World Bank and IDB chiefs decide over drinks to collaborate more

In another step toward closer collaboration and cooperation, the World Bank and the Inter-American Development Bank signed a memorandum of understanding on Thursday that will push them to better align and make progress around specific priorities. While the leaders of the institutions said there are many areas where the institutions can work together, this particular MOU focuses on three: addressing deforestation and the livelihoods of communities in the Amazon, digitization to improve education, and bolstering the Caribbean's resilience to natural disasters. World Bank President Ajay Banga and IDB President Ilan Goldfajn traveled together in June to Peru and Jamaica, the first time leaders of the institutions went on a joint trip. Somewhere along the way over a glass of wine, or a cup of coffee — the two had different recollections — they outlined what would become the agreement the two just signed at an event in Washington, D.C. Outside experts and shareholders have called on multilateral development banks to join forces more often and this agreement, and the joint trip, seem to be visible signals that these two institutions and leaders are serious about doing so. Beyond working together on the priorities in the agreement, it seems Banga and Goldfajn, who are both fairly new to their jobs, share a vision around some of the changes needed at their respective institutions and in the multilateral development bank system more broadly. Banga said that while the World Bank has a storied history, its “future cannot rely on our past” and it must be redesigned, along with other MDBs, to work for the next 30 to 40 years and be “elemental in driving development to change.” What’s important for their institutions is not the amount of money they disburse, but the “actual impact,” Goldfajn said at the event. “For us scale and impact is the name of the game. To do scale, you need to join forces” and “work together differently,” he added. Banga echoed the sentiment, adding that the World Bank needs to measure actual results, rather than the number of dollars it provides, including how many girls went to school, how many people got a better job, or how many greenhouse gas emissions were avoided, rather than how many dollars it puts into a project, he said. Many MDBs create country strategies and then spend time finding projects that fit within that framework. “What we cannot afford to lose sight of is what’s the end result of that. We cannot measure the project and we cannot celebrate the approvals. We have to celebrate the execution and the change in lives of people,” Banga said. Goldfajn said shifting that paradigm will require a “cultural change” at their institutions that includes new incentives, processes, mentality, country strategies, and more of a focus on impact from the beginning. Goldfajn, who will soon lead the informal forum of MDB leaders, will also push for more standardization across the institutions on procurement, measurement, and credit ratings among other policies, to reduce the burdens on their clients. That’s something countries and outside advocates have called for over the years to avoid duplicative efforts and additional bureaucracy. “Our institutions need to be focused on implementation. There are too many conferences, or too many seminars, and I like to think about us as the ones that will actually take it to the ground,” Goldfajn said.