Thursday, May 23, 2024

Do not ignore Africa, World Bank head tells wealthy nations -Dlight News

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The head of the World Bank has warned wealthy countries that it would be shortsighted to “ignore” Africa at a time when development budgets are being strained by wars in Ukraine and Gaza.

African heads of state are pushing for $120bn in aid to boost development and fight the effects of climate change as deadly floods sweep parts of the continent and drought strikes others.

World Bank data has shown that one in three low-income countries eligible for its International Development Association, which offers grants and concessional loans, is worse off than it was on the eve of the pandemic four years ago, with most of those in Africa.

“Ignoring Africa is like ignoring the future of where the world’s going,” Ajay Banga told the Financial Times in Nairobi, where he attended a meeting of African heads of state to discuss an IDA replenishment.

Africa’s population is set to nearly double to 2.5bn by 2050, when one in four people in the world will be African. Banga said Africa’s youth was its most vital asset but at risk of being neglected.

“The purpose is to cater to this ‘demographic dividend’,” added the former Mastercard executive.

The IDA offers grants and concessional loans to 75 low-income nations, more than half of them in Africa, to boost development and, increasingly, to combat the effects of climate change. Since 1960, it has provided $533bn, becoming a key source of donor funds that helped improve the economies of countries such as China and India.

“Crises divert money from everywhere,” Banga said of the competing demands for cash. “The question really is: ‘Can you make the case properly for why IDA for Africa is needed now?’”

Banga’s warning that Africa risked being squeezed of development funds was echoed by Abebe Selassie, the IMF’s Africa director, who said bilateral budget assistance from the EU, UK and other donors had been declining at an accelerating rate.

“In the past there used to be quite a lot of budget support to a lot of the poorest countries in the region, but this has been on a trend of decline,” Abebe said, adding that the World Bank and IMF had needed to step in to fill the gap. “The most depressing thing is that even humanitarian support has been declining.”

African countries argue that high levels of debt and high borrowing costs leave them unable to cope with extreme weather events caused by global warming. They are pushing for more concessional funding and pauses in repayment schedules when natural disasters strike.

William Ruto, Kenya’s president, said his country and the wider east Africa region faced “severe flooding that has devastated communities, destroyed infrastructure and disrupted our economies”.

Floods last month that killed more than 100 people and displaced in excess of 150,000 followed years of droughts in northern Kenya and the Horn of Africa. As floods hit Kenya and Tanzania, countries in southern Africa, including Zambia and Zimbabwe, are battling droughts that are wrecking agricultural production.

Before Banga took over at the World Bank, the institution was criticised for not doing enough on climate change.

Ruto had called on wealthier nations “to meet us at this historic moment of solidarity” by increasing their IDA contribution from the $93bn in 2021 to $120bn in 2024. The G20 independent expert group has recommended tripling IDA’s financing capacity to $279bn by the end of the decade.

Under Banga, the bank has expanded its mission “to create a world free from poverty — on a liveable planet”, setting a goal of increasing climate finance to 45 per cent of total lending by next year, at time when it has been expanding its footprint in Africa. Banga said “a large part of our money” was going to Africa, with the total amount raised from $5bn 15-20 years ago to $35bn-$40bn now.”

The World Bank has had to contend with a number of recent scandals in Africa, including sexual abuse at a for-profit school chain in Kenya in which it held a stake until 2022, before Banga took over.

Last month the Bank suspended new disbursements from a $150mn fund to expand a national park in Tanzania after it received allegations of killings, rapes and evictions.

“I have zero tolerance for us not taking action once we know there’s a mistake,” Banga said.

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