The Next Three Years of International Development Assistance
February 10, 2014
What is International Development Assistance (IDA) and IDA replenishments?
IDA was established in 1960, 16 years after the establishment of the World Bank, following concerns that low-income countries could not afford to borrow at the market rate offered by traditional World Bank loans. Consequently, IDA was established as part of the World Bank's original lending arm, the International Bank for Reconstruction and Development (IBRD) as a revolving fund, providing concessional loans to the poorest countries. IDA is has since been funded largely by government contributions every three years. Additional funds come from IBRD's and International Finance Corporation's (IFC) income, and from borrowers' repayments of earlier IDA and IBRD loans.
What is the role of the United States and other countries in IDA replenishments?
The top ten contributors to IDA in the past decades have remained steady. The United States and the United Kingdom are the two leading donors with each contributing a total of about $13.5 billion and $13.1 billion respectively between the periods of IDA 13 and IDA 16.
Top 10 contributors to IDA 13-16
(Amounts in USD Million Equivalent)
What makes the IDA 17th replenishment unique?
First, despite the tough financial times, the development community has pledged to commit to a record $52 billion in the upcoming year for the IDA 17th replenishment. Many of the donors are still fine-tuning their contributions and it is possible that the numbers could increase when they are released in March 2014.
Second, IDA17 (which spans July 1, 2014 to June 30, 2017) will also be pivotal because it includes the target dates for achieving the Millennium Development Goals (MDGs) and the launch of the post-2015 agenda.
Third, it is also unique because there will be a greater drive to leverage potential private sector opportunities to address pressing challenges. It plans to shift from doing ‘business as usual’ in the development industry, which has been simply filling the service delivery gap. Instead, it aims to leverage private sector and government funds at the country level to help improve quality and results.
Furthermore, there is growing interest for engagement with non-traditional partners and new emergent donors in the south-south cooperation context.
Concurrently, the World Bank group itself is going through its own changes to increase effectiveness in delivering results, improving global knowledge sharing, working together between private and public sectors, and creating greater clarity to focus on eliminating absolute poverty.
What are some of the main areas of focus for IDA 17 and how does it differ from previous replenishments?
Some of the special themes for IDA 17 are inclusive growth, building institutions in fragile states, gender in development, and climate change.
Africa is a key focus: Financing to the Africa Region will account for about 58 percent of IDA monies. This decision was reinforced by the clear messages of African finance ministers about the important role IDA has played in addressing their challenges. It is notable that IDA has been instrumental in shaping country ownership by key local leaders. Some of the pressing issues on the table for Africa are job creation, and, a focused approach for national and regional infrastructure development to achieve economies of scale.
There will be an increased emphasis on fragile and conflict affected states: The 2010 World Development Report marked a paradigm shift when it emphasized the need to address the pressing needs of fragile states, particularly when investment leading to job creation and economic stability becomes almost impossible because of the risks inherent in such countries, and the absence to mitigate this risk. While there has been tremendous progress in working with fragile states, only four percent of current projects are in fragile states. However, it is important point to note that most World Bank projects now are performing almost at the same level in both fragile and non-fragile states.
There will be an increased emphasis on finding new and innovative ways for monitoring and evaluation and defining the importance of conditionality. Monitoring and Evaluation (M&E) has increasingly been of focus and one of the strongest priority areas which has resulted in the successes of efforts such as the Open Data Initiative. IDA 17 is particularly well equipped with much stronger reporting systems and a rich toolkit of data and data collection to draw from. These efforts are going to be bolstered by helping countries develop and maintain their own data management and capacity building, especially to help with capturing the results of more intangible efforts such as institution building.
Many people fail to see the link between conditionality and M&E. Often conditionality is associated with the whims of policy makers in Washington D.C. in determining what is best for developing countries. However, the focus actually is on country ownership which itself is about accountability and truly owning the solution. Another way to look at it is that M&E and conditionality are inherently related. Conditionality provides the parameters and the benchmarks against which M&E can be undertaken. Without specific conditionality or objectives, M&E will be impossible.
The way forward
Moving forward, IDA should focus on incorporating new stakeholders in the dialogue - civil society and other non-traditional stakeholders. Specifically, IDA should pave new avenues in working constructively with China and encouraging south-south cooperation. The World Bank and IFC can utilize their arsenal of public and private capital to encourage the synergy of the two and work together with countries to explore new investment opportunities. Although there has been increasing movement to increase coordination among donors in an effort to raise aid effectiveness, more work needs to be done to keep the momentum going. Stronger regional partnerships with multilateral organizations such as the African Development Bank and Asian Development Bank should be encouraged.
Sadika Hameed is a fellow with the program on Crisis, Conflict, and Cooperation at the Center for Strategic and International Studies in Washington D.C. Jeremiah Magpile is a Program Coordinator and Research Assistant with the Project on Prosperity and Development.
Commentary is produced by the Center for Strategic and International Studies (CSIS), a private, tax-exempt institution focusing on international public policy issues. Its research is nonpartisan and nonproprietary. CSIS does not take specific policy positions. Accordingly, all views, positions, and conclusions expressed in this publication should be understood to be solely those of the author(s).
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