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Africa Fast Facts, Countries eligible for World Bank borrowing
Africa has continued to register progress in many areas. Sixteen countries averaged greater than 4 percent growth over the last decade. Investment and trade trends have been steady. Net foreign direct investment (FDI) to Africa rose to $6.8 billion in 2001 but was heavily concentrated in oil-exporting countries and South Africa. Africa had the highest returns on FDI of any region in the world, and the flow of workers’ remittances back to the continent doubled in only two years, reaching $4 billion in calendar year 2002. Access to new information technologies is expanding by about 10 percent annually, with Internet use rising sharply. Air transportation has been a high-growth sector, with 31.8 million passengers recorded—a 9 percent annual increase during years preceding the terrorist attacks of September 11, 2001. Illiteracy has continued to decline, from 50 percent in 1990 to 37 percent in 2001. The continent’s leaders have made progress in resolving major conflicts in the region (Angola, the Democratic Republic of Congo [DRC], the Republic of Congo, and Sierra Leone). More countries are also managing peaceful political transitions (Ghana, Kenya, Mali, and Senegal).
The continent, however, continues to face enormous development challenges. Half the population lives on less than $1 a day. Half lack access to safe water. Only about one in four poor rural girls attends primary school. Largely because of the HIV/AIDS pandemic (with about 30 million Africans currently afflicted), health and nutrition indicators are moving in the wrong direction. Conflict still exacts a huge toll on politically fragile states. Overall gross domestic product growth is barely 3 percent, roughly in line with population.
Addressing these challenges requires adequate resources, and development partners have pledged to make such resources available. Official development assistance (ODA) could increase by some $12 billion annually if the commitments made at the Monterrey Summit in 2002 are met. If half of this increase goes to Africa, that would represent an increase of about 50 percent in ODA and would restore flows to about the levels of the early 1990s.
WORLD BANK ASSISTANCE
The World Bank, the largest provider of development assistance to Africa, seeks to accelerate progress toward attaining the Millennium Development Goals (MDGs) in Africa. The Bank’s strategic objective is consistent with objectives outlined by African heads of state in the New Partnership for Africa’s Development (NEPAD) Initiative and is based on the analysis of the study titled Can Africa Claim the 21st Century? Indeed, at the request of NEPAD the World Bank agreed to support the pan-African initiative in a number of specific areas: infrastructure, agriculture, regional trade facilitation, health, nutrition, population, education, community-driven development, and capital flows.
IBRD commitments in fiscal 2003 totaled $15 million for 1 project. IDA commitments for fiscal 2003 add up to $3.7 billion in support of 60 projects and 10 supplemental credits. The increase in recent years is expected to be sustained in the coming years, with the objective of 50 percent of IDA resources being directed to Africa.
IMPROVING GOVERNANCE AND RESOLVING CONFLICT
The Bank increased support to African countries emerging from conflict by developing an operational agenda to better tackle postconflict issues. Currently there are 95 projects under implementation in conflict-affected countries in Africa. The DRC received the first IDA grant ($50 million) to help stabilize the economy and contribute to addressing such pressing issues as HIV/AIDS. The Bank administers the Multidonor Trust Fund for Demobilization and Reintegration for the Great Lakes region, set up to provide a comprehensive framework for disarmament, demobilization, and reintegration efforts in the subregional area.
The Bank is focusing on better management of revenues from natural resources (which help finance African conflicts). It has launched an initiative that aims to promote international policy measures to improve transparency of revenues from commodity exports (oil and gas) and reduce rents from illegal trade of commodities linked to conflict (diamonds, precious metals, and timber).
To help clients better capture and integrate issues of anticorruption into poverty-alleviation efforts the Bank strengthened its operational programs in capacity building, governance, and public sector management. Its strategy is detailed in Reforming Public Institutions and Strengthening Governance.
DEVELOPING HUMAN RESOURCES
Developing human capital is key to reducing poverty through better access to education and health services and through social protection interventions to help vulnerable groups. In fiscal 2003 over 21 percent ($811 million) of the Bank’s commitments in Africa were for human development. Communicable diseases, notably HIV/AIDS, pose critical challenges for Africa’s development. The Bank has approved $1 billion over time to fight HIV/AIDS in Africa and remains the region’s leading financier of HIV/AIDS programs. Through the Multicountry HIV/AIDS Program for Africa, $600 million has been committed by 20 countries. This program has approved 18 projects, of which 15 are already effective. Other health, nutrition, and population programs involved 47 projects in 30 countries. (See
box 5.1.)
The Bank is actively involved in 41 education projects in the region, particularly focusing on primary education and on countries with low enrollments. Commitments in fiscal 2003 were $423.6 million. Education for All has emerged as an important priority, especially for girls, not only because of its implications for productivity but also because of its strong links to other social goals, such as reducing maternal and child mortality.
There is an urgent need for African countries to strengthen their tertiary education systems to help them better respond to the needs of their economies. The Bank is actively supporting this effort and is now financing some aspects of tertiary education in approximately 20 African countries. (See
box 5.2.)
Another focal area is the interaction between HIV/AIDS and education. HIV/AIDS has devastating effects on education systems, especially in high-prevalence countries, for example, through the sharply increased mortality and absenteeism of teachers. These effects are not well understood and generally are not addressed. At the same time, in most countries education is not yet playing the effective role it should play in promoting behavioral change to prevent HIV/AIDS infection. Unfortunately the pandemic has led to an alarming increase in orphans—a population projected to grow from about 13 million to perhaps 35 million children in 2010. Several major studies are being carried out to develop “good practice” guidelines for (a) maximizing the role education can play in HIV/AIDS prevention, (b) addressing the impact of HIV/AIDS on education systems, and (c) ensuring the provision of basic education to orphans. Furthermore, the Bank is working with the Joint United Nations Programme on HIV/AIDS’ Inter-Agency Task Team on Education to help countries build capacity to address these concerns and to develop interventions that can be supported under the IDA-financed Multicountry HIV/AIDS Program.
Social protection—targeted activities to improve or protect human capital, ranging from labor market interventions to income support and including pension reform—has been a growing area of attention ($543.7 million or 14.6 percent in fiscal 2003). Social funds account for 60 percent of the Africa region’s current social protection portfolio, constituting some of the most promising programs for community-based development.
PROMOTING INCREASED GROWTH
Growth in Africa will require a sound policy and institutional climate for investment—both domestic and foreign—and a lower cost of doing business, including better infrastructure. Bank funding for infrastructure projects in the region more than doubled between fiscal 2001 and fiscal 2003. The infrastructure strategy is organized around (a) providing access to basic services to all; (b) furnishing a minimum infrastructure platform to render the countries viable for private business, investment, and the creation of wealth; and (c) building a “good business address.”
Regional integration is critical to creating larger markets to achieve economies of scale, foster competition, and attract foreign investment. The Bank has formulated regional integration assistance strategies for West and Central Africa and is planning such strategies for eastern and southern Africa. These strategies support harmonization of macroeconomic policies, liberalization of intraregional trade, and promotion of regional investment, as well as development of regional projects in infrastructure and the strengthening of regional institutions’ capacity. The Bank also supports initiatives aimed at increasing cooperation to address common issues in a regional context, such as the Nile Basin Initiative, and measures to prevent transmission of HIV/AIDS along regional transportation corridors.
DEBT REDUCTION AND DEVELOPMENT ASSISTANCE
The Bank has continued its efforts to have African countries fully benefit from debt relief through the Heavily Indebted Poor Countries (HIPC) Initiative and to ensure the effective use of debt relief resources in alleviating poverty. Under the initiative, 22 African countries have reached the decision point (when the amount of debt relief is decided and begins to flow), and 5 have reached the completion point (when relief of future debt service becomes irrevocable). As of June 30, 2003, HIPC debt relief for World Bank debt was $2.31 billion, of which $2.13 billion was for Africa. Debt service payments to the Bank have been reduced by more than 60 percent. The ratio of social expenditure to government revenue in these countries has steadily increased: from 33 percent in 1999 to 54 percent in 2002.
Improving resource flows to Africa involves both increasing the quantity and improving the quality of assistance. Countries (e.g., Tanzania) have moved toward a new partnership model, with the initiation of a process of independent review of the performances of both donors and the government against their respective commitments. Country-led CASs are at the center of the agenda adopted in fiscal 2003 by the Strategic Partnership for Africa, the lead regional forum for aid coordination. IDA has been moving toward supporting these strategies through program lending.
Also available:
Table 5.1: World Bank Lending to Borrowers by Theme and Sector
Figure 5.1: IBRD and IDA Lending by Theme
Figure 5.2: IBRD and IDA Lending by Sector
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