Fixing Project Bureaucracy at the World Bank

World Bank president Ajay Banga’s declared strategy is to lead with a better bank before pushing for a bigger bank. I hope it works. His shoutout to the dribs of finance offered by Germany and the US toward guarantees and hybrid capital in his Annual Meetings speech today only served to emphasize how utterly inadequate they are compared to both promises and needs. But even if the US and its allies continue with their history of promising mountains and delivering molehills, one reform effort he talked about today would bring significant global benefits: making it easier for clients to do business with the Bank.

“Currently, a World Bank project takes 27 months – on average – before a single dollar gets out the door. This is followed by a lengthy implementation process... Too often it’s longer than 10 years before the first benefits are felt…. We have the entire process in our crosshairs, initially working to dramatically reduce the project review and approval time by one-third. But with ambition to do more. Our plan calls for simplifying approvals, proportionately adjusting reviews, and combining intelligent technology with shorter timelines to drive speed.”

That is great news. If we want World Bank client countries to borrow more, especially for global public goods provision, we have to make the process of borrowing from the World Bank far less onerous, so that clients don’t see it as a financier of second to last resort (only ahead of the IMF). At the moment, we’re a long way from that. Not least, potential projects that are subject to safeguard assessments (and that’s a lot of infrastructure projects) take an extra year to prepare and those same projects usually take over seven years to close. The average project not subject to safeguards still takes about six years. Simplifying project processes could make a big difference. And to help ensure speed does not come at the cost of quality, these reforms should come alongside further work on transparency in the project process, especially around procurement, where the Bank has lost an early leadership position.

There were questionable ideas in Banga’s speech. The suggestion that the Bank should pour more subsidies into renewable energy in IBRD/IDA blend countries is concerning given the grim record of such subsidies to date. The World Bank’s record on carbon markets is hardly reassuring. And billions to trillions remains about as plausible as the idea that the Loch Ness Monster is mediating negotiations with ET at Area 51. But if Ajay Banga makes the Bank’s project cycle significantly more friendly to borrowers, that would have a huge development impact, and we should all wish him every success.



CGD blog posts reflect the views of the authors, drawing on prior research and experience in their areas of expertise. CGD is a nonpartisan, independent organization and does not take institutional positions.