Okonjo-Iweala: World Bank must mirror global shift

Emerging economies must be given a fair shot at leading the institutions at the heart of global finance or they will end up going their own way, a challenger for the top job at the World Bank said.

“The balance of power in the world has shifted and emerging market countries are contributing more and more to global growth – more than 50 percent – and they need to be given a voice in running things,” Nigerian Finance Minister Ngozi Okonjo-Iweala told Reuters. “If you don’t, they will lose interest.

Okonjo-Iweala, 57, was nominated on Friday by African power houses Nigeria, South Africa and Angola to lead the poverty-fighting institution when its current president Robert Zoellick steps down in June.

She is going up against Jim Yong Kim, a Korean-American health expert whose name was put forward by U.S. President Barack Obama on Friday, and former Colombian finance minister Jose Antonio Ocampo, who was nominated by Brazil.

It’s the first time the post has ever been contested.

Under an informal agreement between the United States and its allies in Europe, Washington has laid claim to the top post at the World Bank since its founding after World War Two, while a European has always led the International Monetary Fund, its sister Bretton Woods institution.

Okonjo-Iweala, a respected economist and diplomat, painted the convention as a vestige of a bygone era.

“We’re not asking the U.S. not to compete, we’re just asking for a level playing field where candidates can be evaluated on their merits,” she said.

A former World Bank managing director known for her colorful African head wraps and dresses, Okonjo-Iweala contrasted her experience with that of Kim, who made his mark battling disease in some of the poorest corners of the world.

She noted that she has hands-on experience running one of Africa’s largest economies, as well as a proven track record at the World Bank helping nations in Asia, Africa and the Middle East tap financial markets to fund development.

“I don’t have a learning curve because I know how the institution works and I know what needs to be done to make it work better and faster for developing countries,” she said.

“I know what its strengths are, its weaknesses and importantly I know what policymakers need. I’ve actually done it.”

ASKING FOR LEVEL PLAYING FIELD

U.S. Treasury Secretary Timothy Geithner told Reuters over the weekend that he was confident that Kim, president of Dartmouth College, would win global support for the job. Through his work in fighting HIV/AIDS, tuberculosis and getting health care to the poor, Kim had shown an ability to get things done in tough environments, said Geithner.

Okonjo-Iweala admitted that if the United States, the nation with the largest World Bank voting bloc, and Europe held together, her candidacy would be doomed. But she expressed hope the World Bank’s 187 member nations would hold true to their pledge for an open, merit-based process.

“We are not just going into this saying to ourselves we are already defeated,” she said, speaking by telephone from Abuja. “We are hoping that the Bretton Woods institutions and their shareholders will keep their word.”

“My biggest hope is that this will be a fair contest.”

Okonjo-Iweala, who was named by Forbes magazine last year as one of the world’s 100 most powerful women, said African leaders would be discussing her nomination with other developing and emerging economies including China, the World Bank’s third-largest shareholder.

Her political situation in Nigeria is difficult. She left the World Bank last year to become the lead economic architect in Nigerian President Goodluck Jonathan’s cabinet.

A long-time anti-corruption campaigner, she immediately sought to implement politically tough reforms. One of her first moves was to remove fuel subsidies, a step that sparked widespread protests that forced the government to back down in January

Now, her opponents are attacking her over the World Bank nomination, saying it showed disloyalty to her country and its president. Jonathan backed Okonjo-Iweala’s nomination after calls from South African President Jacob Zuma and West African nations led by Ivory Coast’s president Alassane Outtara.

“Several African leaders called my president and asked for my name to be put forward because they felt they have someone really qualified to do this job,” she said, adding that she remains deeply committed to Nigeria.

FOCUS ON JOBS

Last year, Okonjo-Iweala was behind a World Bank plan to create so-called diaspora bonds to raise money from the estimated 23 million Africans living abroad, who hold more than $30 billion in savings. The money would help African countries fund essential services and fight poverty.

She was also instrumental in launching a fund to provide emergency loans to countries hit by a record jump in global food prices in 2008 and was pivotal in creating an infrastructure fund for roads, railways and power grids in developing countries.

In Nigeria, she is credited with securing a deal with the Paris Club of creditor nations in 2005 that wiped out $30 billion in the country’s debt. It was the second-largest Paris Club debt relief deal ever.

Okonjo-Iweala said a critical issue for many developing countries is job creation, especially among unemployed youth. High unemployment, corruption and political oppression sparked the “Arab Spring” protests that toppled leaders in such countries as Egypt, Tunisia, Libya and Yemen, she noted.

“If we do not come to terms with this problem, we’re not going to have (just) the Arab Spring, we will have many other Springs,” she said. “This is a very important challenge that demands us to go beyond the usual poverty eradication and fighting tools to ask ourselves what is needed.”

While the World Bank’s main mission is to fight poverty, it has increasingly sought ways to help emerging economies that need policy expertise more than money, and Okonjo-Iweala said it had to become more nimble in this task.

“Emerging market countries … need the bank to be a provider and intermediator of knowledge from one country to another,” she said. “To do that we need to organize the experts from the bank in a much smarter and faster fashion.”

“When you are a policymaker and you have a question facing you, you don’t have three weeks to wait for a (World Bank) mission to arrive.”