REGIONAL PERSPECTIVES

There is a modest growth recovery underway in Africa, bolstered by broad-based global growth, loose monetary policies, and a rise in commodity prices. Economic growth is projected to increase to 3.1 percent in 2018, up from 2.6 percent in 2017, and reach an average of 3.6 percent in fiscal 2020, reflecting a gradual pick-up in growth in Nigeria, South Africa, and Angola—the region’s largest economies. However, many challenges remain. Growth in the non-resource industrial sectors of oil and metals exporters has yet to pick up, underscoring the slow structural transformation in the region. In many countries, public debt burdens are increasing, fueling debt sustainability risks. Poverty continues to be widespread, with rising fragility and a lack of productive employment contributing to social instability and intraregional migration.

While the region’s per capita GDP growth will turn positive in 2018, it will remain insufficient to reduce poverty significantly. The total poverty headcount at the international poverty line is projected to decline only slightly in 2018.

World Bank assistance

The World Bank approved $16.5 billion in lending to the region for 138 projects in fiscal 2018, including $1.1 billion in IBRD loans and $15.4 billion in IDA commitments. Revenue from Reimbursable Advisory Services agreements with nine countries was $7.5 million. Key focus areas of the World Bank strategy for Africa include: raising agricultural productivity, increasing access to affordable and reliable energy, building resilience to climate change, promoting regional integration, and boosting human capital.

Harnessing technology for clean and reliable energy

At only 42.8 percent (as of 2016), energy access in Africa lags behind other regions. As part of efforts to ensure access to affordable, reliable, and sustainable energy for all, the Bank’s work in the region supports grid extension and expansion of the transmission network, innovative off-grid electrification solutions, expansion of renewable generation capacity, development of regional power pools, and improvement of service efficiency. In addition, the Bank is supporting the development and adoption of new technologies such as solar storage solutions, smart meters, mobile utility payments, satellite mapping and imaging, high-voltage direct current transmission, and solar home systems and mini-grids.

The renewable energy program Scaling Solar is yielding strong results, making privately funded grid-connected solar projects operational within two years with competitive tariffs. In Zambia, auctions have resulted in some of the lowest tariffs in Africa ($0.06 per kilowatt hour). The program has expanded to include activities in Ethiopia, Madagascar, and Senegal.

Investing in the early years and empowering women and youth

Of the 250 million children under the age of 5 in Africa, one-third are stunted and less than one-quarter are enrolled in preschool, threatening economic growth and social development in the region. The World Bank employs a multisectoral approach to reduce stunting, expand access to early learning, and harness social protection opportunities to reach the most vulnerable. In Rwanda, for example, the Bank is helping to address chronic malnutrition through health and nutrition interventions, high-quality child feeding and hygiene practices, enhanced access to food through cash transfers, and support for improvements in household food security and dietary diversity.

Meanwhile, the $205 million multisectoral Sahel Women’s Empowerment and Demographic Dividend Project stretching across six countries (Burkina Faso, Chad, Côte d’Ivoire, Mali, Mauritania, and Niger) is providing 210,000 young women with life skills and livelihood interventions and helping 87,000 girls to continue their schooling. The program seeks to strengthen resilience in the Sahel by giving women and girls the tools to shape their own future and improve access to quality reproductive, child, and maternal health services.

Scaling up social protection with innovative approaches

The World Bank contributed $17 million to the Social Safety Nets Project in Sierra Leone, which provides regular income support to extremely poor households across the country. The project is currently supporting roughly 30,000 households with quarterly payments and rolling out workshops on health, nutrition, and basic financial literacy. By harnessing digital technology and mobile phones, the program can collect quality data in the field and transmit this quickly to headquarters, thereby conducting efficient targeting and enrollment, delivering timely payments with electronic verification, recording grievances, and monitoring activities. The approach has been adopted by the government and replicated in other interventions, including during the Ebola crisis and the recent mudslides.

Promoting climate resilience and sustainable transport

Despite being the lowest carbon emitter, Africa is more vulnerable to climate change than other regions—of the top 10 countries most vulnerable to climate change impact, nine are in Africa. The Bank’s Africa Climate Business Plan (ACBP) sets out a work program to leverage financing in support of climate change adaptation. As shown in the second ACBP progress report, as of June 30, 2018, there are 186 World Bank–supported projects worth $20 billion contributing to ACBP implementation.

To reduce greenhouse gas emissions and connect citizens to jobs, the World Bank is supporting the construction of a fully segregated 18.3-kilometer Bus Rapid Transit system in Dakar, Senegal. Approved in 2017 by the Board, the $300 million pilot project has the potential for replication and scaling up across the region.

Partnering on research to improve entrepreneurship

The World Bank Group joined forces with a team of psychologists from the University of Singapore and Leuphana University in Germany to develop and pilot a psychology-based personal initiative training in Togo that focuses on developing non-cognitive skills and successful entrepreneurial behavior. The results from this pilot, recently published in Science Magazine, demonstrated the effectiveness of the psychology-based training for entrepreneurs, who saw their profits rise by an average of 30 percent relative to the control group. Female entrepreneurs who received the training saw an average increase of 40 percent in monthly profits. The promising results of the pilot have led governments and other multilateral institutions to apply these lessons in their entrepreneurship programs and further adapt and scale the training for other sectors and country contexts.

Further Information: Africa Region Homepage >

Regional Commitments and Disbusements for Fiscal 2016–18

Project Spotlight: Maximizing finance for development in Kenya’s energy sector

Over the past two decades, Kenya’s energy sector has undergone a series of reforms to create enabling conditions for private sector investment. As a result, Kenya has mobilized at least $2.5 billion in private capital in the power sector toward overcoming its power generation deficits. With adequate power generation capacity available, Kenya is now driving one of the most successful electrification programs in Sub-Saharan Africa, encompassing both grid and off-grid solutions. Kenya has made 1.2 million new electricity connections per year in the last three years—a tremendous feat in the African context.

Under the $135 million Kenya Private Sector Power Generation Support Project, IDA guarantees leveraged $431 million from private capital for the development of 250 megawatts of thermal capacity, which were commissioned between 2013 and 2016. MIGA provided breach-of-contract guarantees, while IFC provided long-term financing. A separate $180 million IDA guarantee was recently approved that will help the Kenya Electricity Generating Company (KenGen) strengthen its financial position through a corporate debt restructuring process to help KenGen raise up to $300 million in long-term commercial financing. Proceeds from the new loan will be used to refinance an expensive portion of KenGen’s existing commercial loans and enhance KenGen’s credit quality, thereby reducing financial costs and extending maturity periods. It will also contribute to the creation of an enabling environment for the sustainable development of renewable energy in Kenya.

As a result of these combined efforts, 30 percent of the installed generation capacity (around 700 megawatts) is developed through independent power producers, representing 44 percent of the incremental generation capacity since 1990. Kenya’s two major utilities, Kenya Power and Lighting Company and KenGen, are publicly listed and able to tap into capital markets for financing needs.

IBRD and IDA Lending by Sector, Fiscal 2018
Share of total of $16.5 billion

Regional Snapshot

In fiscal 2018, growth in Europe and Central Asia was stronger than at any time since the global financial crisis. Growth was robust across the region, especially in Central Europe and Turkey. In 2017, GDP rose 2.7 percent, and annual private consumption rose 2.5 percent. Growth is forecast to moderate to 2.3 percent in 2018. However, increased capacity utilization, unemployment rates close to their 2007 levels, and average inflation now exceeding 2 percent are all signals that regional growth is likely to slow further.

During the economic upswing, many countries in the region increased their exports and reduced fiscal deficits, providing a cushion if cyclical headwinds materialize. Going forward, however, the region will face additional challenges navigating the global tightening of financial conditions and the rising tendencies toward protectionism.

World Bank assistance

The World Bank approved $4.5 billion in lending to the region for 37 projects in fiscal 2018, including $3.6 billion in IBRD loans and $957 million in IDA commitments. The Bank also signed 35 Reimbursable Advisory Services agreements with 11 countries for a total of about $75 million. These agreements provided technical advice on issues such as public finance and fiscal reforms, urban planning and development, and strengthening education and skills for employment. The Bank’s regional strategy seeks to support clients in enhancing productivity and building resilience through investments in sustainable and inclusive growth; in human capital to ensure people stay healthy, educated, and productive; and to mitigate the impact of climate change and natural disasters.

Promoting sustainable and inclusive growth

The Bank supports client countries in building solid foundations for macroeconomic and financial stability, improving governance and institutions, and creating an enabling environment for private sector–led growth. In Bosnia and Herzegovina, a $60 million project is strengthening the financial sector in the country. In Turkey, the Bank provided a $400 million loan to provide better access to finance for women-inclusive enterprises and to businesses active in areas with large refugee communities.

In fiscal 2018, the Bank also provided financial support to boost trade and connectivity throughout the region, including a $50 million project to improve private sector competitiveness in Georgia, a $60 million loan to modernize transport connectivity in Bosnia and Herzegovina, and a $50 million loan to improve regional and local roads in Albania. Additionally, the Bank is supporting improved access to affordable, quality, and high-speed broadband services in Kosovo through the $25 million Digital Economy Project, and improving regional digital connectivity infrastructure and building a digital economy in the Kyrgyz Republic through the $50 million Digital Central Asia–South Asia project.

Supporting critical investments in human capital

Prioritizing and investing in the systems that help ensure people are healthy, educated, and connected is essential for economic growth. The World Bank continued to work with countries to improve the quality of health care systems, supporting Serbia with $31 million of additional financing to improve access to cancer prevention and care, investing $100 million in emergency medical services in Uzbekistan, and providing a $125 million loan to support the modernization of Belarus’s health system.

In Azerbaijan, additional financing of $67 million provided access to basic rural infrastructure to 95 percent of households with internally displaced persons. In Kazakhstan, a $67 million loan will improve the quality of and equity in primary and secondary education in rural and disadvantaged schools.

The Bank’s knowledge products provide evidence-based solutions and valuable insights to help support policy makers make well informed decisions to address development priorities. The report, Growing United: Upgrading Europe’s Convergence Machine, looked at how Europe can boost growth and prosperity for all citizens at a time when the rise of technology risks leaving behind the poorest countries, lagging regions, and unskilled workers. The report recommends policies that ensure people have the right skills to pursue new opportunities and increased access to quality education and training, and that improve the country’s business environment to create more jobs and opportunities for people.

A survey on marginalized Roma in the Western Balkans, jointly conducted by the World Bank and the United Nations Development Programme and supported by the European Commission, showed increased school attendance but also a growing gap between Roma and non-Roma in health, employment, and housing. The results can help inform policies that address the challenges that Roma people face in Western Balkan countries.

Building resilience to climate change and natural disasters

The World Bank focused on building resilience to climate change and natural disasters with investments across the region in three areas: low-carbon energy transition, sustainable land-use management, and climate resilience.

The Bank is supporting energy efficiency in countries across the region, including through a $200 million loan to support energy-saving investments in Uzbekistan and a $31 million credit to reduce energy consumption and fossil fuel use in public buildings in Kosovo. The Bank is also continuing to support low-carbon energy sources, improving dam safety, and rehabilitating a hydropower plant in Tajikistan with a $225 million loan and grant, and improving dam safety and efficiency in Albania with additional financing of $14 million. In Belarus, a $14 million project is working on improving forestry management, while in Moldova, a $31 million project is helping to introduce sustainable land management practices.

The Bank supported disaster risk management development policy loans in Serbia and Romania with catastrophe deferred drawdown option loans of $70 million and $493 million, respectively. These investments provide rapid access to funding for natural disaster response and help strengthen institutional and legal frameworks to better manage the physical and fiscal impacts of natural disasters when they occur.  

Further Information: Europe and Central Asia Homepage >

Regional Commitments and Disbusements for Fiscal 2016–18

Project Spotlight: Building momentum on Uzbekistan’s economic transformation

Uzbekistan has made rapid progress in adopting major reforms to transform its economy. In less than two years, the government has made significant progress toward liberalizing its currency, lifting trade and investment barriers, improving business regulations, and opening markets to attract private sector investment and boost exports. The government has also introduced safety nets to protect its most vulnerable people and prioritized citizen engagement.

To support this transformation, the World Bank has realigned its country strategy to help the country build a market economy, reform state institutions, broaden dialogue with citizens, and invest in human capital. Uzbekistan’s social and economic transformation has also generated new momentum among Central Asian countries for greater regional cooperation in energy, transport, water, and economic connectivity.

In fiscal 2018, the Bank approved $1.4 billion for five new projects in Uzbekistan, focusing on energy efficiency, horticulture, and emergency medical services. Overall financing in Uzbekistan amounts to $3.3 billion in existing projects that support Uzbekistan’s transition to a market economy, as well as reforms in the transport and education sectors, urban development, and water supply and sanitation services.

The World Bank is also working closely with the government to modernize and diversify the massive agricultural sector, which employs millions of people, and help the country completely end the use of forced labor.

IBRD and IDA Lending by Sector, Fiscal 2018
Share of total of $4.5 billion

Regional Snapshot

After suffering the global downturn worse than any other region, Latin America and the Caribbean turned the corner in fiscal 2018. Excluding Venezuela, average GDP in the region grew 1.9 percent in 2017 and is expected to accelerate to 2.6 percent in 2018 and 2.8 percent in 2019.

The World Bank is promoting faster and more equitable growth in the region to buttress the profound social transformation seen during the first decade of the 21st century, when the commodity boom fueled an expansion that helped cut poverty rates by half. Between 2003 and 2016, the share of the population living in extreme poverty in the region fell from 24.5 percent to 9.9 percent. Since then, however, the pace of poverty reduction and growth of the middle class has stalled.

World Bank assistance

The World Bank approved $4.3 billion in lending to the region for 34 projects in fiscal 2018, including $3.9 billion in IBRD loans and $428 million in IDA commitments. The Bank also issued the first-ever multi-country catastrophe bond between Chile, Colombia, Mexico, and Peru, valued at more than $1.3 billion, and signed 18 Reimbursable Advisory Services agreements with nine countries for a total of $5.5 million.

In fiscal 2018, the Bank’s priorities in the region centered on supporting inclusive growth through higher productivity and competitiveness, with an emphasis on investing in education, health, and other aspects of human capital. It also invested in infrastructure and worked to improve countries’ abilities to manage and withstand shocks—such as natural disasters, economic upheaval, and crime and violence—while promoting greater transparency and accountability. In addition, the World Bank prioritized the inclusion of groups that have traditionally faced exclusion, including indigenous peoples and rural communities. As countries’ needs often exceed public resources, the Bank supported activities and interventions that attracted private investment whenever possible.

Leveraging innovations to support economic recovery

Natural disasters are a constant threat in the region, which can have detrimental impacts on economic growth. Following the devastating 2017 hurricane season, the Bank and its partners helped Caribbean countries conduct damage assessments and prepare emergency response projects. In Dominica, for example, the Bank pledged $115 million to support efforts to build climate resilience. The Bank also leveraged innovative solutions to transfer risks to capital markets and offer financial protection to participating governments.

In Haiti, the Bank conducted an Urbanization Review to help lay the roadmap for the sustainable development of Haitian cities. The Bank is also supporting the Organisation of Eastern Caribbean States to implement the Eastern Caribbean Oceanscape Policy endorsed by 11 Caribbean heads of state. This involves advising governments on concrete actions to generate sustainable blue growth that balances economic activity with the preservation of healthy coastal and marine ecosystems.

Public and private sector investment in infrastructure is a key element of both growth and resilience. In fiscal 2018, the Bank provided $64 million for sanitation in Brazil, $24 million for water delivery in Panama, and $17 million for municipal services in the Dominican Republic. In addition, a $150 million project helped improve over 1,500 kilometers of economically vital roads in Argentina, while the $74 million Paraguay Road Maintenance Project helped the country improve the effectiveness of road maintenance.

Investing in people to improve lives and the economy

Building up human capital by providing new opportunities to traditionally disadvantaged groups improves not only their lives, but also the entire country’s economic strength. In Mexico, through a $100 million project, the World Bank helped over a million women, indigenous peoples, and underprivileged and rural residents get access to credit and savings institutions for the first time.

The Bank also supported Peru in improving health and nutrition services for the poor. The $25 million Results in Nutrition Project has helped the government make major progress in improving health outcomes and decreasing hunger. As a result, Peru has more than halved malnutrition among children under five, from 28 percent in 2008 to 13.1 percent in 2016. Meanwhile, in Chile, the Bank-supported the $40 million Tertiary Finance for Results Project III, which helped the government improve tertiary education by strengthening the links between public funding and accountability for results.

Employing knowledge to solve countries’ unique challenges

The Bank also provides a host of Reimbursable Advisory Services and technical assistance to countries in the region. In Colombia, these services supported the implementation of public sector accounting regulation, agriculture insurance for small farmers, and preparation of a broad socioemotional program for teachers and students to improve education. In Mexico, the Bank provided technical assistance on transport and governance. In Chile, the Bank helped with an assessment of special economic zones and the social protection system, while in Peru it advised on housing, improving conditions in urban slums, and strengthening the control framework for public-private partnerships. The Bank also advised Argentina on improving health care and Paraguay on forestry, finance, competitiveness, governance, and education.

A series of groundbreaking reports and conferences also served as powerful convening platforms in the region. These included timely studies such as At a Crossroads: Higher Education in Latin America and the Caribbean; The Jobs of Tomorrow: Technology, Productivity, and Prosperity in Latin America and the Caribbean; and Raising the Bar: For Productive Cities in Latin America and the Caribbean.

Further Information: Latin America and the Caribbean Homepage >

Regional Commitments and Disbusements for Fiscal 2016–18

Project Spotlight: Building resilience to natural disasters with catastrophe bonds

Last year was a stark reminder that Latin America and the Caribbean is one of the most exposed regions to natural disasters. Devastating hurricanes left hundreds of victims across the Caribbean. Two earthquakes rattled Mexico. Flooding and landslides followed heavy rains in Colombia and Peru. When such disasters strike, it is often the poorest who suffer the most. With these events in mind, the World Bank has sought to help countries in the region access greater risk insurance through capital markets.

This year, the Bank issued more than $1.3 billion in catastrophe bonds as insurance against earthquakes in the Pacific Alliance—an economic and development initiative between Chile, Colombia, Mexico, and Peru. The “Cat Bond” issuance was the largest of its kind ever placed and the first involving multiple countries. These bonds pay investors a premium for a set number of years, with governments receiving a payout if a covered disaster happens and bondholders getting the principal back if not. This transfers part of the risk of disasters from governments to markets, ensuring the quick mobilization of funds and fiscal resilience in the face of disaster. To date, the Bank has facilitated nearly $4 billion in risk transactions worldwide.

The Cat Bonds highlight the fact that building resilience involves more than just reducing exposure to threats. It is also crucial to design and implement policies that will ensure the well-being of all and allow economic growth to continue after a disaster. The Cat Bonds are also a huge step forward for regional integration and put Latin America at the vanguard of risk management.

IBRD and IDA Lending by Sector, Fiscal 2018

Share of total of $4.3 billion

Regional Snapshot

Although violence and the consequences of war continue to take their toll in Libya, the Syrian Arab Republic, and the Republic of Yemen, the past year has seen several positive developments in the Middle East and North Africa region. Recovery and reconstruction efforts are underway in Iraq following the liberation of its territory, while countries such as the Arab Republic of Egypt and Saudi Arabia have undergone major economic and social reforms. With support from the international community, Syrian refugees and host communities in Lebanon and Jordan continued to show remarkable resilience, and Libya witnessed a renewed push for solutions to its ongoing crisis.

Aided by reforms and firmer oil prices, regional economic growth is forecast to increase from 2 percent in 2017 to 3.1 percent in 2018. This growth will be broad-based, with most countries in the region seeing an uptick.

World Bank assistance

The World Bank approved $6.4 billion in lending to the region for 26 projects in fiscal 2018, including $5.9 billion in IBRD loans and $430 million in IDA commitments. Revenue from Reimbursable Advisory Services agreements with nine countries, as well as the Gulf Cooperation Council (GCC), was around $55 million, with the program expanding and focusing on key areas of support to the ongoing reform process in the GCC countries. The Maximizing Finance for Development approach is now an integral part of Bank Group programs in almost all countries in the region, with subregional strategies developed for the Maghreb, the Mashreq, and Egypt.

The Middle East and North Africa regional strategy puts the promotion of peace and social stability at its center and continues to guide the Bank’s engagement. The strategy’s four pillars focus on forging a new social contract with citizens; increasing regional cooperation; building resilience, which includes addressing the challenges of forcibly displaced people; and supporting recovery and reconstruction. Many Bank programs in the region include more than one of these pillars.

Renewing the social contract

Promoting more accountable and more inclusive structures and supporting private sector–driven economies to provide greater opportunities remain key regional priorities for the Bank. In Tunisia, for example, a $60 million project targeted youth facing unemployment, another $100 million project focused on early childhood development, and a separate $140 million program supported farmers. In Lebanon, a $400 million program promoted labor-market reforms and skills training, including for refugees. A $30 million project in the West Bank and Gaza supported fiscal measures while strengthening the business environment, and a separate $13 million Innovative Private Sector Development Project further strengthened the role of technology in helping to develop the private sector. In Djibouti, a $15 million project sought to foster women and youth entrepreneurship and further highlighted the region’s private sector focus, while in Egypt, a $500 million project supported critical reforms in the education sector.

Increasing regional cooperation

The Middle East and North Africa is the least integrated region in the world. The Bank’s activities in the region, therefore, focus on promoting greater cooperation, efficiency, and interdependence, particularly in the energy and private sectors, where reforms will enhance cross-border investments and reinforce moves toward a regional market. In fiscal 2018, a $1.2 billion program in Egypt enhanced fiscal stabilization and private sector reforms in the energy sector while further reducing subsidies. In Morocco, a $200 million program enhanced private sector participation in municipal infrastructure, while another $200 million program supported private sector activities in agriculture. To promote the expansion of renewable energy capacity in the country, the Bank also provided $100 million in additional financing for the Noor Solar Power Project in central Morocco, which promotes private sector participation.

Building resilience to forced displacement

In countries throughout the region, especially in Jordan, Lebanon, and Iraq, the forcibly displaced—including refugees and internally displaced persons—continue to pose challenges for local services. In Jordan, a $200 million program for education reform will benefit both host communities and refugees in the country. Meanwhile, in Lebanon, Syrian refugees are among the beneficiaries of a $295 million project that will improve public transportation in Beirut and the surrounding areas. These projects all include concessional financing from the Global Concessional Financing Facility, an initiative launched in 2016 that leverages funding from donor countries to bridge the financing gap for countries dealing with refugee crises.  

Supporting economic recovery and reconstruction

Following the liberation of Iraq from ISIS, the World Bank has focused on recovery and reconstruction in the country. This effort includes the $300 million Iraq Social Fund for Development Project focused on small-scale community projects, the $200 million Iraq Emergency Social Stabilization and Resilience Project focused on social protection for vulnerable populations, and $400 million in additional financing for the Emergency Operation for Development Project. Meanwhile, the $210 million Baghdad Water Supply and Sewerage Improvement Project underlines the Bank’s commitment to longer-term reforms in Iraq’s water sector, including creating the enabling environment for private sector investments.

Elsewhere in the region, the Bank has expanded support to vulnerable communities affected by conflict, most notably in the Republic of Yemen, where a humanitarian crisis looms. In fiscal 2018, the Republic of Yemen received three grants totaling $400 million for health and nutrition, specifically targeting the cholera outbreak, urban services, and emergency electricity provision.

Further Information: World Bank's Middle East and North Africa Region >

Regional Commitments and Disbursements for Fiscal 2016–18

Project Spotlight: Enabling Private Sector Participation and Reforming the Energy Sector in Egypt

In 2014, energy subsidies in the Arab Republic of Egypt were 6.6 percent of GDP—more than the public expenditure for health, education, and social protection combined. Daily power outages reached six hours. Political turmoil following 2011 and limited inter-ministerial coordination presented additional challenges. The private sector, dissuaded by the perception of insurmountable risks and credibility concerns, had not invested in the sector since 2002.

This prompted a comprehensive response by the World Bank Group, encompassing a $3.2 billion loan from IBRD, a $200 million guarantee insuring against political risk by MIGA, and the largest-ever renewable energy investment by IFC of $653 million.

Between 2014 and 2018, Egypt witnessed a remarkable transformation in its energy sector. Subsidies went down to 3.3 percent of GDP, backed by a robust social protection mechanism and additional funds made available for social programs. Legislation and regulations designed to facilitate private sector participation in the renewable energy, electricity, and gas sectors were enacted, leading to more than $2 billion in private investments leveraged by IFC and MIGA and 1,500 megawatts of new solar energy capacity. The program also led to the establishment of the world’s largest solar park, creating long-term employment for 500 people in one of Egypt’s poorest regions, largely benefiting the most vulnerable members of the population.

IBRD and IDA Lending by Sector, Fiscal 2018
Share of total of $6.4 billion

Regional Snapshot

South Asia remains the fastest-growing region in the world, with economic growth projected to accelerate from 6.6 percent in 2017 to 6.9 percent in 2018 and 7.1 percent in 2019, driven by strong private consumption, recovering exports, and investments due to policy reforms and infrastructure upgrades. Risks to the outlook mainly stem from domestic factors, including weak exports, slow progress on fiscal consolidation, high deficits, and disruptions due to natural disasters.

Robust growth has translated into declining poverty and impressive improvements in health and education. However, as of 2013, the proportion of people living on less than $1.90 a day was estimated at 14.7 percent, or about 249 million people—a third of the global poor. Moreover, many countries in the region suffer from extreme forms of social exclusion and significant infrastructure gaps. The region has also seen the largest refugee influx in modern times, with more than 690,000 Rohingya refugees fleeing to Bangladesh since August 2017, according to United Nations estimates.

World Bank assistance

The World Bank approved $10.7 billion in lending to the region for 56 projects in fiscal 2018, including $4.5 billion in IBRD loans and $6.2 billion in IDA commitments, of which $451 million came from the IDA Scale-Up Facility. The Bank also delivered 150 advisory services and analytical products to countries across the region, providing technical advice on issues such as energy sector reform, female labor force participation, and climate change. The Bank’s regional strategy emphasizes sustaining inclusive growth, investing in people, and addressing fragility. It focuses on supporting private sector development and job creation, particularly for women; investing in sustainable cities and climate-smart agriculture; and strengthening inclusion, public institutions, and governance.

Supporting sustainable growth and creating jobs

Economic growth in the region has been driven mainly by consumption and infrastructure upgrades, and can only be sustained at high levels if both investment and exports grow stronger. Moreover, with an estimated 1.5 million people entering the job market every month over the next two decades, job creation is essential. To address these challenges, the World Bank supports efforts such as the $300 million Punjab Agriculture and Rural Transformation Project in Pakistan, which seeks to improve agriculture productivity, raise farmers’ incomes, and create jobs on farms and in agribusinesses.

The World Bank is also helping countries maximize their development resources by drawing on private financing and sustainable private sector solutions. The first use of the MIGA Guarantee Facility, part of the IDA18 Private Sector Window operation, supported MIGA guarantees of up to $9 million for private investment in the Rikweda Fruit Process Company in Afghanistan, a raisin production and processing plant. In India, the World Bank and IFC worked together and attracted private capital for the development of the 750-megawatt Rewa Ultra Mega Project in the low-income state of Madhya Pradesh, one of the largest solar plants in the world. Two World Bank guarantees helped Pakistan access over $1 billion in international commercial financing in support of policy reforms for growth, competitiveness, and infrastructure investments, such as the Dasu Hydropower Project.

Investing in human capital and supporting inclusive growth

To strengthen human capital as a driver of growth, the Bank focuses on improving access to and the quality of education, addressing stunting and malnutrition, strengthening health systems and services, and supporting safety nets to protect the poorest. Initiatives such as the $500 million Health Sector Support Project in Bangladesh, the $600 million Sehatmandi Project in Afghanistan, and the $100 million General Education Modernization Project in Sri Lanka build upon earlier efforts to improve the quality and accessibility of health and education services in the region.

At 28 percent, the labor participation of women in South Asia is very low and has even declined in some countries. To address the factors that are holding women back, the Bank focuses on improving their skills, promoting financial inclusion, and changing social norms. One critical barrier to greater female participation in the labor force is lack of access to safe transportation, which the Bank is addressing through transport programs in Bangladesh, India, and Pakistan.

Fostering resilience to conflict and climate change

Conflict and fragility risks are increasing in South Asia, resulting in growing displacement and border tensions. The World Bank is working with its partners to provide basic services to the displaced and hosting communities, such as the recent $114 million project in Pakistan that aims to support families affected by militancy-related violence, improve child health care, and establish safety net systems in affected parts of the Federally Administered Tribal Areas. The Bank is also supporting Nepal’s historic transition to a federal democratic republic through a $200 million development policy credit, which includes resources from the IDA18 Risk Mitigation Regime.

South Asia is also highly vulnerable to the impacts of climate change, including climate-induced natural disasters and rising sea levels. Progress in South Asia depends on reducing carbon emissions, changing the energy mix, mitigating the effects of climate change, and building climate resilience. For example, the $420 million Maharashtra Project on Climate-Resilient Agriculture in India aims to improve smallholder farmers’ capacity to adjust and modify their production systems to withstand future impacts from climate events.

Promoting regional integration

Regional integration and economic cooperation can enhance the prospects for poverty reduction and shared growth, yet South Asia remains one of the least integrated regions in the world. The Bank therefore focuses on energy and electricity trade, transport connectivity, and long-term water security in the region. In Afghanistan, the new $51 million Digital Central Asia–South Asia Project is helping to build the government’s capacity to deliver digital services and develop regionally integrated digital infrastructure. It will also support private sector development by opening the telecommunications market.

Further Information: South Asia Region Homepage >

Regional Commitments and Disbusements for Fiscal 2016–18

Project Spotlight: Digital Youth Summit advances Pakistan's tech revolution

In April 2018, 5,000 students participated in the annual Digital Youth Summit organized in the Khyber Pakhtunkhwa province of Pakistan. The summit, spearheaded and supported by the World Bank since 2014, grew out of an idea of bringing together the next generation of digital innovators to educate and inspire youth in a conflict-affected region where 50 percent of people are under 30.

Given a lack of infrastructure and an anemic private sector in Khyber Pakhtunkhwa, the World Bank and the provincial government are working together to promote the digital economy as an avenue for job creation. The prevalence of mobile broadband and devices has led to increasing internet connectivity, creating opportunities in digital freelancing, entrepreneurship, and business process outsourcing (BPO) to drive job creation and boost prosperity for young women and men. Several burgeoning local firms have already grown to become successful job-creating ventures with clients across Pakistan.

The summit also brings potential investors from the outsourcing industry to showcase new initiatives planned in Khyber Pakhtunkhwa—most notably BPO-ready spaces in Peshawar, as well as Pakistan Digital City, an outsourcing facility planned in Haripur that will accommodate around 5,000 outsourcing jobs. Both the BPO-ready spaces and Pakistan Digital City are being supported by World Bank funding and technical assistance, and investors are ready to invest, attracted by the abundance of competitive and dynamic labor and available facilities.

IBRD and IDA Lending by Sector, Fiscal 2018
Share of total of $10.7 billion

Regional Snapshot