World Bank Boss Banga seeks sustainable loans for poor states

Monday December 11 2023
Ajay Banga

World Bank President Ajay Banga. PHOTO | AFP


World Bank Group President Ajay Banga wants the International Development Association (IDA) to give poor countries what he terms sustainable loans.

Mr Banga said this in Zanzibar at an IDA mid-term review meeting. IDA is the part of the World Bank Group that helps the world’s poorest countries, 39 of which are in Africa.

Mr Banga outlined an ambitious plan to streamline IDA’s operations, identifying its concessional financing as key to poverty reduction.

The meeting was to evaluate progress for loan commitments worth $93 billion under its 20th financing round (IDA20) for the 2022-2025 period.

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Speaking to The EastAfrican, World Bank Managing Director for Operations Anna Bjerde said while there was a consensus that 40 percent of loans disbursed was a satisfactory return on initial commitments, increasing global problems could trigger new loan demands before the next financing round in July 2025.


Mr Banga called for a shift in IDA commitments from projects to platforms and yardsticks from inputs to outcomes by concentrating more on the impact of funded initiatives such as girls’ education, job creation, environmental conservation and community services than the money spent.

He also disclosed a new $15 billion programme to connect up to 100 million more Africans with reliable and affordable electricity by 2030. He said at least $5 billion of the funding requirement would be covered by IDA from its own coffers and the rest through partnerships.

“We see it as a start, and also a platform to draw more interest among IDA partners to also join the cause through similar investments during,” he explained.

On his plans for IDA, he said he would seek to simplify its loan disbursement processes, standardise application procedures, and lessen bureaucratic burdens that borrowing governments sometimes have to wade through before being granted loans.

The IDA20 financing round model is built around helping low-income countries respond to multiple challenges in a post-Covid world and restore their trajectories towards achieving UN 2030 development goals.

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Commitments under it are primarily focused on addressing climate change issues, situations of conflict and violence within countries, gender equality and empowerment, and creating more jobs on a platform of cross-cutting issues such as crisis preparedness, debt and governance and technology.

The IDA20 $93 million package includes donor contributions from high- and middle-income countries totaling $23.5 billion. Negotiations for IDA21 will be held throughout next year culminating in a formal pledging session in December 2024 where the IDA21 replenishment envelope will be announced.

“Several donor country representatives in the meeting have made pledges to help fill emerging gaps between commitments and rising demand during the current IDA20, though we have yet to determine the exact amount and value of new pledges,” Ms Bjerde said.

The MTR meeting also discussed issues to address when negotiations begin for the next financing round (IDA21), which Mr Banga said he was aiming to secure commitments of an even larger value than IDA20.

Since its establishment in 1960, the World Bank has provided $533 billion in funding to 115 countries.