Beyond size in IDA21 replenishment: What about socio-economic transformation?
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Article summary
Notes from Civil Society Policy Forum panel on 19 April titled, “Beyond size in IDA21 replenishment: What about socio-economic transformation?” IDA21 happens in a polycrisis context and within the framework of the WBG Evolution Roadmap. While most discussions focus on its finance, this session discussed the policy framework to deliver socioeconomic transformation. This implied examining IDA’s experience and addressing the structural causes of why developing countries are stuck in recurrent borrowing.
Organisers: Eurodad, Afrodad, Oxfam International, Bretton Woods Project, SEATINI, ACET
Moderator:
- Jason Braganza, Executive Director, AFRODAD
Panellists:
- Jane Nalunga, Executive Director, SEATINI
- Dr. Edward Brown, Senior Director for Research, Policy, and Programs, Africa Center for Economic Transformation
- Fati N’zi-Hassane, Director of Oxfam in Africa
- Andrew Dabalen, Africa Region Chief Economist, World Bank
- Enrique Blanco Armas, Manager for the IDA Strategy and Operations, World Bank
Jane: The size of IDA is not enough. IDA countries continue to experience recurrent debt cycles. They must move up value chain. IDA should focus on supporting this effort.
Question: What are the specific plans in IDA21 for Jobs and Economic Transfomation (JET)? Human development must also be considered.
Investment in real economy is essential, such as in agriculture. Need for indicators – production and productivity, percenatge of value-added commodities.
Edward: Since its establishement, IDA has supported 81 countries, of which only 17 graduated. None in Africa. IDA has not worked. Has not worked itself out of the business.
Growth is not enough. No job creation or resilience.
The continent continues to face multiple challenges that remain unaddressed by IDA:
- Urgent need to diversify the economy, competitiveness, increase productivity, use of technology – all of these are slow in Africa. Human well-being in Continent not on par with comparators.
- 70% of exports are primary exports comprised of five products.
- Productivity has been declining. Ghana and Korea where in similar positions in the 60s. Not so today.
- Why no transformation?
- Aligned with national plans
- Requires medium/ long-term NDP
- SDGs – malnutrition and nutrition are key focus for IDA.
Andrew: Reaction to claim that it has not worked. What can be done differently.
Asserted that there is a long debate to be had on whether growth is enough.
IDA is a big ‘social impact fund’ – owned by member states. Will depend on generosity of contributors. Aligned / share vision of what IDA must achieve?
Advantages of IDA:
- Very efficient form to address Overseas Development Aid (ODA) fragmentation
- Very impactful – without associated debt. Capital is desperately needed
- Provision of needed resources
Challenges:
- Institutional quality is essential
- Low growth trajectory – since 1960s about 3% per capita growth in Africa. However, e.g. Ghana’s GDP per capita has doubled.
- Some countries have used IDA well.
- Cannot place all responsibility on IDA
Fati:
- Supports robust replenishment. Reduces inequality to some extent.
- There is an urgent need to focus on better IDA, as outlined in the March Economist opinion piece by the presidents of Ghana, Kenya and Zambia.
- Progressive tax system,
- Climate adaptation
- Quality public services
- Support universal social protection – remove school and university fees, universal health coverage.
- Financial protection – need for universal social protection
- Should focus on quality of teachers/ focus on school completion. Should ensure 12 years of free schooling
Oxfam is concerned about the de-prioritisation of gender as focus area: Evidence suggests this may not be right approach.
- Risk of gender set backs is very high as women and girls are the ones most immediately affected by multiple crises.
- IMF managing director expressed concern about persistent and rising inequality, which has risen in 35 countries, including IDA countries.
- IDA has two opportunities to make a significant contribution to the achievement of the Sustainable Development Goals (SDGs) by 2030 through the IDA replenishments this year and in 2027
Enrique: The IDA team has been focused on stronger engagement
- People, prosperity, planet, digital and infrastructure with four lenses.
- Priorities will be defined within next six months – there is a need to work together on this process
- Increase productivity in jobs
- Also inequality – of access
Enrique noted that 56 per cent of IDA countries are at risk of debt distress. IDA is major contributor of capital. Debt sustainability policy framework support is provided.
Africa will hold an IDA Heads of State meeting on 29 April.
Jane: Bank loves the private sector more than the governments themselves. Bank has to assume responsibility, as governmentas have been very good students and have largely implemented the reforms proposed by the Bank. That is why the Continent has such low productivity. The economy has been financiliased. E.g. land in Uganda.
IDA must be changed. Need to also reform the international financial archtecture and multilateral trade system. States still reliant on IDA. Need to break the cycle of poverty and debt.
Edward: Meeting in Nairobi will be pivotal. Consultation with civil society by the Bank is perfunctory. Inclusion must be integrated in the development of the Country Partnership Framework and project design. Once governments will power, they loose accountability.
It is very important that IDA consider how it can better assist with regional integration.
Fati: Not excited about the private sector window. Private sector is very good at taking care of themselves. Private sector will not put people first.
IFC should transfer money back to IDA. Shut down PSW. Expand Crisis Response Window.
