What is IDA?
- The International Development Association (IDA) is one of the largest and most effective platforms for fighting extreme poverty in the world’s lowest income countries.
- IDA works in 74 countries in Africa, East Asia, South Asia, Europe & Central Asia, Latin America & Caribbean, and Middle East & North Africa.
- IDA aims to reduce poverty by providing financing and policy advice for programs that boost economic growth, build resilience, and improve the lives of poor people around the world.
- More than half of active IDA countries already receive all, or half, of their IDA resources on grant terms, which carry no repayments at all. Grants are targeted to low-income countries at higher risk of debt distress.
- Over the past 60 years, IDA has provided about $422 billion for investments in 114 countries.
How is IDA funded?
- IDA partners and representatives from borrower countries come together every three years to replenish IDA funds and review IDA’s policies. The replenishment consists of contributions from IDA donors, the World Bank, and financing raised from the capital markets.
- Since its founding in 1960, IDA has had 19 regular replenishments. The current cycle, called IDA19, was replenished in December 2019 with $82 billion, of which $23.5 billion came from IDA donors.
- Due to pressures from the COVID-19 crisis, the World Bank frontloaded about half of IDA19 resources in the first fiscal year (July 2020-June 2021) to meet financing needs.
- In February 2021, IDA shareholders agreed to advance IDA20 by one year and shorten the IDA19 cycle to two years. IDA19 will now cover July 2020 – June 2022, while IDA20 will cover July 2022 – June 2025.
As African countries grapple with the devastating impacts of the COVID-19 pandemic, continued IDA support is critical to help meet financing needs, which were elevated even before COVID-19.
- Africa’s needs remain significant with demand for IDA resources reaching at least $78 billion.
- Africa’s 39 IDA countries require continued support to address the impacts of the pandemic, tackle long-term structural challenges, and achieve lasting development results by building back better.
- IDA has been Africa’s reliable long-term partner for six decades. Overtime, IDA has improved millions of lives and delivered results that have translated into larger shifts in countries’ development.
- Africa is the largest recipient region for IDA followed by South Asia.
To help IDA countries restore their development trajectory towards the 2030 development agenda, recover stronger from the crisis, and respond to the new challenges in the post-COVID world, IDA20 will focus on Building Back Better from the Crisis: Towards a Green, Resilient and Inclusive Future.
This overarching theme will be supported by five special themes:
- Human Capital: Address the COVID-19 emergency and lay the foundations for an inclusive recovery. This theme will continue to help countries manage the pandemic through vaccination programs deployment, scaling up safety nets and building strong and pandemic-ready health systems. It will continue to support the Africa Human Capital Project.
- Climate: Raise the ambition to build back better and greener; scale up investments in renewable energy, resilience and mitigation, while tackling issues like nature and biodiversity.
- Gender: Scale up efforts to close social and economic gaps between women and men, boys and girls. It will address such issues as economic inclusion, gender-based violence, childcare, and reinforcing women’s land rights.
- Fragility, Conflict, and Violence (FCV): Address drivers of FCV, support policy reforms for refugees, and scale-up regional initiatives in the Sahel, Lake Chad, and Horn of Africa.
- Jobs and Economic Transformation: Enable better jobs for more people through a green, resilient, and inclusive recovery. IDA20 will continue to address macroeconomic instability, support reforms and public investments, and focus on quality infrastructure, renewable energy, and inclusive urban development.
IDA20 will deepen recovery efforts by focusing on four cross-cutting issues:
- Debt Sustainability and Transparency: The Sustainable Development Finance Policy will continue to be key in IDA20 to support countries on debt sustainability, transparency, and management.
- Governance and Institutions: Strengthen public institutions to create a conducive environment for a sustainable recovery. Facilitate transformation to more inclusive and resilient post-pandemic economies. Reinforce domestic resource mobilization, digital development, and combat illicit financial flows.
- Technology: Speed-up digital transformation with the focus on digital infrastructure, skills, financial services, and businesses. Also address the risks of digital exclusion and support the creation of reliable, cyber secure data systems.
- Crisis Preparedness: Strengthen national systems that can be adapted quickly, and shock preparedness investments to increase country readiness (e.g. shock-responsive safety nets).
COVID-19 AND AFRICA’s DEVELOPMENT CONTEXT
The COVID-19 pandemic has plunged Sub-Saharan Africa into its first recession in over 25 years, pushing up to 40 million people into extreme poverty and erasing at least five years of progress in reducing poverty.
Growth is expected to rebound to 3.4% in 2021 and 4.5 percent in 2022, although this will depend on:
- More rapid vaccine deployment.
- Credible policies to stimulate private investment.
- Greater integration into regional and global value chains under the African Continental Free Trade Area.
- Faster progress on vaccine deployment along with credible policies to stimulate private investment would accelerate growth to 3.4% in 2021 and 4.5% in 2022 in the region.
Recovery is expected to be multi-speed, with significant variation across countries.
- Nigeria, South Africa, and Angola, the region’s three largest economies, are expected to return to growth in 2021, partly owing to higher commodity prices, but the recovery will remain sluggish.
- For the rest of the region, activity is projected to expand at a more solid pace with non-resource-intensive countries, such as Côte d’Ivoire and Kenya, and mining dependent economies, such as Botswana and Guinea, expected to see robust growth in 2021.
Regional integration efforts in Africa remain important in addressing challenges that defy borders such as COVID-19.
- Emerging risks from COVID-19 include border closures and disruptions to trade flows, which highlights the importance of building integration efforts into the core of crisis recovery plans.
- More than 10% of the Bank’s total portfolio for Africa is on regional integration, and scale up continues with over $8 billion in additional IDA funding for FY21-23 to help the continent build back better and achieve its economic transformation.
- Drawing on lessons from the West Africa Ebola outbreak, the Regional Disease Surveillance Systems Enhancement Program is supporting 16 countries in their COVID-19 response and training medical students through the Advanced Field Epidemiology and Laboratory Training Program.
WBG’S RESPONSE TO THE COVID-19 CRISIS IN AFRICA
Since the onset of the crisis, IDA-supported countries in Africa have mounted an extraordinary health, social, and economic response.
- IDA responded fast and at scale with nearly $35 billion approved for the region since the COVID-19 pandemic started.
- Response efforts are focused around four main areas: saving lives, protecting poor people, protecting and creating jobs, and building back better.
- The IDA Private Sector Window implemented by the International Finance Corporation (IFC) - the private sector arm of the World Bank Group - is supporting Small and Medium Enterprises and women, especially in fragile and conflict situations, with a majority of projects in Africa.
As of June 30, 2021, the World Bank approved operations to support vaccine rollout in 51 countries amounting to $4.4 billion. More than half of the countries are in Africa whose total amount is $1.7 billion. The largest IDA country recipients of vaccine support in Africa are: Cote d’Ivoire, Democratic Republic of Congo, Ethiopia, Ghana, Kenya, Madagascar, Mozambique, Senegal, and Sudan.
This funding is helping governments purchase and deploy safe and effective COVID-19 vaccines and strengthen national programs to ensure quick, broad, and fair access to health services and vaccinations.
The IFC, is also investing in vaccine manufacturing, medical equipment and health services, and working to boost local production capacity in Africa. IFC also launched the Africa Medical Equipment Facility to improve private sector healthcare delivery.
In June 2021, the World Bank announced an historic partnership with the African Union to support the Africa Vaccine Acquisition Task Team (AVATT) initiative with resources to allow countries to purchase and deploy vaccines for up to 400 million people across Africa. As part of this effort, a joint financing package of €600 million with IFC and Aspen Pharmacare Holdings Limited, a leading pharmaceutical company in South Africa, was announced in June to support vaccine development and long-term resilience in the health sector in Africa.