Your Excellency President Alassane Ouattara; Your Excellencies Ladies and Gentlemen, Heads of State; Your Excellencies, Presidents of the African Union, ECOWAS and UEMOA.
It is an honor for me to be here with you today. I would like to thank, on behalf of the World Bank Group, His Excellency Mr. Alassane Ouattara, President of the Republic of Côte d'Ivoire, for his kind invitation and his hospitality.
I also thank your Excellencies for coming together in solidarity for the cause of Africa at this very challenging time.
I am joined here by my colleague Makhtar Diop, IFC Managing Director and Africa Regional Vice Presidents for World Bank and the IFC. We are delighted to be here today and are here to listen to you.
I would like to highlight the critical importance of these times for Africa. The stakes are high with the impact of COVID pandemic on Africa’s development goals and this is the time to chart a path forward.
I have three key messages:
- The World Bank Group is strategically focused on Africa – and this is largely enabled by IDA.
- IDA supports countries with both short-term crisis response and longer-term development priorities.
- IDA is here to support Africa in its ambition for a strong and inclusive recovery. The African ambition ultimately makes IDA stronger as a partner for Africa and its quest for long term development.
Structural Shift to Africa – driven by IDA
Over the last two decades, there has been an increasing transformation of the World Bank’s relationship with Africa.
Africa has always been important to our operations. And it has become the dominant region for our engagement. In that sense, our long-term strategic partnership with Africa is more important than ever.
Increasingly our operations are shifting towards Africa. Consider this: in 2000, our entire lending to Africa was about $3.5 billion which was only 15 percent of our entire lending program. This has changed, particularly in the last few years, and resulted in our last fiscal year, which ended at end of June, showing commitments of $30 billion to the African continent – which represents 45% of our total financial engagement worldwide.
This is not temporary – this is to stay. Africa has become an important region for operations at the World Bank – this is not only in lending but also in manpower. We are building our presence in all countries in Africa.
In the last 4-5 years, we have increased our staffing in the region by over 40%. We have 1400 operations staff – and we will increase this further. We have 2 Vice Presidents for the Africa region and increasing presence of managers based in Africa – we quadrupled our presence of managers in the last few years.
Behind this strategic shift is IDA.
IDA depends on the strongest partnership between African countries, the World Bank as an institution, and donor countries.
Over time we have been increasing our IDA engagement in Africa – from 10 years ago in the order of $10 billion dollars to $25 billion dollars today.
As 2/3 of IDA resources are going to Africa, today’s meeting is an important moment in the negotiations of IDA20 – as it is an opportunity to hear from Heads of State your development priorities and how IDA can support.
This shift is a big change – if you keep in mind that IDA was created over 60 years ago largely as a way to deal with the Asian challenge, including India. In the initial years it was India that took the bulk of the resources and until about 10 years ago, it was Asia who benefited largely from IDA resources.
We are also increasingly concerned about countries that are affected by fragility and conflict. And here we are also increasing our support – in the last fiscal year we increased our engagement in fragile states from $10 billion to over $14 billion. This is a 40 percent increase – and this will stay.
Also to note, that IDA is a concessional resource – which means not only long-term concessional credits over long periods of time – but also increasingly supporting countries with grant financing. Last year IDA provided to the African continent $10 billion in grants – this is going to be very important as we go further.
Value of IDA
IDA’s operating model is country driven – and based on the priorities articulated by Africa countries. This is the most effective way we can make IDA successful – following country development priorities.
Secondly, IDA offers predictable finance, which is critical for the development agenda.
And finally, IDA is the largest source of unearmarked concessional finance, which helps us finance programs based on your priorities.
IDA has a strong short term crisis focus – as witnessed through the COVID response but also issues such as conflict locusts, and drought.
That said, the World Bank is also about long-term development – and how IDA can support the African continent with sustainable and inclusive development projects. That is where most of the money will be provided, so that that the results can lead to sustained poverty reduction and more prosperity.
World Bank Group COVID Response – $157 billion over 15 months
IDA has been a strong partner with Africa in time of crisis, this past year moving with speed and scale to help our borrowers mitigate the crisis caused by the pandemic. The pandemic has created a massive crisis, and there was a massive need to provide support.
When the crisis broke out, the World Bank together with the IFC said we would together provide $150-160 billion support worldwide. Of which about $100 billion would come from the World Bank – through IBRD/IDA.
We have been successful – and together have provided about $157 billion. Since April 2020, on the World Bank side, of the $100 billion delivered, $41 billion went to Africa and most of it was related to crisis support – not only health, but also, social protection and ensuring jobs are preserved.
In this context, we made a strategic decision to frontload the IDA resources from IDA19 and use the resources in 2 years instead of 3 years, with a consequence that we have to fundraise for the next round.
And that is why we are here today, to get your guidance – and while the needs of the continent go beyond IDA – it is important that every institution supporting the region does its maximum. That needs to continue in particular as we go to the longer- term recovery.
The African continent has been left out on getting access to vaccines. Only 1% of the African population has been fully vaccinated. This is completely unacceptable and it is a problem that needs to be resolved urgently.
At the World Bank we have welcomed an initiative by the African Union to set a clear target of 40 percent of the population to be vaccinated by the end of this year and 60 percent by middle of next year. But we are far from reaching this.
The African Union negotiated a deal with Johnson & Johnson to get 400 million doses this year. But the financing was missing. We are partnering with the AU and have said we can finance this fully. In fact, the World Bank has said we are willing to put $20 billion for vaccine acquisition and deployment worldwide and whatever is necessary, we are willing to finance that. If there is more money needed, we will be there.
Because this is a crisis – and as long as the COVID crisis is affecting countries, economic recovery is not assured.
Supporting Africa’s Recovery – long term
That means we need to ensure that Africa has the means to recover not only from the pandemic, but also economically and socially. And that requires more resources – to support these programs and ensure they are fully financed.
That is the reason why we started the IDA20 negotiations early, in April and we would like to finish them at the end of this year, in Japan.
But IDA also focuses on the longer-term development needs as well - such as providing for inclusive and sustainable recovery. Getting back on track to the development goals, to the SDGS, to poverty reduction. These are the ultimate test of success.
As I said earlier, we are here today to listen and learn.
When I was in Paris in May, along with many of you here today at the Summit hosted by President Macron, I had the occasion to meet President Ouattara. We had a very good discussion about the challenges the Africa continent was facing. I was grateful when he said we could organize this kind of brainstorming meeting with you.
It is ultimately about getting the best possible results from IDA – and strategically, what are the key topics we will need to support in IDA20.
We have right now about 40 borrower representatives, mostly from Africa, who have been articulating already important priorities for the African continent.
I name only a few – jobs, private sector recovery, human capital investment, as well as digital economy – but there are many others that are important. These are topics that are fundamental to the success of IDA 20.
We also need to make sure that the Africa continent will have the resources to carry out these development priorities. Clearly, IDA is only one actor – but we are an important one and have been successful across beneficiary countries.
Just to give you a sense of the financial dimensions, we have calculated for all of the IDA countries -this is not only Africa – that there are about $700 billion in needs for the next three years.
For the IDA countries, the demand is about $112 billion that was articulated by the IDA countries and 70 percent is needed for Africa. Just to compare, when we negotiated the last IDA, we had $82 billion for IDA19.
In the summit in Paris, President Ouattara mentioned $90 billion would be a good number.
But we also need donor resources. We were able to get a floor commitment of donors of $25 billion. So, the goal is not only to have $90 billion, but whether we could get to $95 or $100 billion. There your support is necessary, because behind the money will be the programs – programs for COVID response, programs for recovery, programs for long term development. Those need to be financed and are needed for your countries.
While the World Bank focuses mainly on working with governments, we know that for a successful economic recovery, we will also need the private sector. We have been supporting private sector development through the IDA private sector window that helps de-risk IFC operations but clearly more needs to be done.
So any presentation of the World Bank Group would not be complete if we would not also touch upon private sector development and where our private sector arm, the IFC, could make a huge difference. In this context, I am very happy to introduce an old friend and colleague, Makhtar Diop, with whom I have worked many years together. And now we are working together towards a resilient recovery in Africa. The World Bank is working to get a strong IDA20, and Makhtar trying to get the strongest possible IFC program in Africa, and he will share some of his reflections now.