Aug. 8 (Bloomberg) -- Jim Yong Kim once slept in his office and drove dusty roads to help his patients in a slum near Lima. When he returned to Carabayllo in Peru two decades later as World Bank president, a motorcade whisked him from a luxury hotel past welcome signs on banners and brick walls.
The reunion in June, a year after the Harvard-trained physician took over the bank, was as much about the future for Kim as it was the past. In the 1990s, his Partners in Health organization helped Carabayllo patients suffering from drug-resistant tuberculosis. The project, relying on community health workers for the treatment, got a better cure rate than U.S. hospitals, was expanded in Peru and influenced other countries.
Kim describes his “fantasy” of replicating that type of success at the World Bank, which distributed $53 billion in financial aid last year -- comparable to the economy of Croatia. Leaning on the field work of his past, he’s trying to refocus 15,000 employees on a poverty-ending mission that’s under threat from an institutional aversion to change built up over almost seven decades and from outside forces such as the global tide of private capital searching for higher returns.
“My background as a development person is going to be relevant going forward for a fairly simple reason,” Kim said in an interview in Lima. “This is not, for me, just about getting macroeconomic policies right, finding financing. It’s about getting the details of delivering in places like that right.”
Reaching into the world’s most impoverished corners and getting governments and investors to follow suit will be key for Kim, who set a target in April that the bank can’t reach on its own: lowering the share of people living on less than $1.25 a day to 3 percent in 2030 -- from 21 percent in 2010 -- and boosting the income of the poorest 40 percent.
To get there, he’s pledging to transform an institution that was established after World War II to rebuild Europe and is now focused on developing countries. Kim has concluded that the bank has grown too fragmented, cautious and self-absorbed to accomplish its mission.
Kim’s attempt to reshape the organization and cut red tape echoes the tenures of many of his predecessors, a series of bureaucrats, politicians and financiers. Before him, the bank was run by Bush administration officials Paul Wolfowitz and Robert Zoellick, investment bankers such as James Wolfensohn from 1995 to 2005 and former U.S. Defense Secretary Robert McNamara during the 1970s.
In a memo to staff on July 23, Kim said he plans to make changes to overcome “myriad obstacles -- some cultural, some procedural.” He said he wants to establish a career track for technical experts to parallel the managerial path and signaled that staff with regional knowledge need to work more closely with specialists in areas such as education or health. On July 30, he shuffled the ranks of his lieutenants, announcing internally that Managing Director Caroline Anstey and Senior Vice President Pamela Cox would leave in a few months.
“The bank is in danger of drowning in its own bureaucracies, but I think also it’s a difficult institution to reform,” said Clare Short, a former U.K. international development secretary who met with Kim in Washington in July. “He needs all his charm and his determination and then he needs to be absolutely ruthless.”
At stake for the bank during Kim’s five-year term and beyond is its place in a global economy where more countries can tap debt markets, grant-making organizations such as the Bill & Melinda Gates Foundation are expanding and nations such as China have become low-rate lenders.
Capital flowing from private investors into developing economies last year reached $1.18 trillion, the Washington-based bank estimates. By comparison, the flow from the bank, net of loan repayments, was just $4.6 billion.
The bank “has to redefine itself in a more competitive environment where it now occupies a smaller and smaller piece of the world pie,” said Catherine Weaver, an associate professor of public affairs at the University of Texas at Austin who wrote a 2008 book about the institution.
Kim, 53, was born of Korean parents whose lives were shaped by a war that split the country. His father escaped across the border to the south when he was 19. His mother walked for 200 miles with her younger sister on her back to flee the fighting, according to Kim.
After they married, he was born in Seoul and his family eventually settled in Muscatine, Iowa, where his father opened a dental practice and his mother prepared for a Ph.D. in philosophy. Kim played basketball and golf, and was quarterback on a high-school football team he acknowledged never won a game.
“There weren’t a lot of Asians in Iowa in the ’60s and ’70s but happily, one of the most popular shows at the time was ‘Kung Fu,’” Kim told graduates of Northeastern University in Boston this year. “The bully kids left us alone, because they thought all Asians knew kung fu.”
During his studies, he was torn between his father’s insistence he study medicine and his mother’s passion for social justice, which she instilled by reading him the writings of Martin Luther King Jr. Working at a health clinic while attending Brown University in Providence, Rhode Island, he decided he could do both.
He graduated in 1982 and went on to receive degrees in medicine and anthropology at Harvard University, in Cambridge, Massachusetts. While at Harvard in 1987, Kim co-founded Partners in Health, which started with a clinic in Haiti and now works in 10 countries. He later served as director of the World Health Organization’s HIV/AIDS department.
In 2009, he became the first Asian-American president of Dartmouth College. His tenure at the Hanover, New Hampshire, school ended with mixed reviews including criticism from students and faculty on the way he handled budget cuts.
In March last year, President Barack Obama nominated him to run the World Bank. So far he has gotten the bank’s 188 member countries to endorse his 2030 goals and has pledged to provide them with details of his strategy at their next meeting in October.
His past experience at a time when the bank needs a more “activist agenda” makes him “the right man at the right place at the right time,” Dutch development minister Lilianne Ploumen said.
In the June 30 interview, Kim said he’s battling “an extreme risk aversion” inside the institution. He wants to better mobilize the knowledge staff has built over the years to offer aid recipients a range of solutions based on experience elsewhere, an approach he called the “science of delivery.” He said this goal is the “fantasy” of all development workers and is something the bank currently does only during emergencies.
Kim said he also wants to overhaul the structure and budget of the bank, which has five units. He has made changes such as merging some human-resources and information-technology departments and limiting senior managers’ terms to four years.
“They are still very far from clear direction and strategy,” said Uri Dadush, a former World Bank director of economic policy. Kim’s objectives “are sensible but how does that translate in action?”
While Kim has tried to be accessible -- he has a desk in an open working space to encourage collaboration and made himself available to have lunch with staff -- uncertainty about his next moves is spreading anxiety through the ranks, according to the bank’s staff association.
“We feel a bit like a lost driver who stops to ask for help from a friendly stranger, and instead of clear directions to our destination, we get well-meaning but rather vague directions,” the association said in an e-mail to employees two days after Kim’s July 23 internal memo.
On the South America trip, which also included stops in Chile and Bolivia, Kim donned the local outfits he was offered and joined dances when prompted. He obliged a last-minute invitation by Bolivian President Evo Morales to play soccer at a village perched at nearly 12,000 feet.
Speaking to residents of the Bolivian town of Cliza on July 6, Kim said the era of the bank imposing policies on aid recipients is over. “I’m a doctor, but at this bank we don’t give prescriptions,” he said. “We want to be seen as a partner that puts its great wealth of knowledge at your disposal.”
He hasn’t always been such a salesman for the bank, which he once demonstrated against. In a book called “Dying for Growth” he helped write in 2000, Kim and his co-authors criticized the bank’s “rather schizophrenic public presence,” which they said encouraged privatizations while its own research showed such policies led to inequality.
Kim doesn’t chastise the private sector any longer, and he calls for “inclusive growth.” Two of his senior recruits are from the financial industry: Cai Jinyong, the former top Goldman Sachs Group Inc. executive in China who is now chief executive officer of the bank’s private-sector unit, and Chief Financial Officer Bertrand Badre, who held the same job title at Societe Generale SA.
Kim’s conversion was tested in his handling of the bank’s annual “Doing Business” report, which ranks countries based on how easy they make it for companies to operate. While nations low on the list and labor advocates wanted it scrapped, Kim said he was sticking with it.
He can’t afford to be polarizing. He’ll need rich countries such as the U.S. with already tight budgets on his side as he prepares to ask later this year for cash to lend interest-free to the poorest nations.
“He’s going to have to show not only his goal, but he’s going to have to be much more concrete about how he’ll achieve it,” said Steve Radelet, a Georgetown University professor and a former U.S. Treasury Department official.
Without a more efficient way of operating, the bank may lose relevance. A project with China takes six months to be approved, compared with about two years for the bank, according to Central Bank of Sri Lanka Governor Ajith Nivard Cabraal, whose country uses Chinese financing for roads and power plants.
“When governments are elected for six years, as in Sri Lanka, two years to finish the negotiations and two years to get started, it’s a long time,” he said in a July 15 interview in Washington. Sri Lanka turns to the World Bank for “softer projects, like the education, health services,” he said.
In Peru, there’s been progress in the hills of Carabayllo, where Kim can use 4G Internet and his mobile phone in areas where he once waited in line to make calls. What motivated him in Peru’s slums back in 1993 hadn’t changed, he said.
“If we can show that even in these poor communities we can deliver, we could have a much, much broader impact,” he said. “There’s no question that’s still what I am here to do.”
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