World Bank commits $57bn to Africa, with emphasis on the private sector

The World Bank is to back Africa to the tune of $57bn in the next three fiscal years, with a huge emphasis on the private sector. Following a meeting with G20 finance ministers and central bank governors, World Bank Group President Jim Yong Kim announced a record $57bn in financing for Sub Saharan African (SSA) countries. The bulk of the financing – $45bn – will come from the International Development Association (IDA), the World Bank Group’s fund for the poorest countries. The financing for SSA also will include an estimated $8bn in private sector investments from the International Finance Corporation (IFC), a private sector arm of the Bank Group, and $4bn in financing from International Bank for Reconstruction and Development, its non-concessional public sector arm. In December, development partners agreed to a record $75bn for IDA, a dramatic increase based on an innovative move to blend donor contributions to IDA with World Bank Group internal resources and with funds raised through capital markets. Sixty per cent of the IDA financing is expected to go to Sub Saharan Africa, home to more than half of the countries eligible for IDA financing. This funding is available for the period known as IDA18, which runs from 1 July 2017 to 30 June 2020. “This represents an unprecedented opportunity to change the development trajectory of the countries in the region,” Mr Kim said. “With this commitment, we will work with our clients to substantially expand programmes in education, basic health services, clean water and sanitation, agriculture, business climate, infrastructure and institutional reform.” The World Bank said IDA financing for operations in Africa will be critical to addressing roadblocks that prevent the region from reaching its potential. “To support countries’ development priorities, scaled-up investments will focus on tackling conflict, fragility and violence; building resilience to crises including forced displacement, climate change and pandemics; and reducing gender inequality. “Efforts will also promote governance and institution building, as well as jobs and economic transformation,” it explained. “This financing will help African countries continue to grow, create opportunities for their citizens and build resilience to shocks and crises,” Mr Kim said. Significant amounts will be available through special “windows” to finance regional initiatives and transformative projects, complemented by a newly established private sector window (PSW) – especially important in Africa, where many sound investments go untapped due to lack of capital and perceived risks. The Bank said the PSW will supplement existing instruments of IFC and the Multilateral Investment Guarantee Agency (MIGA) – the Bank Group’s arm that offers political risk insurance and credit enhancement – to spur sound investments through de-risking, blended finance and local currency lending. Priorities for the private sector will include infrastructure, financial market and agribusiness. The scaled-up IDA financing will build on a portfolio of 448 ongoing projects in Africa totalling about $50bn.

World Bank commits $57bn to Africa, with emphasis on the private sector

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