MR. QUEST: It's always very gratifying to be in the headquarters of any building where you're interviewee is the boss. It ensures that the room will be full.
However, for the person who should be sitting in that seat, we've taken your name. HR will duly be informed.
Good morning, everyone. And welcome to the World Bank headquarters in Washington. For those of you watching us online at CNN, or at Live.WorldBank.org, you can follow us in English, Spanish, Arabic, and French. The translators are going to have a fun time today.
I'm Richard Quest, the host of Quest Means Business on CNN. I'm here with President Jim Yong Kim, the President of the World Bank Group. And the ground rules for the next 45 minutes: I have agreed nothing. Is that right, Mr. President?
MR. KIM: That's so. Yes. Absolutely.
MR. QUEST: Okay. So we've agreed nothing, in terms of what I will ask, what we will discuss. There are no restrictions on what we can ask, or how we're going to talk. And we will, of course, take your Tweets and your -- I think it's hash-tag -- remind me, someone -- hash-tag -- WBlive, #Wblive, and I will be watching on my screen here.
Let's start, Dr. Kim -- you've been in the Bank now just over a year.
MR. KIM: Right.
MR. QUEST: Just over a year. Before we talk about your reforms and your changes, we need to deal with the U.S. government shutdown and the debt ceiling.
MR. KIM: Mm-hmm.
MR. QUEST: Well, you didn't expect me to ignore that, did you? For goodness sake.
Sir, tell me, how worried are you, and why?
MR. KIM: We're very worried. You know, Richard, we looked back and asked a very simple question: What happened when we had the last near-miss in August of 2011? And it turns that even though it was a near-miss, and we didn't actually get to default, the effects were really quite substantial. There was about a 75 basis-points increase in the bond spreads, and the markets in emerging markets dropped about 15 percent. And that effect persisted.
So we're very concerned. Because right now, there are so many headwinds as it is for emerging markets and the developing world, and that kind of impact really could be devastating.
MR. QUEST: When you say that, is this the budget, or is it the debt ceiling? Which, for you, is the more worrying?
MR. KIM: It's the debt ceiling. It's the potential for default that really is of greatest concern. You know, the last time it happened was just in August of 2011, and the impacts were severe. I mean, there are many ways that it has the impact, but -- interest rates go up, there is a flight to safety, and then currencies in developing countries could go down. And, you know, just overall confidence goes down.
And right now, many countries need to continue to invest. And if confidence, if there's a strong confidence effect, we're going to have trouble. And the headwinds that these economies are already facing are just going to get stiffer.
MR. QUEST: The problem, of course, is we know to some extent that they are playing -- I mean, Warren Buffett described it as they’re playing with nuclear weapons. But they continue to do so.
You're in Washington. It's happening up the road from you.
MR. KIM: Well, you know, we are very happy to be a global organization. You know, we have 188 member countries. And, you know, I'm not going to comment on the politics. There have been many people who have commented on the politics.
But what I want to say is that for the legislators, I want them to know that the closer they get to default, the bigger the impact it's going to have -- not on giant corporations. I mean that, everyone knows that the big companies will all be affected. But it's, you know, the rice farmers in Southeast Asia, it's the young men and women in the Middle East who are trying to start businesses. All of those people will be affected, and will be affected severely. And those are the people, of course, who we're most concerned about.
MR. QUEST: Well, just remind us again how they are affected by it. Because, arguably, the Midwest farmer, and the French vineyard grower, they are affected.
But draw that line, as seen from your palatial offices in Washington -- I had to get that in -- draw that line from here to there.
MR. KIM: Well, when interest rates go up on U.S. treasuries, which we've already seen, borrowing costs go up all over the place. And, of course, if capital is more scarce, and if you just can't get access to capital, it's a problem in all developing countries.
But the line directly, of course, is that as everything slows down, and as markets drop, as economic activity slows down, we often forget that it does have a direct impact on the poorest.
MR. QUEST: Are you making, as yet, contingency plans for what might, could happen?
MR. KIM: You know, we've been very good at responding to various disasters, from, you know, when the economic crisis hit. We increased our lending a lot. And we're ready to move, just as we have before, to support the poorest countries. Many of them will just need direct budget support in order to just keep their governments running, to provide basic services.
We've done it before, and we're ready to do it again.
MR. QUEST: So, to be clear --
MR. KIM: Yes.
MR. QUEST: -- in the event that the debt ceiling crisis turns into a debt ceiling catastrophe, the World Bank is ready to come to support.
MR. KIM: Absolutely. You know, we responded in previous times. There was a lot of confidence and strong, positive reviews of what we were able to do in crisis in the last five years. We're ready to do it again.
And, you know --
MR. QUEST: So, you've had meetings here about this.
MR. KIM: Oh, of course. Yes, I mean, you know, we are continuously following the situation. And because we've done this before, the muscle-memory is still in place -- it just happened five years ago. I mean, we're ready to go.
MR. QUEST: Let's talk about the strategy that you introduced. I'd like to have read the document about this strategy. Unfortunately, it wasn't published, but was leaked, so I only read the first five pages or so.
MR. KIM: Yes.
MR. QUEST: Describe for me your strategy to end poverty.
MR. KIM: Well, you know, it's based on when I first walked in this building. When I first walked in this building, I started literally visiting every single one of the units. When I go to the country offices, visited all -- with the staff -- and I asked them, "So, when was the Bank at its best? What makes you most proud of working at the Bank?" And, to a person, they said, you know, we're here to fight poverty.
And so that kind of idea grew and grew, and now in the last -- at the April spring meetings, we have a target to end poverty by 2030 -- which means bringing it down to a level as low as we can possibly go. And that's really 3 percent. I mean, there's so much conflict in the world, people going in and out, 3 percent is about as good as we can do. So the strategy is focused on getting us to the target.
The second focus for us is what we call "shared prosperity." And that means we're focusing specifically on the income of the bottom 40 percent. So it's not just getting about $1.25 a day, which is extreme poverty, it's really looking at how much the bottom 40 percent are participating in the overall economic growth.
MR. QUEST: You see, I'm slightly surprised it took you a year to come up with a conclusion to end poverty and share prosperity.
MR. KIM: Have you worked at the World Bank before, Richard? (Laughter.)
Let me put it this way: This is really the first time that we've had two overarching goals for the entire institution, and it's been voted on by the member countries.
And the thing is, it really sets a program for us that's going to be difficult.
MR. QUEST: Well, what have you been doing until then?
MR. KIM: Excuse me?
MR. QUEST: I mean, I'm sorry, forgive me, but you say this is the first time there's been a single, or two goals in this way. And I don't understand what's so different about saying "we're going to end poverty," which is exactly what, well, I thought you were always doing, and that you were going to have shared prosperity.
MR. KIM: Well, let me explain. So, for example, when you look at the growth numbers over the last 20 years, and you say if we have the same growth rate in the developing world as we've had over the last 20 years, how close will we get to 3 percent poverty? And the answer is: actually, not very close. We'll only get to 8 percent.
And so the difference between 8 percent and 3 percent is huge. And once you get to 8 percent, what's left are not low-hanging fruit. These are the highest-hanging fruit. These are going to be the most difficult people to reach and lift out of poverty.
And so, if you go backward from there, you have to then say, well, then if you want to get to 3 percent, what has to happen? And what has to happen is that countries have to perform as if they were performing at their best. And it's different, varying, different periods -- 3 years, 5 years, 10 years -- but they've all got to get to the point where they were at their best over the last 20 years, not the average.
And so we have a huge amount of work to do. How do we get countries there? How can we help them get there?
MR. QUEST: So, where are we now, in percentage terms, on poverty?
MR. KIM: We're about 18 percent.
MR. QUEST: 18 percent.
MR. KIM: Yes.
MR. QUEST: At the moment. And you're about to come out with a new target.
MR. KIM: Right. Well, you asked me about it last time we talked, Richard -- "What's your interim target?" And so we looked again carefully at it, and we don't think that there's any way that we can get to 3 percent unless we're at least at 9 percent by 2020.
So, we have an interim target now. And we want to halve poverty.
MR. QUEST: Now, this is new.
MR. KIM: This is new. This is new.
MR. QUEST: Today.
MR. KIM: I'm announcing it right now, to you, because you asked me about it last time.
So, we're now --
MR. QUEST: You're going to halve --
MR. KIM: In seven years.
MR. QUEST: You're going to halve poverty -- and, by the way, just for anybody watching online, if you've got the idea that we're talking about a car in the garage, and two chickens in the pot, you're wrong. You're talking about that -- all right? Correct, Mr. President?
MR. KIM: Exactly, $1.25 a day.
MR. QUEST: $1.25 a day. It won't even buy you half a Starbucks latte.
MR. KIM: So --
MR. QUEST: And you're going to halve it.
MR. KIM: Yes. And a great thing about having a real target that's given to us by our board -- the really good thing about it -- is that you have to go backwards and say, so what do we need to do differently to get, to help developing countries get to the point where, over the next 17 years, they're growing as well as they did during their best period over the last 20?
That's a huge job. What were they doing in terms of fiscal policy? What were they doing in terms of investments? What were they doing in terms of health and education?
We have to really understand what the strategies were that worked, and then we also have to then understand that the context is different now than it was before, so what will be the best strategy for them going forward?
That's a lot of work for us to do, and we have to do it working together. Because there's no way that any one sector, or even what -- the public sector or the private sector. Our public sector and private sector teams have to work together to accomplish that goal.
MR. QUEST: To do this -- it's not a one-size-fits-all.
MR. KIM: Absolutely not. No.
MR. QUEST: Every country has a different --
MR. KIM: Right.
MR. QUEST: -- set of dynamics, set of solutions, and this.
But you have a single organization that has to deal with that.
MR. KIM: Right.
MR. QUEST: And you're repositioning the Bank. So tell me how you're repositioning it?
MR. KIM: Well, there are a couple of things that are really critical for us. First of all, one of the things that we're hearing from everyone is that it's really critical for us to do, for example, public-private partnerships.
And so, in every country in the world, people understand that just foreign assistance is not going to lift them out of poverty. What they really have to do is to use foreign assistance, and their government resources, to really make the private sector work. The private sector creates 90 percent of the jobs in the developing world. If we want to see growth, we've got to see public and private work together.
And the Bank has not been very good at having its public sector and private sector branches working together. We are completely changing that. We're going to be working together in every single country, with joint strategies for every country, that's public and private. That's what people want. That's just one example.
The other example is we're going to ask ourselves every day: Are we making progress toward these goals? Is everyone here united toward these goals? Because what happens in bureaucracies, Richard, is that the incentives sometimes get a little bit misaligned with the mission. In other words, if the incentive is to get your loan, or get your deal through the board as quickly as possible, we end up with a hodgepodge of a lot of little projects that were good for the career advancement of individuals, but maybe not aligned with the strategy of a country to actually end extreme poverty. That's the biggest change we're making.
MR. QUEST: But to do that -- how many employees have you got?
MR. KIM: 13,000 to 15,000, it varies from time -- depending on contractors.
MR. QUEST: Right. So, say 15,000 employees. You've got to re-engineer their thinking, to do this, into a more results-oriented fashion -- which is basically what you're saying.
MR. KIM: Yes. Well, you know, the thing -- one of the things which -- I've been in great institutions, Harvard, Dartmouth. I've been part of great institutions.
But I have, frankly, never been part of an institution with the kind of staff that the Bank has. It's a very special group of people. They have PhDs in economics, and sociology, and engineering from the best institutions in the world. They come from more than a hundred countries. But it's not just the academic knowledge they have. These are -- we have thousands of people who've actually built bridges, who have actually dealt with difficult, fragile economies and gotten them back on track. So they have both practical experience and the depth of academic knowledge. That group of people have been waiting for us to change the structure so that they can really do everything that they'd like to.
MR. QUEST: How do you know?
MR. KIM: I do. How do I know what?
MR. QUEST: How do you know they'd be waiting to change the structure? They may be thinking --
MR. KIM: That's what they told -- oh, no, no.
MR. QUEST: Oh, no, no, come on. They may be thinking here is a man --
MR. KIM: That's what they told me.
MR. QUEST: Well, they'll tell you, absolutely. But they may be thinking here is a man who's come in who's never built a bridge, who's now going to try and tell us how to build a bridge and is going to try and turn things around.
MR. KIM: Well, I've never built a bridge; I'll give you that Richard. Okay, I've never built a bridge, but I've built healthcare systems and I've built village and community support projects. So I've actually been in the field doing the work. And this is why I feel I've come in and been able to in a deep way appreciate our staff because that's what they've done too.
They've been in the field, you know, mud between their toes trying to figure out difficult problems and we did a survey of the whole organization. And the survey of the whole organization was not pretty. The people in the organization --
MR. QUEST: Ooh, tell us more.
MR. KIM: Oh, we asked things like is the bureaucracy, is the structure, is it set up in a way that allows you to do your best work, and the answer was no. We asked other questions like how much of your time, for technical people in one region, how much of your time do you spend providing support to people in other regions? We have six regions. That's all. And the answer was less than one percent of their time.
So there was no cross fertilization of knowledge between the regions. And what they said was we are less than the sum of our parts and we want to be even greater than the sum of our parts. That was a message loud and clear coming from the staff.
MR. QUEST: So you have this report and you know my view on part of it, the bit that was leaked that I was able to read.
MR. KIM: Tell me, Richard.
MR. QUEST: I’m going to. It sounds to me, with respect, as if you have taken every bit of management speak buzzword and shoved it all into one document. You have a solutions World Bank. You have a customer oriented development solutions. You have a one World Bank strategy, a repositioning strategy. I mean who wrote it?
MR. KIM: Well, Richard, if you think that was bad you should have seen the first draft.
MR. QUEST: But you get my point. My point is, my serious point is you're about to make major fundamental root and branch change at the World Bank.
MR. KIM: Right.
MR. QUEST: And you have to justify that change.
MR. KIM: Right. So for the people who know the Bank well -- and our executive directors, our board, our governors know the bank well -- what we're saying in the report means a lot. And what we've heard back is wow, this really does signal a change, but you have to look at what we're doing structurally. All right? We're really taking apart the bank and putting it back together so that it will work in a way that will lead us to be able to help countries reach that three percent target and boost the incomes of the bottom 40 percent.
And, to do that, one of the things, just focus on one issue that came out in our survey. Less than one percent of the time of technical experts are spent helping other regions. So that means if there's a great innovation in one region it is effectively going to stay in that region. And if there's a better way of doing a water project in another region, the likelihood of it moving to that region is pretty low.
So what we're doing is we're taking all the technical people and making sure that they're together so that anything that happens in one part of the world that can help are going to be spread all over the world.
MR. QUEST: What will you not be doing as a result of this new strategy?
MR. KIM: There are things that we do now that other people do better. We won't do that anymore.
MR. QUEST: Such as?
MR. KIM: Well, I mean there are so many small projects that we're doing that other organizations are doing well. And it's not so much, Richard, we're not going to get out of any sector. We did this before. Years ago we decided we're not going to do infrastructure, we're not going to do agriculture. That was a mistake because it's not about the sector. It's about how we do our work. We have to have expertise in a lot of different sectors because --
MR. QUEST: But the --
MR. KIM: Go ahead.
MR. QUEST: Sorry. The fear is that the World Bank is going to start cutting back.
MR. KIM: We have no plans of cutting back, and in fact we've made it very clear that we want to become a bigger bank. We think that there's the demand for the kinds of services we can provide will only grow over time. And let me just give you the example.
So when someone says something like we want to build better cities, that means that you've got to know something about urban design. You've got to know something about transport. You've got to know something about energy, health, education, social protection, you've got to know something about all those and you've got to bring all those together to come up with a cogent plan for building your cities.
Now, not very many organizations in the world have that kind of capacity. That's uniquely our capacity. But what we've been doing in the past is a little project on a road here, a little project on healthcare here, as opposed to sitting back and saying, look, what's your real problem? In China it's that 300 million people are going to move into the cities by 2030. They're going to have more than a billion urban residents by 2030. And they're asking us please don't give us these little mosquito bite solutions. Sit back and say: How should we think about urbanization in China as a whole?
And the lessons we've learned here, can we help other countries that are facing the same problems? That's what we're going to do, Richard. We're going to stop the little, small mosquito bite projects that may have gotten through the Board easily and may have gotten people their next promotion but don't really help countries solve their core problems. That's what we're going to be.
MR. QUEST: Right. So that's the sort of the cut, but you don't imagine some wholesale budget cuts? I mean I know you're hoping to take 400 million. Can you confirm that number by the way?
MR. KIM: Absolutely, yes. That's a minimum. That's our starting point.
MR. QUEST: 400 million out of the --
MR. KIM: Roughly $5 billion budget.
MR. QUEST: Of the administrative budget?
MR. KIM: Yes, yes. So --
MR. QUEST: Job losses?
MR. KIM: Excuse me?
MR. QUEST: Job losses?
MR. KIM: Well, we're going to do it in a strategic way. Will there be some staff cutbacks? You bet. There will be. But we're not going in with any number in terms of the people to cut because that's a stupid thing to do. You want to go in and say, okay, to what extent are people helping us achieve our goals? Ending poverty, boosting shared prosperity? And as we go through it's just my experience, Richard. You know, I've done this now in two other large organizations and what I've found is that bureaucracies, what we tend to do is, if there's a problem we, hire more people.
It's like, you know, we call it a Cape Cod house. When you go to Cape Cod you see houses that have the original and then they just keep adding sections to it. That's what bureaucracies do. Instead of saying, okay, let's sit back and rethink is there some way that we can reorganize ourselves so that we can get all this stuff done but much more effectively and efficiently, we haven't done that for a while. So we're going to do it now.
MR. QUEST: Isn't the danger of doing, and I don't deny the validity of doing the opposite, but isn't the danger of doing the rebuilding from scratch that it never gets done properly? The real danger is you start doing it and all problems get in the way. And not only do you not end up with a Cape Cod plus, you end up with something even worse, a Cape Cod plus not fit for purpose?
MR. KIM: Well, the whole point is that we want to build an organization that's fit for purpose. We have two clear goals. We now have a strategy document that our Board has supported. We hope that the governors will support it at this meeting. And we're going to go through a thorough looking at every single part of the budget and asking ourselves: Is this really optimally organized? Are we spending money in a way that's going to lead us to our goals? And if we're not, we're going to make those changes.
The key, Richard -- and I've done it twice before -- the key is that leadership, and that's our whole senior leadership, can't back off because there's resistance or can't back off because there's noise. There will be noise. There will be resistance. But at the end of the day I am convinced that we can do this and that the organization will work much more effectively afterwards. I've done it twice. I'll tell you it's not easy.
MR. QUEST: But you've done it before?
MR. KIM: I've done it before.
MR. QUEST: And you're going to do it again?
MR. KIM: And we're going to do it again. And we're going to do it again. It's a matter of not losing nerve.
MR. QUEST: Really?
MR. KIM: Absolutely. Because there's noise. There's always noise.
MR. QUEST: Not losing nerve?
MR. KIM: Absolutely.
MR. QUEST: Hang on, that's a challenge.
MR. KIM: Yes, and you can ask me about that next time we talk.
MR. QUEST: All right. Do you think this organization, I mean, one of the criticisms when you were appointed, you know as well, of course, was that you came from the development industry. You came from the development side. You weren't an international banker. You weren't an international economist. You hadn't sat at the table at the G20 and everything else. Do you think now it is starting to become clear that actually was your strength and that, no disrespect to your predecessors, they had spent perhaps a little too long doing all those other things?
MR. KIM: Well, Richard, I tell you --
MR. QUEST: Oh, come on, don't be a diplomat. Just say it.
MR. KIM: I've been doing development all my life. I really have. And this is a development institution. And the time when people get most passionate is when they talk about lifting people out of poverty, about, you know, we're cleaning up the Ganges River, and I went right to the source. And the excitement that people have about actually solving problems, that's the excitement that I share with them.
So, on that level, I think I have found, anyway, I don't know how the staff feels about me, but I certainly feel toward the staff that we share this really unique and wonderful experience of having been able to go into a situation and actually make it better and see the difference in peoples' lives.
MR. QUEST: If you are watching us anywhere in the world, do please ask a question. It's, well, it's a variety of #wblive, it's #ask -- no, just send it to @richardquest. Let's boost my numbers a bit. Stuff the World Bank numbers, let's get mine up. @richardquest.
Africa. I came back from Ivory Coast on Sunday. There, we have a classic development situation. It creates great crops, coffee, cocoa, rubber and others. It has some industry. It's now got an element of stability, and it is dirt poor.
MR. KIM: Yes. So, Richard, one of the changes -- and this goes back to the strategy -- one of the things that we've said in the strategy is we're going to invest 50 percent more in the fragile and conflict-affected states. Now, I was just in Côte d'Ivoire, as well. One of the things they have that's really important is good leadership. You must have met President Ouattara, someone who understands a global economy, committed to development.
But here's his problem. There was a conflict that started in 1999 and lasted for over a decade. And so, one of the things we're doing is we're providing training programs, support for training programs for former combatants. And I was at a meeting with a whole group of trainees, former combatants and one of them stood up and said, look, I put down my weapons, and now I have a chance. I'm studying to be an electrician, but I have sisters and brothers and cousins who don't have this opportunity, and, if something goes wrong again, they're going to pick up their weapons.
What can you do to help us spread these training programs and find jobs for young people? This is a huge issue, and it's the relationship, I think, that we're making again and again and again and between security and peace and development. If you don't have a growing economy that's creating jobs, you’re always going to be at risk in places like Côte d'Ivoire.
MR. QUEST: But in places like Côte d'Ivoire where you've got the farmers, the cocoa farmers, it creates 40 percent of the world's cocoa, and they're being paid a dollar and change for the cocoa for the same bar of chocolate that charges three, four, five dollars. Why not just for some more simplistic answers? Raise the price of cocoa?
MR. KIM: Well, you know, one of the things, I won't comment on the cocoa price. I just don't know enough about it, Richard, to tell you about it, but I can tell you this, right? One of the things we have to do is to increase the access of those growers to not only local and national but global markets. So the one project that I got to look at very closely was a project in which we're doing just that for cashew farmers. This is another one of their crops. A huge cash crop for them is cashews.
We helped an entrepreneur figure out a better way to shell cashews, and then we're creating direct access to global markets so they can sell cashews and get a bigger profit than they would if they had to go through all the steps that it takes to finally get the market price on cocoa or cashews. That’s one of the things that we need to do.
MR. QUEST: Each time in these places, I mean Côte d'Ivoire is a good example, because there's a stability there.
MR. KIM: Right.
MR. QUEST: Post the civil war and the --
MR. KIM: Relatively speaking, right.
MR. QUEST: Relatively. But if you now take somewhere like Syria or you take the Arab Spring, where Egypt's a good example. Just when you think things might be about to get a little bit better, you go over the precipice and down the other side.
MR. KIM: You know, Egypt is a really tough situation, and we have a large team in Egypt. We're waiting for things to calm down. We continue to do our projects to provide basic kinds of social protection and social services. But that whole area is in such crisis and so, one of the things we're doing now is trying to respond to the Syria issue by focusing on Jordan and Lebanon, which are in the most difficult situations.
But again, let me just say, one of the ways we have to change the way we do our business, one of the ways we have to change the ways we think, is that often we're waiting for the peace agreements. And then after we get the peace agreements we sort of sit back and wait to see if they'll hold. And then those of us who do development work go in afterwards. We're changing that game plan altogether.
The Secretary General of the UN and I went to the Great Lakes region where there was an active conflict going on. There was fighting the day we arrived but our approach to it was to say, you know, security and peace and development are linked. There is no question in my mind, and Côte d'Ivoire was the clearest example. That former combatant said, I will pick up my guns again if I don't have access, if I don't have a good job.
MR. QUEST: But that's firefighting. Syria, Egypt, Arab Spring: that's putting out fires and dealing with immediate crises. How does that relate to your strategy and your two goals of ending conflict? I mean in the wider sense they --
MR. KIM: Oh, I'm so glad you asked me that. I'm so glad you asked me that, because why did we focus on the income growth of the bottom 40 percent? Because what was happening in the Arab Spring countries is that there was growth, you know, these economies were growing but they were not growing for everybody. And the bottom 40 percent were suffering terribly.
You know, in Tunisia today, Richard -- I visited -- the highest levels of unemployment are among the college educated. So what does that mean? That means that so many of the young people were sent to college but with really not much hope of getting a job afterwards, right? So that breeds conflict. And so, our sense of focusing on the bottom 40 percent is just a reflection of what's happening today in the world.
If you ignore the bottom 40 percent because of Twitter, because of Facebook, because of social media you're going to hear it from your people. And so, that strategy of focusing on the bottom 40 percent is in some ways tailor-made for the Middle East. Because by ignoring the young people, by ignoring women, by keeping marginalized people who haven't had access to financial services and capital, by keeping them out of economic growth, they were creating instability in their societies.
MR. QUEST: Let me -- I know you know why I'm doing this but I apologize if at some stages I look down at a screen.
MR. KIM: No, go ahead.
MR. QUEST: It's one of the awfulnesses of the social media age. To bring you the questions I have to --
MR. KIM: I got it.
MR. QUEST: So I do apologize. Question via Twitter: let's do these rapid fire, all right?
MR. KIM: Yes.
MR. QUEST: So we can get as many as we can from Twitter questions.
MR. KIM: Sure.
MR. QUEST: Via Twitter, why wasn't fighting inequality set as its own goal in the plan for a new World Bank?
MR. KIM: Well, we have to have ways of following what's happening. And so, the bottom 40 percent goal was to say we first and foremost need economic growth. But that economic growth has to include the bottom 40 percent. And I think we go a long way to directly measuring it. This is the most the World Bank has ever done, by the way, in really looking at incomes of the poorest.
MR. QUEST: From Poland, what role does the private sector have in ending poverty? You answered that but I’m going to put something on to the end of that.
MR. KIM: That's a great question, go ahead.
MR. QUEST: I'm going to add something on to it. Once the private sector gets involved, the UK discovered PPP ends up costing more money than not. You know that? Sometimes. And how do you stop corruption when PPP and World Bank money is involved?
MR. KIM: Okay. First of all, it's plain arithmetic. So if you just look at the total envelope of official development assistance, foreign aid, it's about $125 billion a year. Africa itself has $100 billion a year infrastructure deficit. In other words, they need at least that to meet their needs.
The BRICS countries -- Brazil, Russia, India, China and South Africa -- have a $4.5 trillion infrastructure deficit over the next five years. India alone has a $1 trillion infrastructure deficit over the next five years. In other words, official development assistance is not going to get anywhere close to meeting the needs of the developing world.
So it's not a matter of whether you embrace the private sector, you're for or you're against the private sector. Fundamentally the question is what are your aspirations for poor people? And if you have high aspirations for poor people, you can't just rely on official development assistance. Everyone knows that you've got to make the best use of the precious ODA to make sure that you get the kind of private sector investment.
MR. QUEST: But you have to accept an element of wastage, corruption on the way. That's real life if you're going to get private sector involvement.
MR. KIM: Well, we have all kinds of mechanisms in place, and over the last 20-25 years there's been intensive development here at the World Bank Group on making sure that we're really following corruption. And so, we debar companies. When there's a case where we think there's corruption, I walked into my job on July 1st, July 2nd, 2012, and the first question put on my desk was: Will you continue, or will you cancel the Padma Bridge in Bangladesh? And because we had evidence of corruption, I actually canceled it.
MR. QUEST: Jessica Evans tweets, how will the World Bank effectively work in countries plagued by systematic human rights abuses without exacerbating them?
MR. KIM: We have a system of safeguards that have been developed over time that are very specifically focused on protecting the rights of Indigenous People, on protecting the environment, making sure that we don't displace people and these were hard fought battles over time of non-governmental organizations and civil society organizations. And we have, we think, the best set of safeguards of any development organization in the world.
MR. QUEST: Nezir Sinani, why fund coal in Kosovo? And I realize we're getting into things, but we'll take the principle rather than the actual detail. But why fund coal in Kosovo he says, after the IPCC report calls to leave fossil fuels in the ground to fight climate change?
MR. KIM: We have been extremely vocal and we will continue to be in pointing to the need to battle climate change. But let's look at the reality of who has put the carbon in the air over time and look at basic fairness questions.
And so, I was at a meeting in Japan with heads of states of 50 African countries, and they said, person after person after person, they said, we're committed to sustainable development. We're committed to climate change but why should we pay the price of all the carbon that's already in the air that we had almost no role in putting there?
And so, the point is, Richard, we've got to do everything we can and shake every tree to find sustainable, renewable approaches to providing energy, but poor people deserve energy. And if we have no other option for a particular country, we may have to use coal.
MR. QUEST: This is a downright mischievous question from Maria H.
MR. KIM: Mischievous question from you, Richard? No, what a surprise.
MR. QUEST: No, from Maria H. There are 9,000 homeless people in Washington, DC. Some feed 850 homeless a day. Can the World Bank be a catalyst for change in the District of Columbia?
MR. KIM: Well, the good news, Richard, is, we are. And we give millions of dollars every year to our community centered projects. We have a whole group of people that spend all their time making sure that we are a good citizen. We give millions of dollars to Washington, DC, and I'm very proud of our staff who volunteer in many different ways.
But let me take another question. So what do you about poverty in developed countries? We know that it still exists in many developed countries. What we hope to be is the organization in the world that understands how every country in the world is approaching this problem of poverty. And there are so many innovative solutions happening all over the world that I wouldn’t be surprised eventually if even some of the most developed countries were looking to us for good ideas about how to fight poverty in their own countries.
MR. QUEST: As we come sort of to the end of our time together, let me ask you when you walked in the building, I mean, it takes both an enormous amount of humility to take on a job like this, doesn't it, because of the size and scale of the challenge? But that humility immediately has to be counterbalanced with a huge amount of confidence to be able to think that you can do it. So, when you walked in here, describe your feelings as you realized the enormous nature of the challenge you were about to undertake.
MR. KIM: You know, Richard, I was formerly president of Dartmouth College. And, a former president who was the first head of public relations for the State Department here in the United States, his very first speech to Dartmouth students, he got up there and he said, I just want to tell you two things: one, that the world's troubles are your troubles and two, that there's nothing wrong with the world that better human beings cannot fix.
Which was one of the great statements of all time and I used to say it all the time. And I walked in the door and I realized, oh my God, every single one of the world's troubles are now my troubles actually and it's both --
MR. QUEST: How do you sleep at night knowing that?
MR. KIM: Sometimes well and sometimes not so well. The things that are keeping me up at night, though, Richard, I really think we have to tackle the climate change issue, and we're not serious enough about it yet. I really worry about the fragile and conflict situations. Look, Richard, I see Ellen Johnson Sirleaf a lot, President of Liberia, right? And every time I see her she reminds me they have electricity enough for one percent of the population.
The amount of electricity that's provided in Liberia every day is the same as we use in Dallas Cowboys Stadium in a day, right? And she tells me every day if you don't give us energy quickly we're not going to be able to grow companies, we're not going to have jobs, and my 35-year-olds who've been nothing but soldiers their whole lives are going to pick up their weapons again. So these are the kinds of things I worry about.
So this is why we're going through the reorganization. We've got to move more quickly.
MR. QUEST: Yes, but how do you not prevent yourself from, although you don't seem the sort of man who would lose his temper, but how do you not avoid losing your temper when you're with these leaders and you're with rebel guerrillas and you're with these politicians at G20s and others and tell them to stop -- I'd use another word if we weren't being webcast -- around and get on and do something?
MR. KIM: Well, if that would work, if that were effective maybe I would try it. But I don't think that's a particularly effective way, and that's the whole point, Richard, is that when you're in a position like this it's no longer about you. It's about, oh my goodness, all these problems are on my back. We've got 15,000 employees. We've got this enormous mandate to try to end poverty. You have to be humble, serious and get better. I mean you've got to get better all the time.
I'm working hard to get better as the leader of this institution because I have to in order for us to achieve what we need.
MR. QUEST: Let's turn to China. The Premier said urbanization will be the main driver. You talked about. You alluded to it a second ago. You were in China and the World Bank is coauthoring a plan on this. What is China doing well and not? And how do you relocate people on such a vast scale without either disrupting the ecosystem, the economic system or causing dislocation?
MR. KIM: So one of the things that China's doing really well right now is that despite the fact that their growth rates have gone down to around seven and a half percent where they've been close to 10 percent over the last decade, is that they're saying, look, we've got to go through reforms. We've got to move our growth model from investment and exports to consumptions and services. And they're doing it despite the fact that their growth rates are low.
And I was just there and they reconfirmed that we're going to go forward with the reforms. The Shanghai Free Trade Zone, they're going forward with a process of liberalization that, again, in a context of lower growth rates they might pull back and say, wait a minute. Our growth rates are low. We've got to go back to what we know well. They're not going that. They're continuing with their reforms and it's a good lesson for all emerging market economies.
Now is the time to continue forward with the reforms. The other thing they're doing, I mean, they are the largest emitters, but they've got incredibly aggressive goals for reducing carbon emissions, for example. 40-45 percent reduction in carbon --
MR. QUEST: But the size and scale of the urbanization is what could be the tipping point or the worry.
MR. KIM: Right. So what they're doing now is saying we know that we've got to plan the next phase of urbanization. We've got to think about clean sources of energy. You know, what's happening now is that right now in China, you can only get services like health and education from the area that you were born in. But they're going through a process of reform so that you can get health and education wherever you live.
Now, to do that you've got to massively build up your health and educational system and this is what we're working with them to do right now.
MR. QUEST: So we're coming to the end here, and I want to recap. Let's go back to debt and debt ceiling. Your message now to US politicians?
MR. KIM: My message right now is, remember that even if there's something heroic that happens right at the end, the closer we get to the end, the bigger the impact on people like rice farmers in Southeast Asia, people trying to build businesses in the Middle East. It's having an impact all over the world and not on just the big guys but on the little guys. And eventually because 50 percent of our exports are to the emerging markets, it's going to hurt the economy here.
So the impact is broad. It's not only -- think about the poor but also think about the turnaround impact on our exports if more than 50 percent go to the emerging markets.
MR. QUEST: Your strategy, your twin strategy of repositioning the Bank, when do you expect to see results?
MR. KIM: We've already had some results. We're going to do most of our reorganization over the next six to nine months. By July 1st of 2014 we will be a different organization, and I think we will be fit for purpose to end poverty and boost shared prosperity.
MR. QUEST: You were not fit for purpose before?
MR. KIM: Well, that's what the staff told me in a survey.
MR. QUEST: Was that your opinion?
MR. KIM: Was that my opinion?
MR. QUEST: Yes.
MR. KIM: Yes, it was my opinion.
MR. QUEST: And now you believe this will turn it round?
MR. KIM: I believe this will turn it around.
MR. QUEST: And your interim goal 20 --
MR. KIM: Nine percent by 2020.
MR. QUEST: When does your contract run out?
MR. KIM: 2017.
MR. QUEST: Well, let's assume you get a second term. You'll be around probably to talk to me --
MR. KIM: I hope so.
MR. QUEST: -- to tell me whether you've succeeded or not.
MR. KIM: Absolutely, absolutely.
MR. QUEST: You're prepared for that?
MR. KIM: Absolutely.
MR. QUEST: Nine percent?
MR. KIM: I’m prepared to take full responsibility for setting this target, and I have great faith in my staff, but I also have great faith in the countries and everyone else that will have to be part of getting us to nine percent and then to three percent.
MR. QUEST: Mr. President, Mr. Nine Percent I'm going to call you. Cheaper than my agent, thank you.
MR. KIM: Thank you, Richard.
