World Bank Commits Record $5.7 BIllion to Continent
The World Bank Group committed a record $5.7 billion in International Development Association (IDA) resources to Sub-Saharan Africa in the last fiscal year, one billion dollar more than in the previous year.
In addition, the International Finance Corporation (IFC), the Bank Group's private sector arm, provided $1.38 billion in financing for its own account and mobilized an additional $261 million in financing through syndications, the bank said this week.
Africa, the bank's lead development priority, is in its third year of economic growth at levels above five percent, despite persistent constraints throughout the region arising from inadequate infrastructure, low investment and limited skills. Higher economic growth is lowering poverty levels, However, although there is significant variation among countries, and many countries are showing measurable progress in expanding the reach of education and attacking malaria and HIV/AIDS, most African countries aren't yet on track to achieve the Millennium Development Goals by 2015it said.
"We are now seeing increases in African countries per capita income consistent with those of other developing countries, and African countries have made great strides in expanding access to health and education," said Obiageli Ezekwesili, Vice President for Africa. "African leaders are well aware of the support that IDA provides and this is why they are strong supporters of a robust replenishment of IDA this year."
A significant factor in the bank's increased commitment is an expanding investment in infrastructure - particularly electricity generation-badly needed to sustain healthy growth in the higher-performing economies, and to raise productivity in slow-growth countries. In fiscal year 2007, which ended June 30, the bank committed $2.4 billion of IDA funds to infrastructure projects, of which $660 million was lending for the energy and mining sectors and $870 million was transport sector lending.
Uganda, where power shortages have constrained social and economic development, will benefit from a package of $360 million in loans and guarantees to support up to 250 MW of additional generating capacity, and a more reliable and efficient power system.
Regional projects-another emerging priority for Africa-accounted for a record $707 million for the year. By helping to integrate Africa's small, fragmented economies, these projects are critical to establishing an enlarged economic space for the region, while providing critical links for economically vulnerable landlocked countries.
Among these investments the bank approved a $201 million operation to finance transport and trade improvements in Cameroon, Chad and the Central African Republic, an area that accounts for the costliest transportation on the continent. The project spurs significant additional investments from the countries, as well as development partners, to improve linkages among the three countries, and alleviate the economic isolation of Chad and C.A.R., both landlocked.
"During fiscal year 2007, the World Bank Group provided over $34 billion of financial support for developing countries to invest in practical plans to move from poverty to prosperity," said World Bank Group President Robert B. Zoellick. "But we can and should do more. Given the great needs among diverse developing countries, the World Bank Group can make its capital work for people by creating development solutions for all. That would help advance an inclusive and sustainable globalization."
IDA provides interest-free loans and grants to the world's poorest countries, of which 39 are in Africa. In fiscal year 2007. Africa accounted for nearly half of all IDA commitments. Other financing instruments were also made available in Africa. The International Bank of Reconstruction and Development (IBRD), which charges market-based interest rates to borrowers, approved $37.5 million in loans to African countries showing higher income levels. The Global Environment Facility committed $52.7 million in Africa, and $159.6 million was provided by bank-managed trust funds supporting Sudan's rehabilitation.
The newly created Africa Catalytic Growth Fund agreed to support five projects with projected disbursements of $148 million. The fund addresses specific constraints that may be holding a country back or blocking progress on the Millennium Development Goals. Among other things, ACGF resources are helping Sierra Leone to lower child mortality and assisting Rwanda to alleviate transportation bottlenecks.
Beyond direct financial support, the bank provided clients 104 pieces of analytical work during the year, along with 90 technical assistance projects.
As part of a private sector push in Africa, IFC stepped up its activities. Among other things, it helped increase cellular access in the Democratic Republic of Congo (DRC), Madagascar, Malawi, Sierra Leone, and Uganda by mobilizing loans from international commercial banks to rebuild communications infrastructure.
Lars Thunell, IFC Executive Vice President and CEO, said, "Last year we doubled our finical commitments to the private sector in sub-Saharan Africa, which continues to be a priority frontier region for IFC. We helped 166,000 small African businesses get access to finance last year. Our projects gave six million new customers access to power and created 11 million new telephone communications across the region."
MIGA supported 11 projects with $311 million in investment guarantees and undertook 10 technical assistance projects in the region. "Africa is a strategic priority for MIGA," said Yukiko Omura, Executive Vice President of MIGA. "Projects supported by MIGA are delivering significant development benefits, ranging from addressing acute electricity shortages to the provision of cellular technology to populations who are underserved or populations who are underserved or have no access to telephone services."
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