The World Bank pushes for a greener economy

ADVERTISEMENT

With the opening of COP21 in Paris, climate change is at the heart of international debates. Euronews’ Gregoire Lory took the occasion to speak to President of the World Bank Jim Yong Kim about a new ecological plan for Africa and the economic outlook for the coming months.

Euronews: The World Bank has launched a new plan for Africa, the Africa Climate Business Plan. Can you explain to us? What is this plan?

Jim Yong Kim: This is what it is, we called for the next 4 years as much as 16 billion additional dollars to help Africa with this plan. There’s all kind of resilience that we need to build in. The African plans understandably are partly about medication and then largely about adaptation. So, for example, Africa is actively loosing land, you know land is deteriorating it’s becoming desertified so we’re announcing our support for something called the green wall, you know building literally a green wall to protect existing arable lands from becoming desertified.

We need to be better at adaptation to extreme weather events for example, just simple things like early warning systems in the case of extreme weather could have a huge impact. And finally we need more data, we need to really understand where we are in building the capacity to adapt to climate change in the form of a more climate resilient agriculture. Roads, for example, that can work even when there’s flooding, cleaner – more livable – cities. Theses are the kinds of things that we need to understand where we are and use the data, use the knowledge that we have to help Africa to take the next step.

All those things are part of the plan. Also we’re going to increase our financing for renewable energy. The demand for renewable energy in Africa is very high but sometimes the financing is not available. We need to find ways of providing very low cost finance so that more investment can be made in renewable energy.

Euronews: Why did you decide to focus specifically on Africa?

Jim Yong Kim: The worry that we had and the worry that the African countries had was that the climate change meeting and the climate change debate was going to be all about reducing the amount of carbon in the air for the benefit of the rich countries. And the poor countries were saying: what about us, we didn’t put the carbon in the air yet we’re suffering the most. The boot of climate change is on our neck, that’s how they say. If that’s the case is there something that can happen out of these meetings that would be extremely positive for Africa? And we think there is. We think that we need to make a much bigger committement to helping Africa adapt to climate change while at the same time moving it toward cleaner sources of energy to fuel the growth and development of Africa. Africa has been growing very very quickly and the one thing that has limited its growth is access to energy. So we now need to find ways of meeting the needs for energy but in a cleaner way. That’s not going to be easy, on the other hand the technology is there and we think we can make the financing available as well.

Euronews: You’re talking about 16 billion dollars. How will you get this money?

Jim Yong Kim: We’re not just calling for the money we’re putting up a third of it ourselves. Out of the 16 billion, 5.7 will come from the World Bank Group and what we’re saying is – the countries have the plans – we’re putting the first third of the money down we think everyone else should step up and support the rest of the plan.

Euronews: You’re optimistic?

Jim Yong Kim: Absolutely!

Euronews: Let’s talk about global economy. What are your expectations for 2016?

Jim Yong Kim: Growth is disappointing once again. The only country, the only advanced economy that seems to continue to do well is United States of course there have been loud signals that the US Fed may increase its index rate in December. Also we’re seeing a huge exodus of capital from the emerging markets so the demand for our capital has increased tremendously. We need now to fill in as banks move out of emerging markets and developing countries we now have to step in play our usual kind of cyclical role and provide financing. This is all happening in a difficult period but we think this is also an opportunity especially in terms of rethinking how we invest in these developing countries if we can now move towards cleaner energy, if we can now move towards the kinds of activities that will both develop the country and impact climate change then I think we’ll be in a great position. All of our estimates for growth had been lowered just a little bit in emerging markets Russia and Brazil are the countries of greatest concern right now.

Euronews: What word would describe this economy: fragile, on the recovery path or getting stronger?

Jim Yong Kim: We would just say disappointing, disappointing. The emerging market countries are in a very different position than they were in the late 1990s or 1980s the central banks are independant, there is more fiscal space, there are more buffers in place. But still we’re expecting that the emerging markets that really drove global growth between 2008 and 2014 are going to grow slower this year and as commodity prices will likely stay low for some time we see that the slow down will continue for at least the next year.

Euronews: What advice would you give to leaders to be careful about in the coming months?

Jim Yong Kim: With the impending rise in the Fed rate, every single leader has to think carefully about their plans for the budget and for the economy. So, many countries are facing structural changes, structural reforms they have needed to make for a long time: improving business environment, investing in education – all kind of things that different countries have to do. We’ve been saying for a long time – now is the time to do it. We’re getting right to the point of a Fed rate increase we’re not sure what will happen. Developing countries now have to send very clear signals, policy uncertainty coming out developing countries is going to affect their borrowing costs it’s going to affect the movement of capital into or out of their country so be clear on your policy intentions, undertake structural reforms where needed, build back the fiscal buffers wherever they can and prepare, prepare for what could be more difficult conditions over the next year or so.