Malpass must usher in an era of redistribution of wealth

Tackling inequality needs to be the cornerstone of the work to be done by the new president of the World Bank, writes Kevin Watkins.

Malpass must usher in an era of redistribution of wealth

Tackling inequality needs to be the cornerstone of the work to be done by the new president of the World Bank, writes Kevin Watkins.

David Malpass has taken over as World Bank president, and he carries some heavy political baggage.

He is, after all, the pick of US President Donald Trump, raising fears that he may use the position to open a new front in Trump’s trade war with China, weaken the Bank’s leadership on climate change, and undercut multilateralism more broadly.

Malpass needs to address these concerns head-on. He should be judged not by his past, or by his links to the Trump administration, but by his delivery.

As leader of a 189-member multilateral institution with a remit to tackle some of the greatest injustices of our time, from poverty to extreme inequality and global warming, Malpass is stepping into one of the world’s most important jobs.

Whatever the circumstances of his appointment, the temptation to pass sentence on Malpass ahead of a fair trial should be avoided. His anti-multilateral instincts can be overstated.

As a senior US Treasury Department official, he helped engineer a €12bn capital increase for the World Bank last year.

He has also signalled an intent to keep poverty reduction at the heart of the Bank’s mission.

This week’s Spring Meetings provide an opportunity to put words into action on the Sustainable Development Goals (SDGs), the international community’s 2030 targets for eradicating poverty, improving health and wellbeing, expanding opportunity, and environmental sustainability.

Despite the extraordinary progress of the past two decades, the SDG warning signs are flashing. Recent World Bank estimates point to a sharp slowdown in the pace of global poverty reduction.

On current trends, some 600m people will remain below the official poverty line of €1.70 per day in 2030. Over 40% of those people will be African children.

Child survival data are similarly worrying. While the death rate of children under the age of five has been nearly halved since 2000, the SDG target of zero preventable child deaths is drifting out of reach.

On current trends, more than 3m children under five will die in 2030.

The report card on education is similarly bleak. In our increasingly knowledge-based global economy, there are still some 263m young people out of school.

One quarter of these young people are primary-school-age children — and the numbers are rising.

An even greater number of children are in school, but not receiving a quality education. For these children, the SDG commitment to “expand opportunity” has all the hallmarks of a bounced check.

Inequality lies at the heart of the looming shortfall regarding the 2030 targets. Without some hefty income redistribution in favour of the poor, there is no prospect that the poverty eradication goal will be achieved.

To its credit, the Bank has increasingly turned the spotlight on inequality.

But it has been curiously reticent about advocating for the redistributive policies in taxation, public spending, and regulation needed to narrow social disparities. bution, but that is what is needed.

There is legitimate cause for concern on this front. In his initial “election” manifesto, Malpass focused overwhelmingly on cutting taxes, while scrupulously avoiding any reference to the need for increased public spending in areas like health, education, and infrastructure.

This is a cure guaranteed to kill the SDG patient. Far from cutting taxes, the IMF estimates that developing countries will need to raise an additional 5% of GDP in tax revenues to achieve the SDGs.

The World Bank should be helping build the progressive and accountable tax systems needed to achieve this outcome.

At a time of shrinking aid budgets, the Bank should also be supporting more innovative approaches to finance.

Former British prime minister Gordon Brown, the United Nations special envoy for education, has called for the creation of an International Finance Facility for Education that would use loan guarantees to unlock $8bn (€7.1bn) in new education financing for lower-middle-income countries, whose access to concessional finance is currently restricted.

Gordon Brown
Gordon Brown

This would help put 70m children in school. Health financing is another high-priority area.

Millions of children die each year as a result of treatable diseases like pneumonia, malaria, and diarrhea, because their parents cannot afford health fees, or because clinics lack trained health workers, drugs, and vital diagnostic equipment.

Under its former president, Jim Yong Kim, the World Bank championed publicly financed universal health coverage, and for good reason: there is no alternative route to providing quality health services to the poor.

Malpass should work closely with the WHO to drive this agenda, focusing on primary care services.

Malpass has the responsibility of overseeing one of the world’s largest sources of development finance – an institution staffed by dedicated professionals committed to transforming millions of lives by achieving the SDG targets.

He must not drop the ball.

Kevin Watkins is the CEO of Save the Children UK

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