By Daniel Oluwatobiloba Popoola
The World Bank has warned that Artificial Intelligence (AI) could widen gaps between countries, increase inequality within them, concentrate market power, weaken trust in public institutions, and create new risks for safety, rights, and social cohesion if developing countries fail to manage its adoption carefully.
The warning was contained in the organisation’s annual World Development Report launched on Tuesday, 4 August, 2026, even as the bank simultaneously called on developing countries to embrace AI tools to deliver better governance outcomes, cautioning that they risked being left behind if they failed to do so.
The Chief Economist of the World Bank Group, Indermit Gill, while unveiling the report, said, “AI has thrown developing economies a lifeline, and they should seize it,” stressing that such countries did not need large models or big data centres to reap its benefits.
He advocated for the adaptation of lower-cost AI tools to local conditions to deliver results in the health, education, justice, and agricultural sectors, noting that advanced AI models, largely developed in the United States and China, offer the ability to quickly analyse data and automate many tasks that otherwise take skilled humans longer to do.
According to the report, these advanced AI models, however, require huge data centres and large amounts of complex computing power, using massive amounts of electricity and water, with implications for climate change.
A statement accompanying the report noted, “Developing economies today are in the midst of their weakest average growth performance in three decades. AI could significantly boost that performance before the end of the 2020s while delivering tangible benefits to people.”
The report called for countries to use AI to help extend otherwise costly medical, legal, educational, and agricultural services to underserved billions, doing in a decade what might otherwise take a century.
The World Bank explained that lower-income countries have struggled through the 2020s, hit by a series of successive shocks that saw the bank earlier this year describe it as a “lost decade” for their economic growth, having also lowered its 2026 global growth forecast to its lowest level since the pandemic, with the economic fallout of the Iran war battering countries around the world, particularly low-income and developing countries, with Asia identified as the worst-affected region.
Against this backdrop, the bank’s new report advocated for developing countries to start working with localised AI tools and solutions immediately, while investing in electricity generation and distribution, expanding access to computing power, and improving the availability of local data.
The report’s Director, Gaurav Nayyar, said, “The window to get this right is narrow.
AI presents a once-in-a lifetime opportunity to solve problems that have resisted solutions for generations.”
The report noted that for the 6.8 billion people, representing 83 per cent of humanity, who live in low-income and developing countries, AI tools would need to be adapted to meet their specific needs, citing examples of AI applications in governance, such as increasing diabetes screening volumes in Bangladesh and reducing costs for Indian farmers through advanced weather forecasts.
It stressed that such solutions would need to meet people where they are, stating, “AI solutions will need to be delivered through voice calls on basic mobile phones for those who cannot read or afford smartphones. Simply importing an AI model does not mean it will work well locally.”
The report further called on policymakers to build public trust as they expand AI use, warning that while improved public services and better learning outcomes in schools would reinforce trust, embedding bias in government decisions or eroding data privacy through AI could make that trust difficult to recover.
It also cautioned that while risks to employment in developing countries remain low at the moment, AI tools could, in the long run, cut off economic mobility by eliminating many of the middle-class jobs that enable it.
The report was written with the aid of several of the world’s most advanced AI tools, including offerings from OpenAI, DeepSeek, Google, and Anthropic, according to a disclosure by the World Bank.
