The push to reform the World Bank has largely been driven by the desire of shareholders (especially the United States) for the lender to focus more on addressing climate change. This effort is behind the World Bank’s new motto: “To create a world free of poverty — on a livable planet.”
But what do government officials, civil society, and other experts in the bank’s client countries actually want it to focus on?
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Turns out climate doesn’t even crack their top 10 priorities, according to the latest country opinion survey out last week. What they do want the World Bank to prioritize is education, health, agriculture and food security, job creation and employment, and public sector governance. For what it’s worth, climate change is number 11 of 17 items on the list.
The tensions between the priorities of wealthy donor nations and lower-income client nations (which often contribute far less to climate change) aren’t new. But this latest survey highlights them once again as the bank looks to continue to define its future under the leadership of its president, Ajay Banga.
He has shepherded through some financial reforms to stretch the institution's balance sheet and in December committed the bank to spending 45% of its annual financing on climate-related projects in the next fiscal year. Devex contributor Sophie Edwards has a great breakdown of the bank’s reform plans thus far.
From what I’m hearing, the questions ahead concern the bank’s future ambitions, whether shareholders will pony up more capital, and what’s next for Banga. His recent remarks at a Center for Global Development event have raised a few eyebrows — including that “I'd be happy to be fired, by the way. I can go back to my private sector life. Much more interesting.”
Read: Everything you need to know about the World Bank’s reform plans (Pro)
+ Tune in tomorrow, Feb. 28, for my discussion with U.S. Rep. French Hill, the vice chair of the House Financial Services Committee, where we’ll discuss World Bank reform, the role of the IMF, and the prospects of more funding for MDBs. Register to watch live via Zoom.
On the agenda
Well beyond the World Bank, it is a big year for climate finance. One of the key issues to watch at the COP 29 climate conference later this year is a new finance goal to help vulnerable countries accelerate climate action. It is likely also to be the most contentious issue at this summit, Chloé Farand writes for Devex. This will replace the $100 billion annual climate finance goal that wealthy nations promised to contribute but have struggled to meet.
How much will be committed this time, how it will be delivered, over what period of time, and how it will be monitored are all up for negotiation. As will who is expected to contribute: China hasn’t made mandatory contributions despite efforts to push it to do so.
You can also expect conversations about the international financial architecture at COP and throughout the year, especially with Brazil pushing that agenda as the head of the G20 this year (finance ministers will convene for meetings later this week in Brazil).
Read: What will be on the COP 29 agenda? Here are 7 issues to watch (Pro)
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Scanning the horizon
It’s also worth watching some of the commitments that have come out of COP 28, particularly when it comes to blended finance deals related to climate, Joan Larrea, CEO of Convergence, writes in an opinion piece for Devex.
After little growth in blended finance — which is the use of catalytic capital from public or philanthropic sources to increase private sector investment in sustainable development — a few recent deals show promise, she writes. One is the SDG Loan Fund, which closed at $1.11 billion and was developed by Allianz Global Investors and the Dutch development bank FMO. It uses a $111 million first-loss investment from FMO and a $25 million guarantee from the MacArthur Foundation to unlock about $1 billion in private capital.
While this and other recent blended finance deals won’t “turn the tide for climate finance in the developing economies,” they can make a difference, she writes. “Big transactions are important not because they are showy or because smaller transactions have less impact — they don’t — but because of the example they set for naysayers resigned to the status quo.”
Opinion: A whale-watching moment in the blended finance ecosystem
Keep an eye out
It’s also worth watching the big climate funds this year. The Green Climate Fund has a new leader who is looking to make changes, and Climate Investment Funds will soon have a new woman at the helm. Those organizations along with the Global Environment Facility are all under scrutiny as they’re being called on to step up. That’s why they’re on our newsroom’s list of 24 organizations to watch.
They’re not the only development finance players on the list: British International Investment (which will also have a new CEO this year), the European Investment Bank (also under new leadership, I think we’ve found a trend), and the World Bank all make the list.
Read: 24 Global development organizations to watch in 2024
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What we’re reading
How Germany is cutting billions from foreign aid. [Devex Pro]
Why isn’t solar scaling in Africa? [Asterisk Magazine]
Report: Time to accelerate capital mobilization for the SDGs in emerging markets. [Global Steering Group on Impact Investing]
About the author
Adva Saldinger@AdvaSal
Adva Saldinger is a Senior Reporter at Devex where she covers development finance, as well as U.S. foreign aid policy. Adva explores the role the private sector and private capital play in development and authors the weekly Devex Invested newsletter bringing the latest news on the role of business and finance in addressing global challenges. A journalist with more than 10 years of experience, she has worked at several newspapers in the U.S. and lived in both Ghana and South Africa.
