On Thursday, 13th June, Development Reimagined hosted an event titled “Reimagining the World Bank’s International Development Association (IDA) for Africa – Going Beyond the Replenishment.”
During the recent Spring Meetings, World Bank President Ajay Banga expressed his ambition to see a 20%-25% increase in donor contributions to the International Development Association (IDA). This increase could bring the total to $28-30 billion in the upcoming IDA21 fundraising round, leveraging at least $100 billion over the next three years.
However, African leaders at the IDA Heads of State Summit in Nairobi set their sights higher, calling for a $120 billion target. Despite these aspirations, both the $100 billion and $120 billion targets fall significantly short of the estimated $1.3 trillion needed annually to achieve the Sustainable Development Goals (SDGs) by 2030. This reflects a persistent issue, as donor contributions have declined from $26 billion in 2012 to $23.5 billion, making even the proposed increases seem insufficient.
With two more IDA21 Replenishment Meetings scheduled before the final IDA meeting in December 2024, there is a pressing need to advocate for increased contributions to meet Africa’s development needs.
The event kicked off with a presentation by Mr. Trevor Lwere, Economist at Development Reimagined, who emphasized that donor contributions to IDA have been declining and examined how IDA funding has been allocated across the continent.
The event then moved into a panel discussion, moderated by Mr. Jason Braganza, Executive Director of the African Forum and Network on Debt and Development, who highlighted that within the allocation of IDA funding, a significant proportion goes to health and social sectors, over productive investments into manufacturing and industrialisation which can spur economic growth. Below are some key takeaways from the discussion.
Honourable Ms. Malado Kaba, Managing Director of Falémé Conseil and former Economy and Finance Minister of the Republic of Guinea emphasized the constant balancing act faced by African governments in maintaining fiscal space while raising capital for economic growth, stressing the need for patient capital to finance critical infrastructure projects. She underscored the need for an integrated approach to economic growth, focusing on industrialization and other key sectors, with the recent inclusion of the African Union in the G20 as crucial for amplifying Africa’s voice globally. Ms Kaba also addressed the biased risk perspectives towards Africa, urging a change in the narrative to position Africa as part of the solution alongside the importance of empowering African institutions.
Mr. Jonathan Glennie, Co-founder of Global Nation acknowledged the challenging political context and acknowledged the need to explore options beyond IDA replenishment. He criticized IDA’s arbitrary thresholds based on GDP pc, arguing that countries who cross this “line in the sand” are often not ready for only non-concessional financing due to extensive development needs, whilst these decisions are made in Washington DC, not by African countries. He also critiques the focus on social sectors driven by donor priorities rather than African needs, stating this imbalance has been problematic for decades.
Ms. Sellah Bogonko, Co-founder and CEO of Jacob’s Ladder Africa stressed that African states need to take more action, acknowledging that the IDA Heads of State initiative in Nairobi was a good start but requires amplification and support from civil society. She pointed out that fragmentation, rather than unity, often undermines efforts. Emphasizing the critical role of leadership, Sellah asserts that demonstrating effective use of funding is essential to secure additional resources.
Mr Trevor Lwere, Economist at Development Reimagined, emphasized that within IDA, both governments and the Bank are on trial regarding their seriousness in ending poverty, as their commitments are being scrutinized, especially given that many African countries have not graduated IDA. This indicates a need for a different approach, particularly in directing financing to productive sectors like manufacturing and infrastructure to spur economic transformation. Further, graduating from IDA can be a penalty due to restricted access to concessional financing once a country is eligible for IBRD-only finance at market rates.
See our Discussion below:
