African Heads of State call for at least $120 billion IDA 21 replenishment

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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, such as the debt crisis, the severe impacts of climate change, the effects of the COVID-19 pandemic, and geopolitical tensions and conflicts currently being experienced worldwide.

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 to 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. 

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 “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 opined that, “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.”

The Ndidi Okonkwo Nwuneli – CEO, ONE Campaign noted that, “To the World Bank and African Presidents –  transparency and accountability must become the hallmarks of IDA in Africa. Clear milestones, robust communication, and consistent citizen engagement will help build much-needed trust that these funds will be used to meet the needs of Africans. Our work on IDA at ONE is grounded in boosting African agency in the global decision-making processes. So, we are collaborating with African partners from government to civil society to citizens to build demand, elevate their priorities and importantly make sure these resources are delivering impact.”

To IDA donors, we need you to step up. We are very clear eyed about the formidable economic, fiscal, and political headwinds in your countries. But donors must increase their contributions by at least 25% so that IDA21 meaningfully breaks the $120 billion mark.”

Sellah Bogonko, CEO of Jacob’s Ladder said, “Africa stands in a David and Goliath battleground facing a myriad of challenges which together can seem insurmountable. You stand as generals leading this army but the truth is that 60% of your army that stands behind you unequipped and therefore helpless. We urge you to take this moment that could be the pivot that Africa needs to empower your foot soldiers so that together we can realise common and shared prosperity. This is why as young people … we are availing ourselves to co-create the solutions  that need to be created for young people – a systems change approach to development that allows for job creation.” 

According to the Executive Director, African Future Policies Hub, Fatten Agad, “The level of ambition of IDA21 will be a very important signal on how serious is the international community about empowering the Bank to respond to pressing needs of IDA beneficiaries notably in light of the World Bank evolution roadmap to allow the Bank, for example, to finance climate action and other emerging development issues such as pandemics and the digital transition.”

Joab Okanda, Senior Advocacy Advisor, Christian Aid said, “For IDA21 to be truly a lifesaver jacket for African countries that are currently sinking deeper into a cocktail of climate and economic shocks, the policy and financial package that comes out of the IDA21 replenishment must address the fundamental question of why only a very tiny fraction of countries have been able to graduate out of IDA in the past 60 years. It’s high time we stitched the wound rather than add bigger gauze bandage onto a deep bleeding wound. Discussions must center around building a just and equitable world where IDA is no longer needed. This world is possible if the World Bank and IDA donor countries make the political choice to genuinely reform the global financial architecture and allow developing countries to equally participate in global economic decision making.”

Mavis Owusu – Gyamfi, Executive Vice President of the African Center for Economic Transformation (ACET) noted that “ACET’s African Transformation Index makes it clear that countries have fallen behind over the last twenty years. This has made it nearly impossible for Africa to withstand and quickly recover from crises. African leaders’ commitment at today’s Summit — that economic transformation must be at the heart of any and all investments in the continent — recognizes that transformation is essential for our long term development. We stand ready to support our governments and all their partners, including the World Bank, to deliver on this ambitious but achievable agenda.”

Fadhel Kaboub, Senior advisor at Power Shift Africa, and member of the Independent Expert Group on Just Transition and Development said, “The framing for IDA replenishment is very problematic. Instead of speaking of “donor countries” and their generous contributions via IDA to provide concessional loans to developing countries, we should be speaking of historical polluters and former colonial powers paying their long overdue climate and colonial debts via grants (not loans), debt cancellation (not restructuring), and transfer of lifesaving technologies to decolonize the economic structures of the Global South. 

No matter how much cash IDA21 raises, it will not even come close to the $2 trillion of net wealth extraction that goes from the Global South to the Global North. That is what the current global economic architecture does. It’s a colonial economic architecture that was not designed for justice, equity or development. It was designed for colonial abuse and wealth extraction. IDA was added to that colonial structure to whitewash and greenwash the abusive nature of the system.”

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