African leaders and development experts are to push for changes in World Bank policy and faster reform of its selection procedures.
This follows a bitter contest for the top job in the financial institution which exposed its failure to practise what it preaches.
In a rare show of unity, all 54 African states backed Ngozi Okonjo-Iweala, the Nigerian finance minister and a former World Bank managing director, to be the new president, in what was an unprecedented contest for the post.
Since the World Bank’s creation in 1944, the presidency has been held by a US citizen, as a result of an unwritten rule that has allowed Europe to dominate its sister institution, the International Monetary Fund. On Monday, the practice was followed again when Jim Yong Kim was appointed to take over from Robert Zoellick, the current president, in July.
Reflecting a widely held African view, Sindiso Ngwenya, the secretary-general of the Common Market for Eastern and Southern Africa, said the fact that the bank’s selection process had not changed to reflect evolving global realities had undermined its authority.
“The World Bank has lost its moral authority with respect to the processes of fair governance and transparency. The bank prides itself on open competitive bidding, but this [election] was not based on merit but on those with the muscle.”
The bank has traditionally exerted influence over African nations’ policy because of its dominant role as a lender to the continent. But it has been losing ground recently as other lenders have become more responsive to African needs.
In a memo sent just before the vote, Mo Ibrahim, the Sudan-born philanthropist and telecoms tycoon, gave warning of the potentially damaging affect on the bank’s credibility.
“No one can lecture developing countries on how to manage their processes, public and private sector, if they so brazenly do not conform to the same standards,” he said.
The losing candidate was more magnanimous in defeat, but expressed the hope that her challenge would bring irrevocable changes to the way the bank was run.
“We shone a light on a murky process and cracked the door open to begin the journey to a merit-based process. We brought contestability to the World Bank position with a lot of courage.” Ms Okonjo-Iweala told the Financial Times after Monday’s vote. This was heavily stacked against her because of US, European and Japanese dominance of voting quotas.
“Africa showed remarkable unity and could not be divided,” she said, alluding to efforts by the US to persuade her to stand down in favour of Dr Kim, a development health expert.
African finance ministers are now looking for Dr Kim to engage with the continent, and speed up the way in which the bank delivers lending – an area that was one of the main planks of Ms Okonjo-Iweala’s campaign – and refocuses on the enormous infrastructure challenges.
A senior African development official said: “What the bank should fear would be if this guy [Dr Kim] comes in on a narrow agenda consistent with his previous experience – you will find that the bank would be seriously out of touch with reality.”
Were he to do so, numerous African officials said, the World Bank would risk losing ground to other funding sources. In recent years, African countries have turned to the African Development Bank, multinational companies, domestic financing through infrastructure bonds, and Chinese loans.
The AfDB was the lender of choice for numerous middle-income African countries suffering from fallout associated with the 2008 global financial crisis.
Mr Ngwenya said poorer African countries would still depend on cheap loans from the World Bank – often stretched out over 35 years with generous grace periods.
He said: “As we long as we have ministers of finance keen to access money in the poorest countries, we will depend on these institutions. [But] we are heading for a different time. In the end, what we need to do is not so much reform the [World] Bank, but say what is it that we can do ourselves.”
Pravin Gordhan, South Africa’s finance minister, said the institution had been damaged by the selection procedure. It was now up to the new leadership to engage in change.
“It does reflect the fact that we haven’t matured adequately as a global community to meet the democratic challenge. What can compensate for that is the extent to which the new leadership at the bank is able to embrace new ways of doing things, and new ways of engaging with the African constituency, which was clearly marginalised in this process,” he told the FT.
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