Senior management at the World Bank Group is in the midst of significant change.
Jin-Yong Cai, the head of the International Finance Corp. — the arm of the World Bank Group focused on private sector growth — is stepping down from his post at the end of this year, prior to the end of his term. And Bertrand Badré, the World Bank Group’s chief financial officer is due to leave the institution in early 2016.
The circumstances around the two departures remain unclear, and the loss of a Chinese and a French national among the World Bank Group’s senior leadership has reshuffled the institution’s international makeup. But as one Frenchman departs, another is stepping in.
Philippe Le Houérou, a former World Bank vice president and most recently vice president for policy and partnerships at the European Bank for Reconstruction and Development will take over for Cai as executive vice president and CEO of the IFC — a position that for 30 years was held by a European before Cai took the role in 2012.
What can World Bank Group staff and the global development community expect from Le Houérou, and what does his appointment mean for the future of the IFC?
Devex spoke with sources who have followed the evolution of the World Bank Group for decades, as well as sources who worked with Le Houérou during his previous stint at the World Bank in order to understand what his appointment signifies for the global financial institution and to gain a sense of the Frenchman’s leadership style.
Philippe Le Houérou knows the World Bank.
The Frenchman worked for the institution for nearly 30 years before joining the EBRD last year. He held a variety of positions within the bank, including vice president of concessional finance and global partnerships, acting vice president and chief information officer, director of finance and resource mobilization, vice president for Europe and Central Asia, and regional vice president for South Asia.
In the early 1990’s, Le Houérou was charged with helping Russia embrace capitalism after the fall of the Soviet Union, and he led replenishment for the International Development Association — the bank’s fund for the poorest countries.
Le Houérou’s close ties to the development side of the World Bank Group could say a lot about the direction he will take the IFC, according to Daniel Runde, William A. Schreyer Chair and director of the project on prosperity and development at the Center for Strategic and International Studies.
The IFC has traditionally felt some tension around whether it should emphasize development or finance priorities, and the institution has historically been led by bankers from the private sector, Runde said.
Jin-Yong Cai, a former top executive at Goldman Sachs, is a case in point.
But appointing someone to lead the IFC who comes from a career at the World Bank could tie the private sector financing arm of the institution closer to its anti-poverty oriented counterparts, the International Bank for Reconstruction and Development and the International Development Association, Runde suggested.
There has been a great deal of criticism of past IFC heads for relying too much on financial returns as a measure of success, rather than on “development impact broadly defined,” said Scott Morris, senior fellow at the Center for Global Development.
“I think because [Le Houérou is] coming from a broader development perspective, he probably will be more willing to push the envelope toward greater experimentation in achieving the broader private development mission and not just the project by project mission,” Morris said.
Le Houérou’s appointment could mean more IFC private investments paired with IDA contributions, Morris said, adding that the appointment likely reflects a desire among senior management to “break down the silos” in the World Bank Group.
Le Houérou’s career at the World Bank is a major plus for the IFC, said Eugene Rotberg, former vice president and treasurer of the World Bank, who left the institution just as Le Houérou was beginning his career at the bank.
“There’s nothing better than having someone who for 30 years has worked with and understands … the various constituencies of the institution,” Rotberg said, emphasizing that familiarity with World Bank Group staff will be an asset.
But, Rotberg disagreed somewhat with the idea that Le Houérou will usher in a drastically new era of cooperation between the World Bank Group’s branches. He said that the IFC, the IBRD and IDA have always worked together and “rarely operate inconsistently.”
“I’m not so sure that there is an inconsistency that needs to be breached or that there will be a substantial change,” Rotberg said, adding that “people like to create a pretense that there’s a great conflict.”
Current and former bank staff who worked with Le Houérou offer varying descriptions of his leadership style.
“He’s not the easiest guy to work with because he is extremely frank … but he’s very well-respected,” said one bank staffer who wished to remain anonymous.
The staffer added that Le Houérou can sometimes “be very political.” Still, Le Houérou is “personable,” remembers everyone’s name and likes to hear everyone’s opinion, the staffer said.
“I worked with him in all of the Vice Presidential roles that he had, and he was very good in all of them,” said Paul Cadario, senior fellow at the University of Toronto's Munk School of Global Affairs and a former senior manager at the World Bank. “So I have the highest professional regard for Philippe. He is a man of integrity.”
Cadario recognized that opinions may differ about Le Houérou’s management style, “which can be very brusque, very blunt, very unforgiving about sloppy work,” but emphasized that Le Houérou’s “insistence on solid analysis, good writing, and clarity” makes him a “strong addition to the World Bank Group’s senior management team.”
Cadario pointed specifically to Le Houérou’s time as acting chief information officer at the World Bank when he “moved very quickly and surgically” to establish a new “strategic framework” for the IT department and clean up its procurement. Cadario also emphasized Le Houérou’s willingness to listen to staff as well as client and partner perspectives and “to find solutions and get results.”
“He’s a man who believes in simplicity and transparency, which is never a bad thing in an organization,” Cadario said.
When Le Houérou left the World Bank last year, he reportedly did so while laughing at himself, during a “roast” in his honor, which included a video poking fun at the Frenchman. According to Cadario, the “unforgiving” Le Houérou laughed louder than anyone else.
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