Regional Context

World Bank Assistance

Africa Fast Facts

Regional Perspectives

Countries
Eligible for
World Bank Borrowing:

Africa

"Today in Africa, we are aware that it’s not the Bank or the Fund that is going to develop our countries or fight against poverty. It’s up to us. We shall do it. We need to be accompanied by these institutions because they have the know-how that helps us to amplify, multiply, and accelerate what we are going to do."

Ali Badjo Gamatie, Minister of Finance of Niger, at the Spring 2001 Meetings of the World Bank and IMF.

Regional Context: Urgent Need for Faster, Regionwide Development

Economic growth in Africa in 2000 was mixed. While it averaged 7 percent in Mozambique and Uganda and 5 percent in 14 other countries, Sub-Saharan Africa’s economic performance has, on average, weakened over the last two years, largely due to resurgent conflicts and political upheavals in a few countries. In addition, sharply higher oil prices in 2000 created adverse external shocks for some countries, while markets for other primary exports were depressed.

For much of the region, inequality is still high and growth remains below the 5 percent rate needed to prevent an increase in the number of poor. Many still have no access to basic services and cannot effectively participate in the modern economy. HIV/AIDS remains one of the largest challenges to human development in Africa, having already reversed hard-won gains in life expectancy in several countries. Africa has also experienced falling levels of overseas development assistance, down to $19 per capita by 1998 from $32 in 1990.

These factors have sharpened the urgency for accelerated development in Africa. At the 2000 World Bank–IMF Annual Meetings in Prague, Bank President James D. Wolfensohn and IMF Managing Director Horst Köhler committed to making Africa a priority. In February 2001 they met with 22 African heads of state in Bamako, Mali, and Dar Es Salaam, Tanzania, to listen to their visions of how Africa can accelerate growth rates, drastically reduce poverty, and position itself to benefit from globalization. The leaders recognized that poverty reduction had to begin with peace, democracy, and good governance. And they acknowledged that prospects for higher incomes depended on a strong human resource base in Africa—calling for better access to health and education services and an exceptional, concerted fight against HIV/AIDS.

Regional cooperation and integration is also necessary to increase Africa’s competitiveness and position it to maximize the benefits of globalization. Enhancing African access to global markets— especially the markets of industrialized countries and for agricultural products—is an essential factor, alongside debt relief and renewed official aid, for sustaining growth.

World Bank Assistance: Accelerating Africa’s Development

Bank lending to Africa rose from $2.2 billion in fiscal 2000 to $3.4 billion in fiscal 2001. A strategy was submitted to the Board in December 2000 to increase IDA lending to Africa—to reach 50 percent of total IDA resources—while strengthening mechanisms to better reflect country performance in the allocations. The strategy was based on discussions held with IDA Deputies around the IDA-10–IDA-12 review, in preparation of the 13th Replenishment of IDA. Lending included new responses to the HIV/AIDS crisis and oil price shocks, as well as re-engagement in several post-conflict countries. The increased aid flows also reflect the dramatically improved development effectiveness of the region’s Bank-financed projects following intense efforts to raise the quality of project preparation and supervision. Priority areas for Bank assistance were consistent with those articulated in the 2000 landmark study, Can Africa Claim the 21st Century?, which proposed ways for international donors to better support Africa’s development efforts with a focus on improving governance and resolving conflicts, investing in people, increasing competitiveness and diversifying economies, reducing aid dependence, and strengthening partnerships. Key priorities in fiscal 2001 included providing debt relief to the poorest countries, tackling the HIV/AIDS epidemic, spurring private sector development, and helping countries empower communities as well as prevent and recover from conflict

Table 4.1 shows the value and sectoral distribution of total Bank lending to the Sub-Saharan Africa region in the fiscal 1992–2001 period. Table 8.2 (see About the World Bank) compares commitments, disbursements, and net transfers to the region for fiscal 1996–2001, and table 8.8 (see About the World Bank) shows operations approved in fiscal 2001, by country. Figure 4.1 shows IBRD and IDA lending by sector.

Supporting poverty reduction through debt relief

A total of 13 African countries qualified in fiscal 2001 to receive debt relief under the enhanced Heavily Indebted Poor Countries (HIPC) Initiative. For these countries, debt service will be reduced over time, from all creditors, by about two-thirds, or over $25 billion. Particularly in Africa such debt relief reflects the coming together of a global and diverse group of partners. The Bank helped achieve consensus on debt reduction without jeopardizing positive aid transfers.

IDA-eligible African countries became eligible for debt relief by preparing Poverty Reduction Strategy Papers (PRSPs), which bring aid agencies and countries together around common goals defined by the country. Through the PRSP process, 17 African countries began to pursue a country-driven development agenda, underpinned by a process of domestic consensus building and with support from development partners. Such support is provided by the IMF’s Poverty Reduction and Growth Facility and the Bank’s Poverty Reduction Support Credit, the first of which was approved for Uganda in fiscal 2001 (box 3.2).

Tackling the HIV/AIDS epidemic and other communicable diseases

Investing in people—and addressing HIV/AIDS in particular—has been a key priority for the Bank, working closely with UNAIDS and other partners. In September 2000, through a Multi-Country HIV/AIDS Program for Africa, the Bank made a regionwide commitment to put all the necessary resources at the disposal of African countries struck by the pandemic (box 1.1). The Bank earmarked an initial $500 million in flexible and rapid IDA funding for individual HIV/AIDS projects developed by Sub-Saharan African countries, of which $287 million was committed in fiscal 2001 for projects in Cameroon, Eritrea, Ethiopia, The Gambia, Ghana, Kenya, and Uganda. A second phase is being prepared. In fiscal 2001 the Bank also stepped up its support for the fight against malaria, a serious killer, particularly among Africa’s children (box 4.1).

Spurring private sector development

A buoyant private sector—both domestic and foreign—is critical for sustained growth and generation of jobs and domestic income. The Bank continued supporting reforms aimed at improving the environment for business and investment. It also developed new tools to support the development of trade, such as the seven-country Regional Trade Facilitation Project (box 4.2). In response to African leaders’ requests, the Bank increased its lending for infrastructure operations (transport, energy, water)—both to facilitate the development of the private sector and to improve living standards. The Bank committed to further increase its lending in the infrastructure sectors in the coming years.

Helping empower communities

To ensure that development benefits do reach the poorest communities, the Bank developed Community Action Programs, which reflect the Community-Driven Development (CDD) approach that empowers communities by making resources available to them in support of effective local development programs. The Bank has placed growing emphasis on decentralized CDD mechanisms to help channel resources to rural areas, such as the social funds in Malawi and nutrition programs in Senegal and Madagascar. This effort was complemented by a focus on strengthening capacities, in both the public and private sectors. The Bank has committed up to $150 million to the Partnership for Capacity Building in Africa (PACT) over five years, together with the Harare-based African Capacity Building Foundation. In 2000 PACT funded projects in 29 countries to help develop skills, knowledge, and management capacity.

Helping countries affected by conflict

Conflict is increasingly becoming a development issue in Africa. The Bank has strengthened its capacity to cooperate with specialized partners, including United Nations agencies, bilaterals, and NGOs, in preventing conflict and supporting post-conflict recovery. With regard to prevention, the Bank has worked with others to try to address some of the root causes that may generate political instability and, eventually, conflict, and in particular poverty and inequalities. With regard to recovery, the Bank was active in several countries, both through project financing and technical advice. In November 2000 the Bank approved a $90 million credit to support Eritrea’s long-term reconstruction and economic recovery, through complementary actions in agriculture, private sector reconstruction, and social protection. The Bank also approved two credits totaling $400.6 million to assist the Ethiopian government with its post-war recovery program. Support included the emergency demobilization and reintegration of 150,000 veterans of the conflict with Eritrea, emergency humanitarian needs, and rehabilitation and reconstruction of infrastructure, as well as stabilization of the economy and restarting the reform agenda. Other countries in which the Bank has been active in post-conflict reconstruction operations include Burundi, Guinea-Bissau, Rwanda, and Sierra Leone.