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Writes Nhau Mangirazi
Nineteen African leaders attending an International Development Association (IDA 21) summit in Nairobi have targeted an ambitious and robust replenishment pegged at $120 billion to support the continent’s development.
The current IDA replenishment cycle comes at a time when African countries are grappling with challenges including the debt crisis, severe impacts of climate change, and effects of the Covid-19 pandemic, geopolitical tensions and conflicts currently experienced across the world.
The summit kicked off on Sunday and ends on Tuesday.
In a communique read by Mohamed Ould Ghazouani, the African Union chair, the Heads of State called for stable and predictable increases in concessional financing flows into the continent.
They called for an ambitious IDA 21 replenishment that matches Africa’s developmental aspiration and increased access to long-term concessionary financing while emphasizing stronger partnerships, and effective and joint coordination for the realization of the African economic and development agenda.
Kenyan President, William Ruto, said last year they brought to global attention that African nations pay interest rates up to five times higher than the typical World Bank IBRD rates.
‘‘Developing countries are now net contributors to the global economy contrary to the expectations of receiving net inflows. The IMF reports that Sub-Saharan Africa’s ratio of interest payments to revenue has more than doubled in a decade, reaching nearly four times that of advanced economies by the end of 2022. As a result, over half of IDA recipients face debt distress or are at high risk. IDA remains their most dependable source of patient capital, with every dollar of donor financing enabling an additional US$3.5 in capital market leverage to amplify development impacts.
‘‘Our proposal and request entail a vision for Africa-driven socio-economic development, executed with transparency and inclusiveness, and our case is straightforward. Significant capital injection into IDA is crucial.
‘‘The G20 Independent Expert Group recommends tripling IDA’s financing capacity to US$279 billion by 2030 while maintaining the essential concessional nature of its financing. At the very least, let us not ignore or wish away this expert advice,’’ Ruto said.
World Bank Group President Ajay Banga concurred that IDA remains dedicated to supporting efforts and investing in the people of Africa.
‘‘We are working to make IDA more efficient and able to deliver faster by cutting burdensome rules, requirements, and redundancies. We believe a simpler and reimagined IDA can be deployed with more focus to make meaningful impact to advance fundamental needs like energy access and health care availability, realize agricultural potential, and build out critical infrastructure and skills,” said Banga.
ONE Campaign chief executive officer, Ndidi Okonkwo Nwuneli, called on transparency and accountability to become the hallmarks of IDA in Africa from both World Bank and African leaders.
‘‘Clear milestones, robust communication, and consistent citizen engagement will help build much-needed trust that these funds will be used to meet the needs of Africans. Our work on IDA at ONE is grounded in boosting African agencies in the global decision-making processes.
‘‘So, we are collaborating with African partners from government to civil society to citizens to build demand, elevate their priorities and importantly make sure these resources are delivering impact,” Nwuneli added.
Nwuneli further called on IDA donors to step up.
‘‘But donors must increase their contributions by at least 25% so that IDA21 meaningfully breaks the $120 billion mark,” Nwuneli said.
Jacob’s Ladder chief executive officer Sellah Bogonko added that Africa faces a myriad of challenges.
‘‘We urge you to take this moment that could be the pivot that Africa needs to empower your foot soldiers so that together we can realize common and shared prosperity,” she said.
Fatten Agad, executive director for African Future Policies Hub reacted that the level of ambition of IDA21 will be a very important signal of how serious is the international community about empowering the Bank to respond to the pressing needs of IDA beneficiaries notably in light of the World Bank evolution roadmap to allow the Bank.
‘‘For example, to finance climate action and other emerging development issues such as pandemics and the digital transition,” noted Agad.
Senior advisor at Power Shift Africa and member of the Independent Expert Group on Just Transition and Development Fadhel Kaboub explained that the framing for IDA replenishment is very problematic.
‘‘Instead of speaking of ‘donor countries’ and their generous contributions via IDA to provide concessional loans to developing countries, we should be speaking of historical polluters and former colonial powers paying their long overdue climate and colonial debts via grants (not loans), debt cancellation (not restructuring), and transfer of lifesaving technologies to decolonize the economic structures of the Global South.
‘‘No matter how much cash IDA21 raises, it will not even come close to the $2 trillion of net wealth extraction that goes from the Global South to the Global North. That is what the current global economic architecture does. It’s a colonial economic architecture that was not designed for justice, equity or development. It was designed for colonial abuse and wealth extraction. IDA was added to that colonial structure to whitewash and green-wash the abusive nature of the system.” Kaboub said.
Senior advocacy advisor at Christian Aid, Joab Okanda, said for IDA21 to be truly a lifesaver jacket for African countries that are currently sinking deeper into a cocktail of climate and economic shocks, the policy and financial package that comes out of the IDA21 replenishment must address the fundamental question of why only a very tiny fraction of countries have been able to graduate out of IDA in the past 60 years.
‘‘It is high time we stitched the wound rather than add a bigger gauze bandage onto a deep bleeding wound. Discussions must center on building a just and equitable world where IDA is no longer needed. This world is possible if the World Bank and IDA donor countries make the political choice to genuinely reform the global financial architecture and allow developing countries to equally participate in global economic decision-making,’’ Okanda said.
Mavis Owusu – Gyamfi the Executive Vice President of the African Center for Economic Transformation (ACET) explained that the African Transformation Index makes it clear that countries have fallen behind over the last twenty years.
‘‘This has made it nearly impossible for Africa to withstand and quickly recover from crises. African leaders’ commitment that economic transformation must be at the heart of all investments in the continent, recognizes that transformation is essential for our long-term development.
‘‘We stand ready to support our governments and all their partners, including the World Bank, to deliver on this ambitious but achievable agenda,” she said.
The World Bank’s International Development Association (IDA) is the largest lender of this kind and has since its inception in 1960 been a partner on the pathway out of poverty for millions of people.