An interesting choice

Ngozi Okonjo-Iweala will stay Nigeria’s finance minister and not become World Bank president. She is right to say that the selection process was not fully “open, transparent and merit based”. The Bank’s executive board, which is domi­nated by wealthy nations, picked Jim Yong Kim for the job. He is a citizen of the USA. President Barack Obama nominated him.

Okonjo-Iweala would certainly have made a formidable World Bank president. She has a solid background in economics plus a strong track record both as finance minister and as managing director of the World Bank. And yes, it would have been a welcome sign of inclusiveness, had the executive directors chosen a woman from Africa to head the multilateral development bank. The irony of the matter, however, is that Okonjo-Iweala was the mainstream candidate. That was evident, for instance, in how the Financial Times and the Economist endorsed her. Moreover, she worked for the Bank for decades, including in a high-ranking position from 2007 to 2011. Not only does she know how the Bank operates; she herself has been shaped by the way it ticks, so her promise to re-invent the World Bank sounded a bit hollow.

Unlike Okonjo-Iweala, Kim is a World Bank outsider. His background is unusual, but certainly relevant. He is a medical doctor and has pioneered community-focused healthcare programmes in developing countries. As the former director of the World Health Organisation’s HIV/AIDS department, he is experienced in multilateral policymaking. Not least due to his family’s Korean roots, moreover, he has a feel for the needs of poor world regions.

His instinct will probably be to make sure that social services work well, whereas economists tend to worry about GDP growth first of all. For decades, critics bemoaned that the World Bank, on behalf of the rich nations, focussed too much on macro-economic issues and paid too little attention to the social dimensions of development. They certainly had a point, though the Bank improved its performance on these matters over the years. It is quite a surprise, however, that the USA, of all nations, has now reinforced the paradigm shift by proposing a medical doctor for World Bank president.

Okonjo-Iweala’s academic background, moreover, is American like her Korean-born competitor’s: both studied at Harvard University. Kim earned his PhD there too; Okonjo-Iweala got hers at the Massachusetts Institute of Technology (MIT).

In retrospect it is clear that Okonjo-Iweala was a candidate from the developing world, but not the candidate of the developing world. José Antonio Ocampo, a former finance minister of Colombia, only withdrew from the race shortly before the vote. As was to be expected, there are now some complaints in the BRICS (Brazil, Russia, India, China and South Africa) about the west, once again, getting its way. However, the BRICS never launched a forceful campaign in the Nigerian’s favour. In the end, Russia and Mexico backed Kim. Some developing countries wanted Jeffrey Sachs from Columbia University to become World Bank president, intentionally picking a US citizen with a history of speaking out in favour of more aid.

Last year, Christine Lagarde from France was chosen to head the International Monetary Fund (IMF), the World Bank’s twin institution. Her appointment was based on emerging powers’ tacit ack­nowledgement that they wanted Europeans to sort out the mess of the Euro crisis. To them, that mattered more than discontinuing Europe’s grip on the job.

Kim’s appointment is different. It reflects the tacit acknowledgement that he is an interesting choice and that it would be unwise to weaken Obama, who understands the need for multilateral policymaking, shortly before a presidential election. No doubt, behind closed doors, the priorities of the BRICS representatives were to limit the sums they committed to the IMF and to boost their influence on the boards of the international financial institutions. A competent US-citizen at the top of the World Bank does not worry them.

One last thought: Kim will be easier to replace as university manager than Okonjo-Iweala would be as reform-minded ­finance minister. ­Nigeria needs her.