for the job precisely because of his previous work in the private sector, and he vowed to identify barriers to further investment and find ways to maximize the bank’s impact.

Banga told CNN that he would also work closely with other multilateral lenders and development organizations, noting that he would be joined on his visits this week by the president of the Inter-American Development Bank, Ilan Golfajn.

“We need a lot to do. We need all shoulders behind the wheel,” he said. “What we don’t need are silos in this effort.”