CFID are delighted to host a guest blog submitted by Jakob Kopperud, the World Bank Special Representative to the UK & Ireland and head of the World Bank office in London. As we mark End Poverty Day on 17th October, we need to remember that we live in a world where one in 12 people live in extreme poverty.
The views expressed in this paper are those of the authors, and may not reflect the views of CFID.
Making Lifechanging Investments Where They Matter Most: The World Bank’s International Development Association
One billion people escaped extreme poverty between 1990 and 2015. But as we mark End Poverty day on October 17, we need to remember that we still live in a world where one in 12 people live in extreme poverty, most of them in Sub-Saharan Africa.
This makes the mission of the World Bank Group - ending poverty and boosting shared prosperity in a sustainable way - more urgent than ever.
Our most important tool to achieve these goals is the International Development Association (IDA), the part of the World Bank which—with the support of the UK and more than 50 other donors—provides interest-free credits and grants to the world’s poorest countries.
IDA is the single largest fund supporting developing countries in implementing programs to achieve the Sustainable Development Goals (SDGs). It helps donor countries coordinate and target scarce bilateral and multilateral aid resources across multiple sectors, reducing aid fragmentation and administrative burdens. With IDA’s help, hundreds of millions of people have escaped poverty—through the creation of jobs, access to, schools, roads, nutrition, electricity, clean water, and more.
A large share of IDA’s work is focused on Africa, and we are on track to deliver $45 billion to the region by the end of 2020. In Nigeria alone, IDA funds trained 25,000 women in life skills and 3,000 women in vocational and entrepreneurial skills between 2013-18.
With these kinds of investments, IDA is helping countries develop their most important resource: human capital, or the health, education, and skills of women, men, and children. Since 2000, IDA has invested US$50 billion to ensure that people can fully realise their potential, and that countries can participate meaningfully in the global, skills-driven economy, and lay the foundation for growth; no country in history has been able to sustain poverty reduction without economic growth.
IDA has existed for more than 60 years and was originally set up to be financed by regular donor contributions and capital flows from loan repayments. Strong financial management and a solid record of loan repayment enabled IDA to build up an unrivalled capital position, accumulating the largest equity of any multilateral development bank. In 2018, we raised our ambition for IDA, leveraging its strong financial position and the strong and consistent backing of more than 50 donors to secure a triple-A rating and launching its first bond in the global capital market. By issuing bonds, IDA is unlocking billions of dollars in additional resources for IDA countries.
By accessing capital markets to complement donor funding, the IDA offers donors exceptional value for their money. For every £1 provided in support by the UK government, £3 goes to support the world’s poorest countries. We are also giving investors the chance to contribute to the world’s largest social impact fund while receiving the safety of a AAA-rating. The market response to IDA’s first bond was overwhelmingly supportive: within hours, more than 110 investors from 30 countries had expressed interest, over-subscribing our $1 billion bond launch 4.5 times for a final bond size of $1.5 billion.
Tackling development challenges requires collective and sustained global action, and IDA will continue to scale up its efforts. This year, we are introducing a comprehensive package of policy and financing proposals for the next three-year cycle - known as IDA19, covering July 2020- 2023. IDA19 will build-on the ambitious policy commitments of previous replenishments, to solve the urgent development challenges facing IDA countries.
IDA19 aligns closely with the UK’s development priorities, and the UK plays a key role in shaping the IDA agenda to focus on poverty reduction and transformational economic growth, jobs and private sector development, climate change, gender equality, and enhanced support for areas affected by conflict.
Membership of IDA enables the UK to amplify its own development impact, extending the UK’s reach across sectors and regions, and deploying its valuable knowledge as we work together to invest in people and foster economic growth. The UK’s continued commitment to IDA underscores that an investment in the world’s poorest countries is an investment in the future prosperity of all.