Address to the Bankers' Club
                                                                99713

by
James D. Wolfensohn
President
The World Bank
London, England, February 3, 1997

Mr. President, My Lord Mayor, Mr. Governor, My Lords, Aldermen, Sheriffs,
and Ladies and Gentlemen, may I, on behalf of the guests, thank you. This
is quite a night. It's quite a night, Mr. President, because I have a
link with the City of London. From my youth, I learned about it from my
father who went to the City of London School and, by some extraordinary
coincidence, became a Freeman of the City of London for organizing the
Victory Parade after World War I.

And one of the few things he was able to leave me with, that have the
distinction that this does, was by patrimony to have the freedom of the
City of London. And I recall, as an impecunious student on my way to
study in the United States, dropping by this building to see if I could
pick up the Freedom of the City. I was scared about one thing
principally, My Lord Mayor, which was how much would it cost given my
state at that time. But I was able to get it and I was duly handed a book
which was entitled Rules for the Conduct of Life, which I thought would
be of enormous value to me as I progressed further.

And I learned that I had I think at least three privileges. One was that
I could wear a drawn sword in the city. Secondly, that I could drive my
sheep over Westminster Bridge or London Bridge, I'm not quite sure which.
And, thirdly, that I could be hung by a silken cord, instead of something
less attractive, were I to become an investment banker here.

In any event, it is, indeed, a privilege for me to be here and one cannot
but be overwhelmed by being in this glorious environment. I thank you,
very much, Mr. President, for that glowing introduction. I only wish that
I was still in the private sector and that I could benefit from it by
gaining clients, although with a group like this, I'm not sure there
would be too much business for what I was doing.

But now I'm in a different world. Now, I'm in a world of development. I'm
in a world that concerns itself not with the ceremonies of tonight, and
not with the wonders of the city but with 4.7 billion people out of the
5.6 billion that live on this earth.

I recall with enormous pleasure my time in the City. And I know very well
the long and distinguished history that London and this country have had
in terms of international development. I was privileged to come here to
work at Schroders under the leadership of Lord Richardson, who is here
tonight, and I'm thrilled that he is here to see me speaking and to hear
me. And I learned, as you all know, of the history of this city and the
development of many developing countries around the world, of the funds
you sent to the United States, to Latin America, to other parts and, of
course, the assets you had sent to Australia in chains years earlier.

And I know very well that you are continuing that tradition, My Lord
Mayor, in terms of inviting developing countries to share in the benefits
of this city.

But the world has changed and I've learned quite a lot since I left
Schroders and since I've left private practice. And what I've learned is
that it's a different world. It's a world in which there are 1.2 billion
people who live under $1 a day, in which there are three billion people
who live under $2 a day, in which there are 1.2 billion people who don't
have access to water, in which there are 120 million children who don't
go to school, where there are many conflicts, and many, many problems.

But there are also many opportunities. Because this developing world in
which I'm now so heavily engaged is not another world, it's our world.
We're linked with this world. We're linked with it because we share the
same environment. We're linked with it because we breathe the same air.
We're linked with it because our health is dependent on the health in
those countries.

The scourge of AIDS which has-16 million people suffering from that
disease is a disease which started in that so-called developing world.
And having just returned from India, My Lord Mayor, by the end of this
century which is just a short time away if nothing is done there will
be 7 million cases of HIV positivity in that country. We cannot ignore
that.

And we're linked by crime and we're linked by migration because migration
comes from countries that do not have economic opportunity. We're linked
by war. In Europe, we're linked by the problems of transition economies
and what might happen if there is a nuclear mishap in those countries,
those countries which are part of the developing world. And we're linked
by food and we're linked by famine.

The developing world is not something we can opt out of. It's something
that's part of the same world we live in and, yet, from my own experience
and my own time both in the City and in the United States, few of us
think of it as part of us. It's only when traveling to some 40-odd
countries that I have really come to realize that this world is, in fact,
our world.

And it's not our world just for social or moral reasons. Speaking to this
august group, it's our world for economic reasons. In the years since
1990, 40 percent of the growth in GDP has come from those countries. By
the turn of another 30 years, 30 percent of the world's GDP will come
from those countries as comes 20 percent today.

It is the home of much of our trade. It is the source of much of our
trade. And one cannot imagine growth in the developed world without
growth in the developing world. And it's quite easy to see that in the
City of London and in other international markets we are responding to
that. International bond issues last year were $88 billion for developing
countries, a significant step from earlier years. International banks
loaned $35 billion, up from $3 billion in 1990. There is economic
opportunity and we are responding.

But the problem is that of the $230 billion of private capital which last
year went to the developing world, 75 percent of it went to 12 countries
and 12 countries only, which leaves 140 countries where there is a need
for development assistance and for economic advance. So, we still have
significant issues to face in terms of this developing world. And by the
way, that $230 billion in private capital compares with only $50 billion
from all the official institutions so that the private sector now
accounts for five times the amount of official assistance, up from half
official assistance seven years ago.

And you can say, again, well, what's that got to do with me? What does it
have to do with us? And I would reply that that is our future. Maybe
those of us at this table can ignore it but not our children and not our
grandchildren. Because by the year 2025, the 5.6 billion people in this
world will be 9 billion people in this world of which 8 billion will be
in the developing countries. And the major cities of this world will be
in developing countries so that we will no longer think just in terms of
London, New York, and the centers of Europe, we will be thinking of
Jakarta and we will be thinking of Beijing and we'll be thinking of Sao
Paulo and we'll be thinking of cities in Africa because these will be the
major cities.

This is what we need to think of now, not for ourselves, but for the next
generation. And it's crucial that the bankers in this city, as the home
of international banking and the largest center of international banking,
recognize that there is something more than the profit motive in terms of
our policies and our strategies.

We have to orient ourselves differently from the way we were trained. I'm
sure that all of you, like me, were not trained in terms of the 4.7
billion people. It's perfectly possible to exist without knowing that
they exist. But our children cannot. And we have a responsibility in the
banking community to participate in bringing about a more stable world.

As far as development is concerned, it's no longer an issue of having
government to government assistance. After World War II there was
practically nothing flowing to these developing countries. And there was,
of course, a need to restructure Europe and other countries affected by
war. And, so, those in the international community created the Bretton
Woods institutions the World Bank and our sister, the Monetary Fund. But,
since that time development has become much more complex. We've no longer
got just the international institutions, the Bank and the Fund. At the
Bank we've diversified and we've got the International Finance
Corporation, and MIGA, our insurance company, but there are now a
multitude of regional banks. There are also bilateral institutions. And
there's the European Union.

So, we have at one level the governmental contributors to this
development and, in addition to that, with the onset of freedom and with
the development of markets we have a growth in non-government
organizations and non-state actors, so that there is now a partnership
not just between government but between governments and civil society.
And beyond that, there is, of course, now the partnership with the
private sector. And with $200 billion per year, alone, needed for
infrastructure development in developing countries, there clearly has to
be a true partnership with the private sector.

International institutions have to change. And private institutions have
to change in thinking not just of themselves but of leveraging their
activities and their interests to work in partnership with the
governments of these countries. And the governments also have to change.
And they are changing. And the opportunities are changing.

We're looking at the moment at satellite links with 60 countries
overseas. Can you imagine a country in Africa which will be able to jump
a generation in terms of research, in terms of training, in terms of
accessibility by access to the Internet, by access to interactive
television not only for discussions but for training sessions
originating in Washington and in London and in Singapore. These aren't
things of the future, they're things of today that we're acting on now.

Last week I was in Washington, and I met with 12 ministers in the
Cameroon after breakfast. I went next door to my conference room and I
had a conversation with 12 African ministers who were sitting in the
Cameroon. The potential is enormous and so are the implications. Using
their computers and video interchange, our children are going to be as
close to Africa as they are to cities in Europe or to regions of London.

This world is not a static world. It's a world full of expectation and
hope, but it's also a world of great differences. Low income countries
today make up 56% of the world's population but have less than 5% of the
world's income. And inequalities between rich and poor countries are
growing. And within countries, we have this great division of wealth. In
Peru, the difference between the top 10 percent and the bottom 10 percent
is 80 times.

Why do I raise this? Because if you have economic disadvantage from one
group to another, ultimately you will have social instability. The two go
together, they have to go together.

And, so, we have a responsibility as bankers not just to think in terms
of immediate profit, but to think in terms of preparing a world for our
children. We have the education, we have the technology, we have the
vision. And many banks in this room already have the networks. We are
already out there. But we must be out there with something other than
just looking for deposits and making money. We must be out there thinking
in terms of contributing to a better world. If banks insist on
environmental conditions in terms of lending, there will be environmental
conditions in terms of lending. If banks insist on labor standards, there
will be labor standards. If banks join in a fight against corruption, we
will at least make a hole in corruption and maybe win the battle.
Corruption is not just an issue of developing countries. There are
corruptions and there are the corruptors. And many corruptors come from
developed countries and many corruptors are clients of all of us. If we
don't want the cancer of corruption to spread in the world we, ourselves,
must stand up to it.

In Washington, at the moment, there is a meeting of 2,000 people on
microcredit. The banks can make an immense contribution to microcredit.
It may not be profitable today but one of the most effective tools in the
villages and in the slums is the possibility of getting small-scale
loans. I recall as vividly as if it were yesterday, my trip to Uganda
when I was in a slum and there was a woman there who, together with other
women, was making briquettes out of banana peel. And they would fire up
the banana peel and it would become carbon and charcoal and they would
press it together and make briquettes to heat. She had started this
business with a $50 loan. And she gave me her accounts in a little
exercise book with all the pride of the chairman of General Motors. And
I've seen it in India where we are teaching women to run businesses,
women that can't read, using cartoon-like figures. And we're training
women in basic skills.

These are things which as chairmen we may not need to do, but for the
sake of the young people in your overseas offices you should put
something into it. Give the younger people a chance to make a
contribution to these societies, and to learn something themselves. I
have become very humble in terms of learning from the cultures of
developing countries. We could all learn from the culture of family in
Africa.

Recently I was in Uzbekistan at the Ural Sea, a place that is desolate
because as some of you may know it's an environmental tragedy. This is a
sea which is gradually becoming salt, affecting the neighboring countries
because the water has been siphoned off in improper irrigation. And when
I was there I went to a fishing village 20 kilometers down from the sea.
But having a fishing village where people only know how to catch fish and
dry fish, 20 kilometers from the sea, is problematic. And, so, the people
there were living on $15 a month.

And we went there to this desolate place, my wife and I, two hours in a
Russian helicopter and we met a group of young kids dressed scantily, and
we talked through their teacher who spoke some English and we gave them
some pencils and a few other things. And as we were leaving a little boy
came up to me and put in my hand a five-sum note, equivalent to about 10
cents, and then scampered off. And I said to the teacher, what is this?
And he said, in Central Asia when a visitor comes we give them money for
the next stage of their journey.

I can give you dozens of examples of the sort of thing one sees in the
developing world. They do not want charity, they want opportunity. They
have the same genomes that we have. They have the same instincts that we
have. They want their kids to get an education. They want shelter. They
want peace and they want economic development.

We have a lot to learn from that world of 4.7 billion people. And it's
only right that the young people within our banks should both contribute
and learn, so that we can have a world in which we can profit
economically certainly but more importantly in which the moral and social
responsibility that we owe to each other is carried forward.

I believe that the City of London and the banking community can lift its
sights and in lifting its sights, help our children and help make the
world a more peaceful and stable place.

Thank you.