- The world needs collective action to address Africa’s financing needs, and to support an inclusive and sustainable recovery of African economies from the COVID-19 pandemic.
- The global community has an opportunity to make good on the 20th replenishment of a 60-year-old World Bank programme known as the International Development Association.
- The objective is an IDA20 replenishment envelope of at least $100 billion, for three years, which would be the largest in the IDA’s history.
The COVID-19 pandemic has led to an unprecedented global health, social and economic crisis. In 2020, Sub-Saharan Africa experienced the worst underperformance ever recorded, with a growth rate of -1.9%, coupled with an increase of 32 million people living in extreme poverty. Healthcare systems, education and other essential services were massively disrupted. Moreover, developed countries’ rush to secure supplies of medical equipment and vaccines caused serious shortages in low- and middle-income countries, leading to much worse health outcomes and widening inequality.
Have you read?
While most regions of the world have relaxed fiscal constraints to make unprecedented funding available to their populations and businesses, and to support their recovery policies, most African countries are lacking the flexibility and instruments to emulate them. They’re also unfortunately facing an increase in terrorist attacks.
We should never forget that poverty is one of the main causes of terrorism and migration.
Generous rhetoric is not enough
Given the additional financing need of up to $285 billion, estimated by the International Monetary Fund (IMF) over the next five years, to fight the pandemic and accelerate economic recovery, African countries need, in addition to their own domestic efforts, greater support from all their partners. Of course, the resources will be used transparently and efficiently.
We welcome the global efforts already made in terms of supply of vaccines, debt and financing, in particular the unprecedented $650 billions of IMF’s Special Drawing Rights (SDRs), of which around $33 billion (or 5.1%) was allocated to African countries.
We also fully support the decisions and pledges of the May 2021 Paris Summit on the Financing of African Economies to address immediate needs and reinforce the African private sector, the foundation of Africa’s long-term growth; notably, the collective decisions (i) to explore the voluntary SDRs reallocation, from countries with comfortable external reserves towards African countries, through concessional loans; (ii) to support an ambitious IDA20 replenishment; and (iii) to support long-term growth driven by the private sector, particularly SMEs and the local production of vaccines.
However, if generous rhetoric alone was the solution to helping African countries overcome the pandemic and join the global post-COVID-19 economic recovery, the outlook would be encouraging. But it’s not enough and we need to act now.
From words to deeds
The global community has an opportunity to make good on those pledges and move from words to deeds, particularly on the 20th replenishment of a 60-year-old World Bank programme known as the International Development Association (IDA).
The IDA provides, to the 74 eligible low- and middle-income countries, grants and low or interest-free loans for projects and programmes that stimulate economic growth, reduce poverty and improve the lives of vulnerable people.
Several African heads of state joined me in Abidjan in July to issue the Abidjan Declaration, which identifies key priorities for financing in Africa and makes the case for an ambitious IDA20 replenishment.
The funding process that began in Abidjan will conclude at the end of this year with a policy and financial package to support specific projects in the 74 IDA countries over the next three years. The objective is an IDA20 replenishment envelope of at least $100 billion, for three years, which would be the largest in the IDA’s history.
What is the World Economic Forum’s Sustainable Development Impact summit?
It’s an annual meeting featuring top examples of public-private cooperation and Fourth Industrial Revolution technologies being used to develop the sustainable development agenda.
It runs alongside the United Nations General Assembly, which this year features a one-day climate summit. This is timely given rising public fears – and citizen action – over weather conditions, pollution, ocean health and dwindling wildlife. It also reflects the understanding of the growing business case for action.
The UN’s Strategic Development Goals and the Paris Agreement provide the architecture for resolving many of these challenges. But to achieve this, we need to change the patterns of production, operation and consumption.
The World Economic Forum’s work is key, with the summit offering the opportunity to debate, discuss and engage on these issues at a global policy level.
This is a good opportunity to demonstrate that solidarity is essential for the good of all and that we can act together to return to the path of income convergence that we were on prior to the pandemic, and to build a safer and prosperous world.
We know that when the World Bank has the backing of all its stakeholders, it has the capacity to make a difference.