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Roundtable on the replenishment of the IDA-20

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Roundtable on the replenishment of the IDA-20 1

On Wednesday June 16, the Brookings Africa Growth Initiative convened a consultation with multilateral institution leaders representing Africa in preparation for the IDA-20 replenishment meetings. The purpose of this consultation was to offer recommendations for securing a robust IDA-20 outcome, identify priorities for IDA-20, and discuss approaches for ensuring a common African voice at the replenishment meetings.

The International Development Association (IDA) is a large source of assistance for the world’s 75 poorest countries, 39 of which are in Africa. Annual commitments have averaged around $18 billion over the last three years, with about 54 percent going to Africa. Despite this funding, in the face of the COVID-19 pandemic, many of the resources under IDA have already been depleted. In response, the World Bank is embarking on an accelerated replenishment of the fund, aiming to complete IDA-20 a year ahead of schedule. The first replenishment meetings are planned for the end of June 2021.

The consultation began with participants agreeing that IDA is fit for purpose, and that the framework is suited to address the region’s development challenges. IDA grants and low-to-zero concessional loans for projects and programs that boost economic growth, reduce poverty, and improve poor people’s lives are urgently needed to help countries in their recovery efforts. Speakers emphasized that concessional financing must be maintained to avoid increased, already unsustainable debt burdens made worse by the pandemic. At the same time, participants also noted the need for recipient countries to use all funds wisely to get maximum use out of them—including those not just from replenishment proceeds but overall fiscal revenues, including proceeds from natural resources.

Indeed, under COVID-19, already complex challenges in IDA countries have been exacerbated, and participants agreed that the COVID crisis is putting Africa’s recent socioeconomic gains at risk. Experts predict that, under COVID-19, 18 million to 29 million people in IDA/fragile countries are on the cusp of falling into extreme poverty—an increase of between 3.1 and 3.6 percentage points relative to pre-COVID projections. Before the pandemic, countries like the Seychelles had achieved this goal; however, now, no other country besides Cabo Verde is on track to reach it. The pandemic is not the only threat to these gains: Recent climate events have highlighted the vulnerability of the region: In fact, 34 million people in 17 countries, the majority of whom are in fragile and conflict-afflicted states, are at risk of famine. In some parts of Africa, floods, droughts, and locusts have only exacerbated these challenges.

Participants also noted that the pandemic has revealed the great extent to which African health systems are overstretched and underfunded. Indeed, weaknesses in African health systems have been laid bare: Institutions cannot cope with COVID-19, oxygen shortages persist, and vaccine equity and efficient rollout are both problems. Moreover, despite the massive funding committed to vaccine procurement and distribution, that amount is simply not enough to meet the needs. Furthermore, many participants emphasized that a holistic health response is necessary both now and in the future; leaders should not and cannot let COVID-19 overrun all the other health priorities. Participants thus urged the need for a World Development Report, as soon as possible, that would focus on health systems and financing.

Finally, requirements for resources in Africa already outpaced current financing—even before the pandemic hit. Given that African countries do not have the fiscal space to cover their recovery needs, there is a huge need for external financing. Almost half of IDA-19 financing was reallocated to COVID response, leading to its shortening, and estimates for the rebuild after COVID-19 lay at $112 billion—just as funders themselves are stretched thin. Already, $10.3 billion of IDA resources have been committed for COVID relief. At the same time, countries continue to pursue the Sustainable Development Goals, which require massive investments.

Discussants then posited areas of focus for IDA-20, emphasizing tackling inequality and boosting human capital. Suggested priority areas for the path to recovery included:

  • Infrastructure, especially energy and digital. The pandemic not only highlighted digital infrastructure gaps, but also emphasized the urgency by which they need to be addressed given their spillovers to all realms of socioeconomic development, especially education and human capital outcomes given the losses in education during the pandemic.
  • Climate change and related shocks. Increased climate change also threatens agriculture, food security, and nutrition. Donors and policymakers must increase access to climate financing to create climate-smart resilience and support the use of clean and affordable energy. Some participants recommended that African leaders take advantage of COP27, which will be held in Africa in 2022, to push the continent’s climate agenda under a united, common African voice.
  • Gender. Economic inclusion for women, including better access to child care and increased land rights, will benefit households and economies more broadly. Support to small- and medium-sized enterprises (SMEs) will also boost women’s economic inclusion and overall job creation. Policymakers must also be sensitive to school closures, as those disproportionately impact girls.
  • Job creation. Policymakers should continue to emphasize job creation policies that will transform and more closely link the informal with the formal sector.
  • Support to health systems. When the crisis is over, financing to the health sector and investments in health infrastructure must not only be maintained, but increased, to prepare the region for the next pandemic.

Participants agreed that improved governance and strengthened institutions will contribute to a successful tackling of many of the region’s current challenges. They also agreed that a regional approach with support from international partners will be key to success.

In moving forward, participants encouraged African countries to approach the replenishment meetings with the following issues at the forefront:

  • Sustainable debt must be at the top of the list for decisionmakers as they approach the replenishment.
  • The African continent saw enhanced and successful cooperation as it tackled the pandemic, thanks to the efforts of the African Union and the Africa Centers for Disease Control and Prevention. This collaborative energy must be harnessed to address other challenges.
  • African countries must be all-in on the digitalization agenda given its role in boosting economic development, sustaining economies during lockdowns, and guarding socioeconomic gains.
  • After the replenishment meetings in June, African leaders will be meeting in Cote d’Ivoire in July 2021 and should use that opportunity to determine what the shared African positions on climate change, COVID recovery, and more will be.
  • To further amplify African voices throughout the replenishment process, the use of eminent Africans as spokespersons is necessary.
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Roundtable on the replenishment of the IDA-20

On Wednesday June 16, the Brookings Africa Growth Initiative convened a consultation with multilateral institution leaders representing Africa in preparation for the IDA-20 replenishment