Good? Bad? Ugly? Two years in, how’s Jim Kim doing as World Bank boss?

July 15, 2014

     By Duncan Green     

Nicolas Mombrial, head of the Oxfam’s Washington office, does his cup half full/empty thing on Jim Kim’s first two years in office

This month, Jim Kim celebrated his second anniversary at the head of the World Bank Group (WBG). After his first year, I concluded “pretty good so far but the jury is photoNicolasMombrialstill out”. Has anything changed since then? Well, Jim Kim has said a lot of good things this year but the effects still remain to be seen, mainly because the agenda has been over-dominated by the Bank’s big internal reorganization. The main difference is that Jim Kim has been confronted with a big scandal around the IFC’s investments in Honduras. More on that later…

Last year I concluded “success or failure will hinge on whether Jim Kim can mobilize the institution and its shareholders behind the vision”. The shareholders are definitely now on board. As for the institution, it is not yet so clear (although he will have the full support of the newly appointed Directors). I also can’t honestly say what the impact of the reorganization will be (fingers crossed). I am just happy that we can now get back to talking about policy and impact on poverty. 2 years has been a long time.

So let’s talk about policy. As last year, Jim Kim has said some remarkable things and has continued to lay down a more progressive agenda.

It may be the first time that we see a President of the  WBG acting as an activist, challenging people to unite around a movement to end poverty, raising the need to address gender issues, speaking against anti-gay laws and against  discrimination of all kinds. But not all the picture is that rosy: under Jim Kim the number of women in management position has fallen by about 25% and as our colleagues from Human Rights Watch have said, progress on human rights still need to be institutionalized.

On inequality, while we criticized the Bank’s lack of ambition, we recognized that its new goal on “shared prosperity” – Bank-speak for inequality- was already a success. This year, Jim Kim has continued to raise the imperative to fight inequality making it crystal clear to any doubters that it is the end of a WBG that thinks that it is enough to focus on growth alone. However, the Bank still risks missing the real picture in terms of extreme income inequality and a big part of the problem (political capture) as long as it refuses to look at the top 10% as well as the bottom 40%.

It also needs to say what it is actually going to do to reduce inequality. Answers will apparently come at the Annual Meetings in October. I am curious to see if they are now going to evaluate all their projects with an equity angle (including what the IFC does), to talk about things they have been silent on lately like tax, or if they will just repackage some old policy wine in some shiny new bottles.

Jim Kim at White HouseJim Kim continues to be a powerful advocate for the role of health in ending extreme poverty and reducing inequality. He added this year a strong new argument: the positive impact health can have on growth. Kim went a step further on user fees, accepting that the Bank was excessively ideological on this issue in the past. The Bank has also been pushing Universal Health Coverage on the global stage, developing a framework with the WHO to measure it. But we have not yet seen how this is going to change the WBG’s work. Does it mean that the WBG is going to review all projects –including the IFC’s – to make sure they focus on equity and we do not end up with another Lesotho health PPP; that it will support governments to develop publicly provided health care and to abolish user fees; and that it is going to stop supporting private health insurances that do not benefit the poorest? If so, we will truly have cause to celebrate.

The WBG is more than ever putting its weight behind the efforts to combat climate change, making the economic and social arguments that it has far reaching development benefits for everyone. But once again, it remains to be seen how Kim can transform his speeches into action. Is he going to ensure that WBG programs are more climate sensitive by supporting a specific safeguard on climate change? Or push for funding for renewable energy to dramatically increase as it could not only be better for climate change but, maybe even more importantly, better for providing poor people with access to energy? The WBG in 2013 invested 38% of its energy lending in fossil fuels and 24 % in renewables. These numbers need to change.

In the middle of these promising noises, a big stain spoiled Jim Kim’s second year in office: the scandal around the IFC investment in Corporacion Dinant in Honduras, which will go down in history as one of the very few cases where the WBG Board stood unanimously against management. While Jim Kim inexplicably signed on the initial appalling IFC answer that basically refused to recognize mistake, under pressure from CSOs and his Board, he promised that the findings of the Compliance Advisor Ombudsman (CAO) would be listened to and pushed the IFC for a better response.

But that is not enough. Though an extreme example, Dinant is not an isolated case. Other IFC investments such as Tata Mundra, Agrokasa, Dragon Capital;  the CAO Dinant headlinereport conclusions on Dinant, or the WBG’s own staff survey demonstrate that Dinant is the consequence of deeper cultural/systemic problems at the IFC (including risk categorization, project selection, inadequate weight given to social and environmental standards, and staff incentives). To this, Jim Kim has not given a proper answer. There has been an IFC ‘lessons learned’ paper but it is insufficient. Jim Kim needs to do more than find solutions to cases as they arise; he needs to give a strong political signal–as Zoellick did after the Wilmar case – by urging the IFC to come up with concrete, time bound proposals to address its  cultural and systemic problems. That is the only way he can ensure the IFC gets behind his grand vision.

So all in all, a good second year, but the jury is still out (and two years is a long time to reach a verdict – the judge may soon declare a mistrial). Let’s hope that by the time of JYK’s third anniversary, the World Bank Group will be firmly on the right side of history.

July 15, 2014
Duncan Green