In a welcome move, donor nations pledged a record $52 billion to the International Development Association (IDA), the division of the World Bank Group (WBG) that supports low income countries through concessional financing and technical assistance.
IDA is one of the largest development financiers for the world’s 82 poorest countries – 40 of which are in Africa – supporting a wide range of development activities including health, education, infrastructure (including electricity), agriculture and nutrition, and institutional development.
WBG President Jim Kim made the announcement following the conclusion of the final IDA-17 replenishment meeting in Moscow. Every three years, IDA donors meet to negotiate the terms of a new round of funding as well as strategic and operational priorities. Under the overarching theme of “Maximizing Development Impact,” IDA-17 will finance projects over a three-year period (July 2014 to June 2017) and have a significant part in advancing the WBG’s two-pronged goals of ending extreme poverty and boosting shared prosperity by 2030.
The pledges represent about a 5 percent nominal increase over IDA-16 (but inflation means the funding is broadly flat in real terms), with 46 countries contributing in the latest round, compared to 51 for IDA-16. Two divisions of the WBG- the International Bank for Reconstruction and Development (IBRD) and the International Finance Corporation (IFC) – are contributing about $3 billion to the total. About $4 billion out of the total $52 billion came in the form of low-interest loans.
The WBG highlighted that more countries may add funds in the coming weeks and will not disclose exact contributions until March, after the WBG’s board signs off on the figures. The replenishment negotiations occurred at a time of austerity, where donors had the difficult task of striking the right balance between fiscal constraints and addressing pressing development needs. ONE Global Policy Director Edith Jibunoh said:
“Donors have recognized how important it is to support the institutions at the forefront of the fight against poverty and should be applauded for their collective support of IDA. By strengthening the linkage between resources and results, IDA has demonstrated value for money and successfully leveraged additional resources from the private sector.
Despite the positive growth trends on the continent, extreme poverty continues to persist in many sub-Saharan countries, with levels in fragile countries of particular concern. We therefore welcome the IDA pledge to apply these resources to addressing poverty in fragile states and conflict zones, as well as to promoting inclusive growth and gender equality.”
IDA-17 comes at a significant moment, covering the target date for the achievement of the Millennium Development Goals (MDGs) and the launch of the post-2015 development agenda. As such, IDA-17 will be critical for accelerating progress on the MDGs and the successful implementation of the new development agenda. The WBG expects that this new funding will provide electricity for an estimated 15-20 million people, life-saving vaccines for 200 million children, basic health services for 65 million people, access to clean water for 32 million people, and better sanitation facilities for 5.6 million.
ONE welcomes the commitment from donors to realize a world free of extreme poverty. In the past year, ONE has been deeply engaged with the IDA replenishment negotiations, calling on donors to support a robust IDA-17 replenishment. These new resources provide an opportunity to consolidate the gains achieved thus far, scale-up successful efforts and confront emerging challenges such as rising inequality to attain transformative results for the world’s poorest countries.