World Bank President Ajay Banga: Aid Solves Only Half of Poverty. The Other Half Takes Jobs

The World Bank is an international financial institution that lends to and funds countries to build roads, hospitals, power systems, and schools. Each year, it holds its Annual Meetings together with the International Monetary Fund (IMF), and this year Bangkok is the host.

One of the sessions was the Civil Society Townhall, where Ajay Banga, President of the World Bank Group, sat down with representatives of civil society, including foundations, NGOs, and community groups, both in the room and online. This was the fourth time Banga has held such a forum, with senior World Bank leaders also on stage to take questions.

Before opening the floor, Banga explained why the World Bank has put jobs at the center of its work, and where the money to create those jobs will come from at a time when funding is harder to find.

Poverty has two sides, and aid can fix only one

Banga recalled a friend once telling him that poverty has two sides. The first is material deprivation, which can be addressed through assistance. The second is an inner feeling that aid cannot fix. People need hope, opportunity, and the pride of being a productive part of society.

What gives people all of this is a job.

Banga explained that as children, people need clean air, clean water, healthcare, and the chance to learn skills. But once they grow up and are ready to work, what they need is a job, because a job provides both income and dignity.

He pointed out that today, even in the world's strongest economies, young people are taking to the streets because they cannot see opportunities for themselves. They are not protesting about one particular issue. They are talking about their future and their whole lives. That is why the World Bank must put the next generation at the center of its work, so they can become the drivers of the economy over the next 30 to 40 years.

Creating jobs takes money, and money is getting scarce

The problem is that job creation requires money, and money is harder to come by than before. Many countries carry rising debt and have less cash on hand. Wealthy nations are cutting foreign aid budgets, while energy and fertilizer prices are far higher than they were six to eight months ago.

"If jobs are the challenge, financing is the constraint," Banga said.

He explained that creating jobs requires three pots of money, each playing a different role:

• Public money and concessional loans lay the foundations, such as hospitals, schools, electricity, water supply, and transparent governance.
• Money from foundations and philanthropists funds risky new ideas to prove what actually works.
• Private sector money scales up what works, giving rise to businesses and employment.

"Governments open the way, lay the foundations, and set the rules, but it is the private sector that creates jobs," Banga said. He noted that roughly 90% of jobs worldwide come from the private sector, from micro businesses to large corporations.

Many may not realize how large funding from civil society and philanthropy really is. Banga said that for every $5 of aid flowing into developing countries, $1 comes from foundations and private donors, adding up to $15-20 billion a year. Shortly before taking the stage, he had just launched the Philanthropy Hub, a new World Bank unit set up to work directly with donors.

More private money is flowing in, but it isn't reaching those who need jobs most

Over the past year, the World Bank mobilized a record $112 billion in private investment, three times the level of four years ago. More than half of that went into sectors with high job-creation potential.

But a closer look at where the money went shows it was not spread evenly:

• Africa saw more than a twofold increase.
• Lower-middle-income countries such as Bangladesh and Angola saw nearly a threefold increase.
• Upper-middle-income countries such as Argentina, India, and Gabon saw more than a fourfold increase.
• The poorest countries saw almost no change.

Put simply, private money prefers places with less risk, so the poorest countries get skipped, even though they are where jobs are needed most. Banga openly acknowledged that this is a problem.

The World Bank's answer, launched this week, is a new strategy for small businesses, from micro shops to medium-sized enterprises. Banga reasoned that even in the poorest or conflict-affected countries, small businesses are always alive. The problem is that they cannot get loans or access markets, as if they have been locked out of the system. Opening the door for them would create jobs in places that big investment has yet to reach.

Before jobs, people need electricity, good health, and access to opportunity

Banga explained that the World Bank's jobs strategy starts with its first pillar: infrastructure, both physical and human. Physical infrastructure means bridges, roads, water, electricity, and digital systems. Human infrastructure means health, skills, and education matched to jobs, because people need these things before they can work.

He shared progress on the flagship programs:

• Electricity: Mission 300, run together with the African Development Bank, aims to bring electricity to 300 million people in Africa. The World Bank has so far connected 59 million people, almost the entire population of Thailand.
• Health: More than 600 million people now have better access to health services near their homes, toward a goal of 1.5 billion by 2030.
• Farmers: The AgriConnect program has supported 26 million farmers.
• Women: 17 million women and women-owned businesses have gained access to finance and financial services, and another 74 million women now have high-speed internet.

Jobs can't wait, so the World Bank has to move faster

Another point Banga stressed heavily was speed. He emphasized that development delayed is no different from development denied.

The World Bank has therefore overhauled how it works, including:

• Faster approvals: Down from as long as 19 months to an average of just 9 months (ranging from 60 days for a clinic project to around 3 years for a major project such as a dam).
• Less red tape: Indicators were cut from 153 to just 22, to focus on whether people's lives are actually getting better.
• Results-based financing: The share of loans disbursed against actual results has grown from one-third to nearly half.

Should mental health count as infrastructure?

After his opening remarks, Banga and the World Bank leadership took questions from civil society representatives around the world. One notable question came from Megan Gardner of Culture Connect, who built on Banga's point about poverty being both physical and psychological.

She said that the dignity of work and economic readiness are both tied to mental well-being, yet today mental health care falls to small, underfunded organizations. She asked whether the World Bank is ready to treat mental health as essential infrastructure that deserves funding.

Anna Bjerde responded that mental health is already part of the World Bank's health work, included in the goal of bringing 1.5 billion people access to care close to home. In conflict-affected countries especially, the World Bank must push harder on this, because people carry psychological wounds, from loss to children who have lived through violence. This work does not end when the war ends. It has to continue so people can feel their lives returning to normal.

Paschal Donohoe added that beyond health, education in schools and universities also helps build children's mental resilience from an early age, and said he would be happy to continue the conversation after the session to explore including it in the work plan.

Banga closed with a thought-provoking point. Whether funding comes from governments, the private sector, or foundations, the most important question everyone must answer is not just how much money there is, but "whose life did that money change, and did it truly create new opportunities for people?"