By Philippe Le Houérou and Antoinette Sayeh
This piece was originally published on World Bank Blogs
It is undeniable that progress has been made in reducing extreme poverty over the last quarter century — from 36 percent of the world population in 1990 to an estimated 8.6 percent in 2018 — and that living standards for hundreds of millions of people have improved over that time.
Yet, poverty reduction has not been consistent across countries and today it is slowing. For the world’s poorest countries, extreme poverty remains stubbornly high with 31 percent of their people living on less than $1.90 a day.
Many countries lag in their progress towards other development targets: two out of five people lack access to electricity; one out of three lacks clean drinking water; and one in five people remains malnourished. While countries have made progress, it is clear that stark challenges remain.
For nearly 60 years, the International Development Association (IDA) — the concessional lending arm of the World Bank Group — has not shied away from these challenges. IDA provides development financing in the form of grants and loans at zero or low interest to governments in the poorest countries. At a time when debt vulnerabilities are rising for many countries, IDA funds support the critical investments that can broaden economic growth and help countries overcome the unique problems they face.
With IDA’s support, countries have made progress in even the toughest environments. In the Democratic Republic of Congo, IDA has contributed to economic recovery by connecting farmers to markets with rural roads in 715 villages, and by creating 50,000 jobs in civil works with a focus on youth and women.
In Afghanistan, IDA-supported projects have generated 5,500 kilowatts of power, built 850 kilometers of roads, and provided 63 million liters of drinking water per day, benefiting 4.5 million people. And in Haiti, IDA’s support has helped immunize 640,000 children and ensured skilled birth attendants at 20,000 births.
But IDA’s value extends beyond financing. For years, IDA and its partners have prioritized learning, innovation, and results to provide cutting edge solutions to these complex issues. In fragile and conflict situations, IDA is using its growing knowledge base to better address the risks and drivers of fragility.
IDA has scaled up its support for regional solutions, helping countries add to ongoing integration efforts and partnering on new global and inter-regional initiatives. In the Sahel, as the largest donor to the region, the World Bank is well placed to convene clients and partners to identify solutions to a range of development challenges, especially those related to the regional dimensions of fragility. On track to double the three-year commitments of $2.5 billion under its previous replenishment period, IDA plans to scale up support to the Sahel further, with financing expected to increase to $6.5 billion, subject to country performance.
IDA anchors the World Bank’s support to small states, which face unique challenges due to their size and often geographical isolation. During the current three-year IDA cycle, commitments to eligible countries have surpassed $1.7 billion, already exceeding the $1.2 billion total during the previous cycle. This scale-up has been pivotal in responding to natural disasters and strengthening resilience. For example, the Pacific Climate-Resilience Project is helping build more resilient transport infrastructure in Samoa, Tonga, Tuvalu, and Vanuatu.
IDA has a unique ability to play a credible leadership role in pursuit of global agendas as diverse as marine litter, crisis preparedness and response, debt sustainability, gender equality, and climate change.
On climate change, IDA is helping countries implement their climate targets. Over IDA18’s first two years, IDA has strengthened support for countries in adapting to the effects of climate change ($7.8 billion total) and improving mitigation efforts ($5.9 billion total). In addition, all IDA operations are screened for short- and long-term climate change and disaster risks.
IDA is also leveraging the strengths of the entire World Bank Group — including the International Finance Corporation and Multilateral Investment Guarantee Agency — to ensure that resources, expertise, and solutions are maximized in the most challenging places. Two years ago, IDA’s shareholders broke new ground with the launch of the IDA Private Sector Window, a $2.5 billion facility aimed to help offset risks and other impediments to private sector investment in the world’s most challenging markets, including those with weak government capacity, inadequate legal frameworks, a lack of capital markets, and limited infrastructure.
Perhaps as important as these innovations is IDA’s results-oriented, country-led model that puts countries in the driver’s seat of their own development. IDA responds rapidly and flexibly and ensures that the resources it allocates to countries address their most pressing concerns and needs while building the appropriate institutions and systems.
IDA remains a unique platform that enables other development partners to operate at their full potential by reducing aid fragmentation among donors, and administrative burdens for client countries. This also enables IDA to build strong and effective partnerships with other bilateral and multilateral agencies and national institutions, the United Nations, the private sector, and civil society.
As IDA moves toward concluding its 19th replenishment (IDA19) together with its partners in December this year, we have heard loud and clear that IDA must continue to respond with urgency to today’s greatest development challenges.
With our partners, IDA has developed a very strong policy package for IDA19 that will invest in the growth, people, and resilience of the countries most in need. It sets IDA on a more ambitious path, squarely focused on results and impact, and increased demand from IDA borrowers.
A strong IDA19 replenishment will enable us to better support countries in these challenging times. We are grateful for the support from our large community of donors, who recognize the value of IDA’s partnership and who help make development progress possible.
During the World Bank Group’s 2019 Annual Meetings, IDA champions from China, France, the Netherlands, Saudi Arabia, Sweden, and the United Kingdom called for a strong IDA19 replenishment. And statements of support for IDA19 from governments across Africa, the Middle East, South and Southeast Asia, and the Pacific reinforce our belief that a fully resourced IDA can and should do more.
Philippe Le Houérou is CEO of the International Finance Corporation. Antoinette Sayeh is a Distinguished Visiting Fellow at the Center for Global Development. They serve as the Co-Chairs for the negotiations of the 19th Replenishment of the International Development Association, which is scheduled to conclude in December 2019.