- 19 African Heads of State seek to triple IDA’s financing capacity to $279 billion by 2030.
- IDA remains [Africa’s] most dependable source of capital, with every dollar of donor financing enabling an additional $3.5 in capital market leverage to amplify development impacts: President Ruto
- We are united by a shared vision for the future of Africa—a continent rich in diversity, culture, and potential, thanks to its young people and natural resources: The World Bank Group President Ajay Banga.
In a historic gathering of 19 African Heads of State and government in Nairobi, Kenya’s President William Ruto has ramped up calls for increased concessional financing from the World Bank’s International Development Association (IDA).
The rallying call, which was made during the International Development Association (IDA21) for Africa Heads of State Summit held at the Kenyatta International Convention Centre (KICC) in Nairobi, reverberated with urgency and determination.
President Ruto’s plea sought to triple IDA’s financing capacity to $279 billion by 2030, aligning with recommendations from G20 Independent Expert Group. Citing the essential concessional nature of this financing, President Ruto underscored its potential to alleviate debt burdens faced by many African and other developing nations, while at the same time helping unlock the vast resources that lie within Africa.
Limited concessional financing slowing efforts to combat climate change
High on the agenda of the Nairobi meeting was the pressing need to address the financial strain caused by high interest rates, which hinders efforts to combat climate change, and the transition to a low-carbon economy, and adequately finance critical industries such as education, health, and social protection.
“Now more than ever, long-term concessional financing is vital,” President Ruto explained, adding, “IDA remains [Africa’s] most dependable source of capital, with every dollar of donor financing enabling an additional $3.5 in capital market leverage to amplify development impacts.”
In his remarks, the World Bank Group President Ajay Banga echoed these sentiments, stressing the need for unwavering global support, particularly from IDA, as Africa charts its course toward a prosperous and progressive future.
“We are united by a shared vision for the future of Africa—a continent rich in diversity, culture, and potential, thanks to its young people and natural resources,” Banga said. “These are the ingredients that can power our future. The International Development Association has been a steadfast partner in Africa’s development journey, and this summit symbolizes our collective commitment to accelerating progress. This will require more from IDA, more from the World Bank Group, more from governments, and more from the private sector.”
The Summit, co-hosted by Kenya and the World Bank was attended by a total of 19 African Heads of State committed to focusing development aspirations across the continent.
Concessional financing lasting 40 to 50 years
The Heads of State and government present included presidents Yoweri Museveni (Uganda), Samia Suluhu (Tanzania), Evariste Ndayishimiye (Burundi), Nana Addo Dankwa Akufor-Addo (Ghana) Lazarus Chakwera (Malawi), Julius Maada Bio (Sierra Leone), Azali Assoumani (Comoros), Mohamed Ould Ghazouani (Mauritania), Faustin-Archange Touadera (Central African Republic), Andry Rajoelena (Madagascar), and Hassan Sheikh Mohamud (Somalia), showcased a united front in the pursuit of transformative development initiatives.
Dr Ruto called on the World Bank to step up capital injection into IDA to enable the unit to foster sustainable growth and prosperity across the continent.
Acknowledging the impactful demand-driven programs of IDA, coupled with concessional loans lasting 40 to 50 years, Dr Ruto highlighted their role in empowering borrowing nations to pursue sustainable, long-term development strategies.
“IDA stands out for its rapid and decisive action during crises, distinguishing itself from other funding sources,” he noted.
The Summit also spotlighted Africa’s rich potential in renewable energy resources, with President Ruto calling for increased access to affordable, long-term capital to unlock this green energy bounty. Africa, he asserted, possesses 60 percent of the world’s prime solar resources and untapped renewable energy potential exceeding 50 times the projected global electricity demand by 2040. However, realizing this potential necessitates a shift in investment strategies.
President Ruto’s address underscored Africa’s determination to drive industrilization using its rich energy, mineral, and human capital resources. With a keen focus on transforming agriculture, ensuring water security, expanding energy access, and creating job opportunities for millions of youth, Africa is poised to embark on a transformative journey towards prosperity.
The Nairobi Summit concluded with a collective commitment from African leaders to take deliberate and robust actions to improve fiscal discipline, increase domestic revenue mobilisation, develop investor-friendly policies, and enhance anti-corruption measures.
Their resolve to mobilise finance and investment for Africa’s development needs and achieve the 17 sustainable development goals stood as a beacon of hope for the continent’s future.
“Our proposal and request entail a vision for Africa-driven socio-economic development, executed with transparency and inclusiveness,” Dr Ruto explained.
Other leaders representing the youth, the private sector, and civil society called for the need for a robust IDA21 replenishment and committed to work in partnership. East Africa’s regional lender Equity Group CEO Dr James Mwangi said, “”This event is a testament to our commitment to driving sustainable development and financial inclusion. Together, with IDA we are paving the way for economic empowerment and transformation in our communities, shaping a brighter future for all.”
Nir Bar Dea, CEO of Bridgewater Associates, said “Africa is expected to have the largest workforce within the next decade, and by 2075, one-third of the world’s population will be African. Yet today, there are challenges in accessing key resources that are essential to economic growth that the IDA replenishment can help secure. We are building on Bridgewater’s mission to understand the world and turn our insights and research into results by providing a deeper understanding of how IDA21 will shift the economic trajectory of African nations and global markets and economies.”
Hugh Evans, Co-Founder and CEO of Global Citizen, said “Africa has the youngest population of any continent, and presents the world’s biggest development opportunity of the next 30 years – but only if the world’s richest nations stop cutting foreign aid and invest the financing necessary to address energy poverty. Through a fully funded and functional IDA, the continent’s young people stand to achieve their full potential.”
Read also: Brace for High Interest Rates for a Longer Period World Bank Warns Kenya
IDA concessional financing in Africa
For years, IDA has stood as a pillar in Africa’s quest for economic growth. With its arsenal of grants and concessional loans, IDA has accelerated progress by financing strategic sectors such as healthcare, education, and agriculture.
By nurturing job-generating industries and building a skilled workforce, IDA has become a powerful engine driving economic growth and prosperity across Africa. Amid the set of woes facing Africa, including pandemics, climate change, food insecurity, fragility, and conflict, the call for tripling IDA’s financing in the continent has never been more urgent.
With 39 African nations among the 75 countries supported by IDA, over 70 percent of its resources are directed towards the continent, a move that helps realise the World Bank Group’s ambitious goal of providing electricity to 250 million Africans by 2030.
By enhancing IDA’s coffers, African nations can access the financial resources needed to confront these challenges better and chart a course toward a brighter future.
Currently, with vast natural resources, abundant sunshine, and the world’s fastest-growing youth population, Africa holds the key to unlocking its own potential. By harnessing these resources and leveraging the energy and creativity of its burgeoning youth demographic, Africa has the potential to emerge as a global powerhouse of innovation, and sustainable development.
