From billions to nowhere: Ajay Banga’s development mirage
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Article summary
- Banga’s presentation of ‘new’ private sector-led development approach recycles the discredited “billions to trillions” model
- Civil society groups fail to spot the difference from previous failed efforts and warn approach continues to prioritise investor returns over public good.
In tandem with the US unveiling a development agenda rooted in national interest and transactional commitments, World Bank President Ajay Banga published an op-ed in the Financial Times in April ahead of the Spring Meetings, positioning private capital as central to the Bank’s approach and framing it as a reformist shift. Yet this repackages old assumptions with little evidence, sidestepping contradictions in the Bank’s private finance agenda and distancing it from stronger climate and gender commitments to appease its main shareholder.
Banga’s claim of a new era in private sector engagement overlooks nearly a decade of unmet goals under “billions to trillions” and Maximizing Finance for Development agendas (MFD; see Observer Summer 2023, Spring 2022). Even Bank officials like Chief Economist Indermit Gill have called the model a “fantasy”, noting that since 2022 private creditors have extracted $141 billion more in debt payments from developing countries than they have lent, undermining claims of large-scale mobilisation.
Civil society organisations (CSOs) have long demanded that the Bank substantiates its claims by providing disaggregated data on private capital mobilisation, including which sectors and instruments work best, and where concessional finance is most effective. The OECD’s own analysis showed 87 per cent of mobilised private finance from 2018-2020 went to middle-income countries, just 12 per cent to low-income ones, and only 7 per cent to social infrastructure. Moreover, private investment in health and education often brings serious risks, as shown by repeated IFC-linked scandals involving poor-quality care, profiteering, and weak oversight in private hospitals and low-cost private schools (see Observer Spring 2025, Spring 2024). These failures reveal how profit-driven models in essential services can worsen inequality and undermine accountability – raising fundamental doubts about the Bank’s private sector-first approach.
Rebranding, not reform
Banga notes private investment will only flow where “strong infrastructure and predictable regulation” exist. To create these conditions, the Bank increasingly uses financial instruments like guarantees, securitisation and development policy financing reforms (see Briefing, A just energy transition deferred). In practice however, guarantees offer protection for investors against political or credit risks, while exposing host governments to contingent liabilities rarely disclosed publicly. The IFC’s securitisation programme which transforms development loans into securities to be sold on secondary markets, creates further risk by importing volatility and complexity into fragile economies. These tools are celebrated as “catalytic”, yet there is no publicly available evidence on which sectors or instruments have delivered the greatest development impact.
Banga’s pledge to boost sectors like energy, agribusiness, healthcare and manufacturing in resource-rich countries overlooks the World Bank’s role in weakening state capacity. Through structural adjustment, deregulation and privatisation, the Bank’s policies have undermined domestic industry and inclusive growth, creating commodity dependence without economic transformation (see Observer Autumn 2024; Inside the Institutions What are the main criticisms of the World Bank and the IMF?). In mineral-rich nations, this has fostered enclave economies dominated by foreign firms with limited local benefits. While Banga emphasises job creation, the impact is questionable. According to UNCTAD’s 2023 World Investment Report, private investments in capital-intensive sectors often create few, low-wage, short-term jobs with little protection, casting doubt on their true developmental value (see Observer Summer 2025).
“The strong support for a private finance-led development agenda is a huge leap in the dark. Enticing private capital into countries of the Global South requires offloading risk – onto them. What is needed is economic transformation and industrial policy that allows states to escape debt and dependency, reduce exposure to external shocks, and increase capacity to safeguard human rights while supporting the aspirations of people from the Global South,” notes Maria Jose Romero of Belgium based CSO Eurodad.
