In an interview eight years ago with the Stanford Graduate School of Business, corporate veteran Ajay Banga, who was serving as the CEO of payment processing giant MasterCard at the time, spoke about one “tremendous” lesson from his 13-year career at Nestle. “You’re one person, but one person can make a difference,” he said. Almost a decade later, as he is expected to become the next President of the World Bank, the focus is on how Mr. Banga, 63, is going to help the 77-year-old institution tackle its several challenges, including pivoting its focus toward climate action and transforming its lending model.
Even with his best intentions and the best people, Mr. Banga says, the “idea that somehow a magic wand has arrived” is flawed. The former CEO, who is U.S. President Joe Biden’s sole nominee to lead the Bank, believes, nonetheless, that the multilateral lender can do a lot more and has ambitious plans to mobilise private sector money for its development projects.
The U.S. President, while announcing his nomination, described Mr. Banga as being “uniquely equipped” to lead the World Bank at a “critical moment in history”. “He has spent more than three decades building and managing successful, global companies that create jobs and bring investment to developing economies, and guiding organisations through periods of fundamental change,” Mr. Biden said.
Some observers believe Mr. Banga, who spent most of his career in the corporate world, may not be the right candidate to shake up the World Bank in a way it needs. Notably, the institution’s role in mitigating climate change is under most scrutiny right now as the current World Bank head, David Malpass, announced his resignation from the post earlier this year, more than a year before the end of his term, after a controversy over his refusal to comment on whether fossil fuels are contributing to global warming.
Some others, including the likes of Mr. Biden, and IMF chief Kristalina Georgieva, believe the corporate leader’s background from a developing country and his work on financial inclusion and diversity at his previous stints make him a good fit for the job.
Born in the Khadki cantonment of Pune in 1959 to an army officer father, Mr. Banga was inclined to a career in finance, receiving his bachelor’s degree in Economics from Delhi’s St. Stephen’s college. He then got himself an MBA from the prestigious Indian Institute of Management-Ahmedabad. Right out of college, he joined Nestle as a management trainee in 1981 and spent the next 13 years at the company.
After a short stint at PepsiCo leading its franchise expansion in India, Mr. Banga moved to the CitiGroup, also spending 13 years there and heading the bank’s business in the Asia-Pacific from Hong Kong. As he was on the decks to become CEO of the bank, he took up the role of President and Chief Operating Officer at MasterCard in 2009, moving to the U.S. Interestingly, the World Bank President nominee expressed in the same eight-year-old interview at Stanford that he left Citigroup as he didn’t see himself as the CEO of a bank, owing to the increasingly regulatory environment and less scope for innovation in the banking industry.
Financial inclusion
In his time at MasterCard, he became popular for being one of the best performing CEOs, as Harvard Magazine called him in 2013. Mr. Banga pioneered the concept of financial inclusion at MasterCard, by setting and achieving the goal to bring 500 million unbanked people into the formal banking system and digital economy by 2021. Under this goal, he also introduced, with his firm, debit cards with encoded biometric data in South Africa to reach unbanked populations. While working to bring low earners into MasterCard’s client base, he also managed to triple the giant’s revenue, increase net income six-times, and bring its market cap from below $30 billion to $300 billion in his 11-year term from 2009 t0 2021. He currently serves as the Vice Chairman of General Atlantic, heading its climate-focused fund Beyondnetzero. He was also chosen by former U.S. President Barack Obama in 2015 to be a part of his Advisory Committee for Trade Policy and Negotiations.
Mr. Banga has promised to bring inclusion as a central tool of his leadership, while mobilising the private sector to help the World Bank in its work. While observers worry about how he will manage the task of getting low income countries to work on climate projects while they face gaps in fundamental funding for infrastructure and health, the nominee has argued that the two issues are “intertwined”.
“Inequality is intertwined completely with challenges like climate change, challenges like fragility of the world with refugees and the like being caused by conflict, with challenges like the pandemic, with challenges like with Russia and Ukraine, with what that does to food and fertiliser,” Mr. Banga said in an interview. “I don’t think you can segregate these into buckets and hope that you can deal with one without dealing with the other.”
The former CEO also faces the crucial task of working on the way the World Bank lends, it follows an equity-to-loan ratio where it can only lend up to five times its total equity. Lowering this ratio and lending more would mean losing the triple-A credit ratings that the Bank holds dear and increasing its own cost of borrowing. This is where, Mr. Banga believes creativity in public-private partnerships would come in.
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