Keeping Your Business in Mind

African Heads of State Call for at Least $120 Billion IDA 21 Replenishment

Nineteen African Heads of State at the IDA 21 summit in Nairobi have called for an ambitious and robust IDA replenishment of $120 billion to support the continent’s development.

The current IDA replenishment cycle comes at a time when African countries are grappling with numerous shocks like the debt crisis, the severe impacts of climate change, effects of the Covid -19 pandemic, geopolitical tensions and conflicts currently being experienced across the world.

African leaders present made a rallying call to IDA donor countries to increase their contribution later this year to finance the development of low income countries to enable them invest in strong human capital, extending energy and digital access, building resilience to climate and fragility, infrastructure, health and education.

In a communique read by Mohamed Ould Ghazouani, the Chair of the African Union, the Heads of State called for stable and predictable increases in concessional financing flows into the continent. They called for an ambitious IDA 21 replenishment that matches Africa’s developmental aspiration as well as increased access to long term concessionary financing while laying emphasis on stronger partnerships, effective and joint coordination for the realization of the African economic and development agenda.

Ahead of the summit, a group of non-state actors called on African leaders to make a demand for an ambitious replenishment of the World Bank’s IDA fund.

IDA Coalition

The World Bank also launched the IDA coalition comprising civil society, foundations, youth organisations and the private sector who will champion a robust and ambitious replenishment of IDA’s resources. The IDA coalition comprises; the One Campaign, Jacob’s Ladder, Bridgewater Associates, Equity Bank and Global Citizen.

William Ruto, President of the Republic of Kenya said: “Last year, we brought to global attention that African nations pay interest rates up to five times higher than the typical World Bank IBRD rates.

Developing countries are now net contributors to the global economy contrary to the expectations of receiving net inflows. The IMF reports that Sub-Saharan Africa’s ratio of interest payments to revenue has more than doubled in a decade, reaching nearly four times that of advanced economies by the end of 2022. As a result, over half of IDA recipients face debt distress or are at high risk.

IDA remains their most dependable source of patient capital, with every dollar of donor financing enabling an additional US$3.5 in capital market leverage to amplify development impacts.

Our proposal and request entail a vision for Africa-driven socio- economic development, executed with transparency and inclusiveness, and our case is straightforward. Significant capital injection into IDA is crucial.

The G20 Independent Expert Group recommends tripling IDA’s financing capacity to US$279 billion by 2030 while maintaining the essential concessional nature of its financing. At the very least, let us not ignore or wish away this expert advice.”

Ajay Banga, President of the World Bank Group said: “IDA remains dedicated to supporting your efforts and investing in the people of Africa.

We are working to make IDA more efficient and able to deliver faster by cutting burdensome rules, requirements, and redundancies.

We believe a simpler and reimagined IDA can be deployed with more focus to make meaningful impact to advance fundamental needs like energy access and health care availability, realize agricultural potential, and build out critical infrastructure and skills.”

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