Since President Ajay Banga took office, the World Bank has placed a renewed focus on the private sector. The most celebrated World Bank news this year was probably the announcement that it had “mobilised more private capital in fiscal year 2026 than in any year in its history and issued a record volume of guarantees”. According to the Bank's own figures, this figure has tripled in just four years, rising from 35 billion US dollars (US$) in 2022 to US$112 billion in 2026. 

World Bank insiders suggest that Banga is not yet satisfied. He wants the Bank to mobilise two dollars of private capital for every dollar of its own annual commitments, which is roughly double the current ratio.

But low-income countries (LICs) – the world’s poorest countries – are being sidelined by the World Bank's refocusing. While total private capital mobilisation more than tripled, the amount mobilised for low-income countries remained at around US$3 billion over the same period. The World Bank's obsession with maximising private capital mobilisation means staff are increasingly focusing on larger 'deals' and low-hanging fruit, which can only be found in relatively large, wealthy and stable economies. The poorest and most fragile countries are being left behind.     

Moreover, while the World Bank's media department is vocal about the volumes of private capital mobilised, it remains silent about the terms and purposes. In the current context, it is reasonable to assume that the mobilised private capital is expensive, and that it will burden borrower countries with high debt servicing needs for years and decades to come, consequently shrinking their fiscal space.

Research recently released by UNCTAD spanning the decade from 2014 to 2024, found that the cost of servicing portfolio investment in developing countries was very high. At an annual rate of 5.2 per cent, this group of countries is paying more than double the average rate of 2.5 per cent witnessed by developed countries over the same period. Even for direct investments, the costs were 1.5 percentage points higher in developing countries. 

While the World Bank's new strategy may generate some new funds in the short term, it also contributes to luring low- and middle-income countries into new debt traps from which they may be unable to escape in the long term. This is particularly concerning given the absence of effective institutions to solve debt crises fairly, quickly and effectively, and the World Bank's own insistence that its loans are exempt from any debt relief initiative under its preferred creditor status. 

It is also worrying that some sectors are more likely to attract foreign investment than others; usually, it is 'bankable' (i.e. profitable) projects that generate a high enough payment stream to satisfy investors' profit expectations. As poor people by definition don’t have much capacity to pay, such projects do not cater for them. 

The new approach proves that the World Bank is functioning well as a bank under Banga's management — a man who took office with substantial Wall Street experience and contacts — but it is operating more and more like a commercial bank. It no longer functions as a development bank focused on eradicating poverty and reducing inequality. It is moving further and further away from the internationally agreed principle of sustainable development—to leave no one behind.

The Annual Meetings also offer an opportunity to refocus the World Bank and direct it towards people and places where commercial banks do not operate. There is no shortage of banks on this planet that cater for wealthy countries and people. What is needed is a bank that caters for those left behind by other financial institutions.