Anthony Rowley

Macroscope | Manifesto for survival: World Bank’s bold new thinking on how to finance a better world

World Bank president Ajay Banga recently spoke of the need to press private finance into service to tackle climate change and other critical objectives

While those in asset management might protest about losing investment freedoms, his logic is hard to argue with

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World Bank president Ajay Banga attends a press conference at the annual meetings of the World Bank and IMF in the Moroccan city of Marrakech on October 11. Photo: AFP

Anthony Rowley

Published: 3:30pm, 21 Oct 2023

The outline of a new form of capitalism – neither American-style market capitalism nor Chinese-style state capitalism, but what could instead be called “institutional capitalism” – could be discerned at the recent annual meetings of the IMF and World Bank.

At these meetings and in his first major speech as World Bank president, Ajay Banga referred to the need for imaginative new ways of employing the massive hoard of global private savings.

This was not a ritualistic reference to the need for public-private partnerships to unlock investment in socio-economic projects such as climate change alleviation, infrastructure building or health spending. It was more of a manifesto for survival.

Banga was venturing into highly political territory. In market economies, the freedom to deploy investment at will – however serious or frivolous the objective – is almost sacred. State or any other kind of dirigiste intervention is not normally welcomed.

In state economies, the opposite is true and private enterprise has to walk a fine line between freedom and the threat of repression, as is the case in China. So, the kind of pragmatic compromise Banga was suggesting is bold and worth hearing.

He went so far as to state the sum of money – US$70 trillion from pension funds, insurance companies and sovereign wealth funds – that might be pressed into the service of critical objectives.

Macroscope | Manifesto for survival: World Bank’s bold new thinking on how to finance a better world

World Bank president Ajay Banga recently spoke of the need to press private finance into service to tackle climate change and other critical objectives While those in asset management might protest about losing investment freedoms, his logic is hard to argue with

World Bank president Ajay Banga recently spoke of the need to press private finance into service to tackle climate change and other critical objectives

While those in asset management might protest about losing investment freedoms, his logic is hard to argue with