US President Barack Obama's decision to renominate Jim Yong Kim for a second term as president of the World Bank is not surprising, but will come as a disappointment to many, including many Bank employees. For India, the World Bank continues to be a significant lender. Over the 70 years from 1945 to 2015, India received over $100 billion from the World Bank, making it the largest recipient of such loans in the world. This figure will continue to increase; in July, the Bank announced that it would support India's ambitious push towards solar power by lending over $1 billion to various projects and programmes. The organisational direction of such a crucial lender - a direction typically set by the president - is therefore of vital interest to India.
Dr Kim came to the World Bank relatively inexperienced in development finance and as a long-time critic of its lending practices - a criticism born of his years as a doctor in Latin America observing the effects of Bank-imposed structural adjustment. As president, he has been nothing if not ambitious in terms of internal re-organisation but has struggled to build a consensus to support his actions. His decision to cut administrative costs by $400 million and to shed 500 operational jobs unsurprisingly infuriated many employees. The World Bank's staff association has already called for an international "merit-based" search for a replacement to Dr Kim and demanded an end to a run of "American males" in the Bank's presidency. The tradition of Americans leading the Bank dates to its creation at the end of World War II; it has been honoured in tandem with naming a European to lead the other major multinational financial institution, the International Monetary Fund.
More far-reaching perhaps was his decision to rework the World Bank's organisational chart. Rather than much policy being run by the country offices, which Dr Kim believed meant that cross-country and regional initiatives got short shrift, he instead decided to reorganise the framework into 14 "global practices" for such issues as water or trade - terminology reminiscent perhaps of McKinsey & Company, from which he hired consultants to advise on the transition. Many of these initiatives have run into trouble. Less than half of the $400 million Dr Kim targeted has been saved. The 14 global practices have become three divisions. Dr Kim is far from the first World Bank president to decide to restructure the organisation over the wishes of its employees. The institution has survived such efforts and continued to thrive. But it is perhaps important to recognise that the world of 2016 is very different. Alternatives to the World Bank exist. For example, the China-led Asian Infrastructure Investment Bank (AIIB). The
AIIB is reportedly trying to work on $500 million for the Indian solar mission. This is less than the World Bank's commitment, but definitely in the same ballpark. Given this, a World Bank president should consider consulting major stakeholders, including the countries being lent to, about what a reorganisation of the World Bank should look like.
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If the World Bank wants to continue to be relevant, it will need to be more focused on the needs of its recipients, which could be an argument for a more local-led approach to lending, perhaps the opposite of Dr Kim's "global practices" effort. Either way, this case should have been made to the stakeholders concerned. Dr Kim's renomination under such circumstances will merely underline the worst part of the World Bank's traditions - that no stakeholder but the US President eventually has a say in how the institution is managed. This, above all, must change.
