World Bank president Jim Yong Kim, who visited SA last week, did not come as a “tourist World Bank president” on a ceremonial African visit, he says, but with a mission to persuade South Africans that the bank is not the “ideological organisation” many fear it to be.
Kim, a Korean-born American who himself once campaigned to have the World Bank shut down, has been its leader since 2012. A physician in infectious diseases and an anthropologist who has worked in community health in the poorest countries of the world, he is not the archetypal global banker. Instead of trying to impose market disciplines on poor countries, Kim’s focus has been the opposite: to bend the will of markets to work for poor people.
When the HIV/Aids epidemic exploded, for instance, Kim — who was then at the World Health Organisation (WHO) — was one of a handful of global leaders who believed that providing treatment for Africans was both possible and morally imperative.
“Every single leader, even people like my hero Bill Gates, were saying you can’t treat HIV in Africa… I was just personally outraged that you could tell 25-million people in Africa, sorry you’re dead. And you are dead because it is just too inconvenient for us to give you one or two pills a day.”
Kim eventually won that argument, moving the world from 150,000 people on treatment to 3-million two years later. In the process he made a special trip to SA to take on former president Thabo Mbeki’s Aids denialism and make the case to the public that treatment was needed.
At a lecture at Wits University last week, Kim retold the story of his fight with Mbeki and his health minister, Manto Tshabalala- Msimang, who had complained to the WHO about him.
“I told this story because I want the people of SA to know that I’m not here as a tourist president. I’ve been here before and I’ve been to many African countries. And I also wanted to make the case that we are not the ideological, structural adjustment prescriptive institution that we might have been in the 1970s and 1980s. People think we are sycophants for the market, but we actually do everything we can to disrupt markets and make them work for poor people.”
An example is the World Bank’s emergency pandemic facility, a bond created two years ago from which $450m has been raised.
“We had no idea whether anyone would want to buy a pandemic bond, but it was twice over-subscribed. So we are actually paying for an insurance policy for the poor people of the world. We made markets work for the poor.”
The facility is able to move money immediately when Ebola, for instance, breaks out in Africa. The bank is now looking at the possibility of famine insurance.
In the case of SA, the bank’s great advantage is its ability to bring evidence from other countries to bear on solving some of SA’s intractable problems. Human development is more than ever before an essential foundation for a successful society and any economy that hopes to compete in a global world where artificial intelligence (AI) is fast gaining a foothold.
The acceleration of AI into production of almost everything means traditional economic development pathways — from agriculture to light manufacturing to heavy industry — are no longer available to most developing countries.
“As you think about the various paths to economic growth, you have to think about whether your people are prepared to compete. Now SA is ranked 126 out of 157 on the human development index. This is a serious issue. But SA spends 7% of GDP on education and about 7% of GDP also on health. These are very healthy numbers, but the outcomes are just not there.”
It’s here where Kim thinks the bank has a valuable role to play. Recent work with China, transforming its health system away from a hospital-centric one to a community-based system, is a good example.
“China absolutely doesn’t need our money. But what they do is ask us to tackle a problem. So China spends 5% of GDP on health but weren’t getting the outcomes they wanted. We studied the Chinese health system; we brought experts from all over the world; had intensive discussions with them about what reforms would work. Then we did a pilot study, which showed that the programme we presented made a difference to outcomes and reduced costs. So they are now scaling it up to [the] rest of [the] country.”
SA’s position ranking at 126 is “a major issue”.
“We would love to help SA with expertise to move up those ranks very quickly. We think you can.”
AI and technology need not leave Africa behind and can be a boon to development and quality of life. Even if Africans are not writing the code for AI, technology can still provide platforms for Africans to prosper.
A recent Harvard study of women entrepreneurs has, for example, led the bank to help Ethiopian women with new ways to access capital. The study, says Kim, compared providing capital to women entrepreneurs using the standard “know your customer” methodology, where collateral is involved, with a psychometric test of about 45 minutes. The study showed the test was highly predictive of who was likely to pay back their loan.
“So now banks in Ethiopia will give women as much as $7,500 based on results of psychometric testing. Wouldn’t a psychometric test be better than having to have access to collateral? We think that is a tremendous success.”
The explosion of e-commerce in China has transformed poor communities, giving people access to markets and attracting young people back to rural areas. E-commerce in China — through online shopping giant Alibaba — has also transformed conventional market practices by, for instance, enabling access to credit.
“In the Alibaba system, you can get as much as 1-million renminbi in your account in two seconds just by applying, and they never have to see you. It’s based on your online behaviour. If your online behaviour suggests you can handle a loan of $150,000, you can get it in two seconds. They have completely changed access to capital for very poor people. There is no reason why we can’t do that in Africa.”
source: Business Day