Developing economies face a potential shortfall of about 780 million jobs over the next 10 to 15 years as 1.2 billion young people reach working age, World Bank Group President Ajay Banga said, underscoring the scale of the employment challenge confronting governments and development institutions.
The countries are expected to create only about 420 million jobs over the same period, Banga said at the 2026 World Bank Group and International Monetary Fund (IMF) Annual Meetings in Bangkok. He argued that closing the gap will depend on the ability of businesses to start, expand, hire workers and compete in domestic and international markets.
“If they can find work, if they can build businesses, if they can see a pathway to a better life, then they become the foundation for growing economies, for stronger trade, and frankly, far more stable and healthy societies,” Banga said.
The projected gap makes private-sector job creation a central development priority, particularly in economies where micro, small and medium-sized enterprises account for a large share of businesses and employment.
Banga said MSMEs represent 90% of firms and employ 75% of workers in developing countries. But their growth is constrained by limited access to finance, inadequate business infrastructure, regulatory burdens and difficulties connecting with customers and suppliers.
The World Bank Group is directing its financing towards what Banga described as the foundations businesses need to create jobs: physical and human infrastructure, better governance and private capital mobilised at scale.
Last year, the institution committed $40 billion to infrastructure and another $24 billion to governance, together accounting for more than half of its financing, Banga said.
The strategy prioritises five sectors that the World Bank Group sees as having substantial potential to generate employment: energy and infrastructure, agribusiness, primary healthcare, tourism and value-added manufacturing.
Tourism is the single best multiplier of jobs per dollar invested, Banga said, while agribusiness investment is intended to help small farmers remain productive and competitive.
In manufacturing, he stressed the importance of processing raw materials rather than relying solely on extraction, particularly in economies endowed with minerals and metals needed by industrialised countries.
The distinction matters for resource-rich African economies, where greater domestic processing could help retain more economic value locally. Banga said value-added manufacturing should create higher-value jobs and allow communities in countries producing minerals and metals to share more of the benefits.
The scale of the employment challenge also raises questions about whether public financing alone can deliver the investment required. Banga said the World Bank Group mobilised $112 billion in private capital last year, more than three times the amount mobilised four years earlier, alongside $120 billion from its own balance sheet.
The increase was broad-based, he said. Private capital mobilisation quadrupled in upper-middle-income countries, including Argentina, India and Gabon, and nearly tripled in lower-middle-income countries such as Angola and Bangladesh. Across Africa, the amount mobilised was two and a half times the earlier level, Banga said.
The International Finance Corporation, the World Bank Group’s private-sector arm, increased its commitments in International Development Association and fragile and conflict-affected countries to $12 billion and mobilised another $11 billion in private capital.
Despite those gains, Banga said financing remained inadequate in fragile and conflict-affected countries, where smaller enterprises often constitute the bulk of economic activity and conventional investment models struggle to reach businesses.
He said the World Bank Group plans to work through local banks, microfinance institutions and digital platforms that already have relationships with entrepreneurs. Fast-payment systems could help establish transaction histories for businesses operating largely in cash, while pooled first-loss facilities could reduce risks for private investors entering underserved markets.
Access to finance is a major part of the problem. Banga put the annual financing gap facing MSMEs in developing countries at more than $4 trillion, citing limited collateral, a lack of credit data and the high cost of servicing small loans as barriers to lending.
The World Bank Group’s new MSME strategy aims to use digital payments, electronic invoicing and other transaction records to make businesses easier for lenders to assess. It also seeks to connect enterprises to markets, reduce regulatory obstacles and expand financing through banks, fintech companies and other intermediaries.
For entrepreneurs at the earliest stage, Banga said, equity and mentorship can be more useful than loans, prompting the institution to create centres where business founders can obtain early-stage support.
He also called for changes to the way lenders assess small businesses, arguing that reliable cash-flow information can provide a stronger indication of repayment capacity than physical collateral alone.
The broader objective, he said, is to create an environment in which businesses can grow and generate employment at the scale required to absorb the next generation of workers.
The projected 780 million difference between the number of young people expected to reach working age and the jobs developing countries are expected to create illustrates the challenge. Banga’s remarks place business growth, value-added production and expanded access to private capital at the centre of the response.
