IDA touches the lives of millions of people in Africa, but few know about this part of the World Bank Group that provides loans and grants around the world. Every three years, IDA seeks new funds from member states. Its annual replenishment process – IDA19 – is led by Antoinette Sayeh, Liberia’s former finance minister. Sayeh spoke to DW’s Daniel Pelz about the process and the association.
DW: You are leading the current IDA replenishment. What has been the response from member governments so far?
Antoinette Sayeh: I am happy to say that coming out of our last round of discussions on the sidelines of the International Monetary Fund and the World Bank, we have reached a broad consensus to aim for the base scenario of 80 billion dollars (72 billion euros) up to the medium-high scenario of 82 billion dollars. We’re hopeful of getting that $82 billion, and I think the surveys we’ve had of replenishment members and donors suggest we can get to $82 billion.
Why do you need money?
IDA supports the world’s poorest and most fragile countries to reduce extreme poverty and increase prosperity. We support 75 countries. Much of this poverty today is concentrated in sub-Saharan Africa. Thus, Africa is certainly the focal point of the reenactment. During IDA18 2019, Sub-Saharan Africa consumed three-quarters of the resources, and we expect this to be similar under IDA19. We will seek to provide funding around five specific themes: One concerns fragile countries affected by conflict and violence. Another is to build stronger institutions and improve governance. The third is to improve gender equality. Fourth, jobs and economic transformation, given the huge need for jobs globally and in sub-Saharan Africa in particular. And finally on climate change which is having a devastating impact on some of the poorest countries.
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There are many new players in Africa, such as China and Russia. When you talk to African governments, you often hear this notion “I would like to get our loans from China. It is a very easy and fast way to get money. Why do we still need players like IDA?
China is not as new as it is sometimes portrayed. It had relations with certain African countries immediately after independence, such as Tanzania. China is a very present partner, as are certain private lenders. But the region’s financing needs are so huge, and IDA’s specific comparative advantage is so important in addressing the challenges countries face, that IDA is still in high demand by the countries themselves. They want a strong IDA presence. IDA is a multilateral institution, bringing together funding and priorities from national authorities around the world, including China, Russia and of course traditional European and Western donors. Together, they decide on IDA’s priorities and fund it to achieve those results. This has been greatly appreciated and cannot be replaced by either the private sector or bilateral donors.
Experts say there are so many loans going to Africa that there is even the risk of the country sliding into another debt crisis. What impact does this have on your work?
IDA has been very focused on addressing the issue of debt vulnerabilities. Nearly half of IDA recipient countries are in debt distress or at high risk of debt distress, meaning they are unable to service their loans. A focus on this issue has been a key element of this replenishment with a view to helping countries better manage their debt, encouraging them to better manage their debt and rely more on concessional financing provided by the IDA. IDA has done this in order to bring non-traditional creditors to the table to ensure that we work together to help countries solve these problems. Clearly, countries at heightened risk of debt distress have an even greater need for concessional financing. Where countries draw resources over a very long period and are not constrained by the need to repay very quickly. IDA therefore remains extremely important in this context and IDA’s grantmaking capacity also becomes even more important.
In collaboration with international partners, IDA seeks to improve the situation of countries in deep poverty
The World Bank has a bad image in Africa because of the harsh austerity measures it imposed on African countries in the 1980s and 1990s. Has it learned the lesson?
IDA and other partners in sub-Saharan Africa have many lessons to learn from this so-called period of structural adjustment, when countries faced major problems of macroeconomic stability. When you are in crisis, the options are much more limited in what you can do to get out of that crisis. So we have tried to build a partnership within IDA, especially with countries before they enter crisis, and around issues that will mitigate the impact of crises on them. We have learned lessons from the experience of conditionality, the need for strong ownership by country governments and society as a whole, and important investments in relationships beyond governments.
We see many conflicts breaking out in Africa, especially in extremely poor countries: South Sudan, the Central African Republic and parts of the Democratic Republic of Congo. How can you work with countries like these where it seems almost impossible to offer any kind of development to the people due to the conflict situation?
IDA works both in fragile countries at risk of crisis, and increasingly in countries in conflict. Past experience shows that if you do not protect the minimum institutions and preserve the ability of the poorest to access services in these communities, it becomes even more difficult once the crisis is over. IDA has partnered with other UN institutions and agencies to try to preserve basic service delivery, and has proven to be successful. IDA 19 will increase resources for these countries because that’s where the poverty is and that’s where we asked to make a difference.
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Many Western governments subscribe to the idea that more private investment in Africa is the key to poverty reduction. What is your position on this?
Even if governments do all they can to improve their domestic resource mobilization to better manage expenditures, governments alone are unable to do so even with the support of external partners. It is absolutely important that their partnerships with the private sector contribute to investments for more inclusive and sustainable growth. This does not mean that the private sector replaces governments. Governments will always be needed to produce public goods that private companies cannot provide, to address public challenges like climate change that the private sector is unable to address on its own.
Antoinette Monsio Sayeh was previously Director of the Africa Department of the International Monetary Fund. She served as Liberia’s Minister of Finance from 2006 to 2008.