A reading of the World Bank Group’s role in African development

Prepared by: Samar Adel – PhD Researcher – Cairo University – Egypt 

• Arab Democratic Center

The world has known during the interwar period many changes and events in various fields and fields, especially the economic field characterized by the events of the collapse of the gold standard and the resort to the mandatory paper money system, and the countries ’reliance on inflationary financial policies in order to rebuild their deteriorating economy. In 1944, representatives of the states met The United Kingdom, England and 42 countries are in Bretton Woods to decide on the shape of the new monetary financial system. It was agreed to establish three organizations, which are the International Trade Organization, the World Bank, and the International Monetary Fund.

The World Bank, through the International Bank for Reconstruction and Development and the International Development Association, provides loans and grants through two basic types of loans and credits: investment loans and development policy loans. Sub-Saharan Africa has some economic and social characteristics, which puts it in front of major challenges that impede the process of sustainable development, and at the same time makes it more deserving of assistance from the World Bank for countries eligible to borrow in order to help achieve the Millennium Development Goals, and then this will be addressed through The following points:

First: An overview of the size of the projects carried out by the World Bank Group

The growth rate in sub-Saharan Africa is estimated to be approximately 2.6% in 2019, although it is expected that the rate will rise to 2.9%, and despite this, growth is insufficient to reduce poverty rates, in addition to declining per capita GDP. The total amounted to 3987.5 dollars in Africa in 2018, and the division of these projects according to a number of years will be dealt with as follows:

• Size of projects in 2014:

The volume of projects that the International Bank for Reconstruction and Development funded in Africa in 2014 amounted to 141 projects worth 10.6 billion dollars, and the International Finance Corporation had the largest share in this financing, as it alone provided financing of 10.2 billion dollars out of a total of 10.6 billion dollars, and in this In this regard, the International Bank for Reconstruction and Development also had support in this financing, worth $ 420 million, and the Public Administration and Justice sector accounted for the largest share of the World Bank Group’s total financing of $ 2.1 billion, and energy and mining $ 1.9 billion, followed by the transport sector with a value of $ 1.5 billion.

• Size of projects in 2015:

In 2015, the Bank agreed to provide $ 11.6 billion to the region to finance 103 projects, and this year the IDA contributed $ 10.4 billion of the total financing of the World Bank Group, which amounted to $ 11.6 billion, and thus this institution is the most funded in the World Bank Group. The International Reconstruction and Development (IBRD) sector accounted for $ 1.2 billion of the total funding, and the public administration, law and justice sector accounted for the largest proportion of this, the World Bank Group’s total financing of $ 3 billion, followed by the health and social services sector with a value of $ 2.8 billion, and transportation with $ 1.2 billion. 

C- The   size of the projects in 2016 :

The Bank agreed to provide $ 9.3 billion to finance 109 projects in Africa in 2016, and often if not always, the International Development Association (IDA) has the largest share of financing the World Bank Group, as the size of the funding by the Foundation was estimated at $ 8.7 billion, and the International Bank for Reconstruction and Development had provided loans in the amount of $ 699 million of the total funding, and these loans focused on raising agricultural productivity, increasing access to low-cost energy, building the capacity of countries to confront climate change, improving the quality of education, in addition to providing support to fragile and conflict-affected countries. In this context, the International Foundation agreed The Development Committee seeks to provide rapid resources to Guinea-Bissau and Madagascar, to address the roots of fragile situations and support their transformation into effective states that carry out their functions by implementing government reform initiatives and supporting the establishment of a transparent and accountable financial management system.

D- The size of the projects in 2017:

In 2017, $ 57 billion in funding was announced for sub-Saharan Africa over the next three fiscal years, and most of the $ 45 billion would be funded by the International Development Association (IDA) and the World Bank Group’s fund for helping the poorest countries, and it will include the aforementioned total amount of ($ 57 billion) about $ 8 billion in private sector investments from the International Finance Corporation, and $ 4 billion from the International Bank for Reconstruction and Development.

E- The size of the projects in 2019:

In 2019, the World Bank approved $ 15 billion in loans to the region for 152 operations in Sub-Saharan Africa, where the International Finance Corporation contributes $ 14.2 billion, which represents 94.6% of the total World Bank financing, while the World Bank provides 820 million Dollars of total financing in loans.

Second: Division of World Bank projects according to sectors:

Funding from the World Bank Group will assist projects with a transformative impact during the fiscal years 2018-2020. IBRD priorities will include health, education, and infrastructure projects, such as expanding water distribution and access to electricity. The priorities will also include food industries. International is also deepening its engagement in fragile and conflict-affected states and increasing climate-related investments. The expected results of the International Development Association will also include health and nutrition services, where the number of beneficiaries reaches 400 million people, access to safe drinking water sources for about 45 million people, and work to generate renewable energy of up to 5 gigawatts.

When lending to sub-Saharan Africa, the World Bank focuses on several axes in an effort to finance the sectors that are priority, and the following figure reflects the volume of loans provided by the International Bank for Reconstruction and Development and the International Development Association by sectors in 2019 as follows:

     Figure No. (1)

The volume of loans provided by IBRD and IDA by sector in 2019

                                The ratio is from the amount of $ 15 billion

Source: The World Bank : Ending Poverty, Investing in Opportunity (Washington: The World Bank Group, 2019 Annual Report), p. 18.

It is clear from the previous figure that the volume of loans provided by the International Bank for Reconstruction and Development and the International Development Association (IBRD) by sectors for the fiscal year 2019, which amounted to $ 15 billion, and the percentage of loans to different sectors reached as follows: The volume of loans provided to the energy sector and the extractive industries reached 22%, which is the sector that accounted for the largest percentage, followed by the agriculture and public administration sectors at 12% each, and the least loan-receiving sectors were the financial sector, which amounted to 5%, followed by the transport sector, at 4%. And finally, the information and communication technology sector, by 3%. The focus on achieving development has also been mainly focused on enhancing human capital, empowering women, expanding the digital economy, enhancing regional integration, addressing fragility, and building resilience to climate changes, as follows:

• Strengthening human capital :

In the context of promoting the protection of human development, the World Bank realized the size of the gap that exists in Africa between what students learn in different stages of education and what the labor market and employers require, and because solutions must be found to bridge this gap by providing these students with the required skills and training, so it launched initiatives to enhance education ( Science, technology, engineering and mathematics) in various African countries, and this project funds 24 centers in many African countries that have been selected and tested on the basis of competitiveness in higher education institutions, especially in eastern and southern Africa within the African Centers of Excellence in Higher Education at a cost of $ 140 million. These centers provide excellent training programs, applied research and knowledge transfer in some important sectors, such as health, education, applied statistics and agriculture.

The World Bank’s plan with regard to human capital, which was launched in April 2019, also seeks to help the countries concerned to accelerate their progress, and within the plan is to increase investments in human capital by 50%, including $ 15 billion in new financing and grants during 2021. – 2023, in order to sharply reduce child mortality in order to save four million children, as well as to prevent stunting among 11 million children, and to increase children’s learning by 20%.

• Accelerating digital transformation:

The World Bank Group and its partners are committed to ensuring digital empowerment for everyone in general, a business, and government in Africa by 2030, and digital transformation can increase the rate of growth in Africa by about 2% annually, and help reduce poverty by 1%. Also, $ 25 billion has been allocated for the digital transformation process since (2019-2030).

• Addressing drivers of fragility and climate risks :

In light of the climate change occurring that threatens food security, the World Bank has invested in activities related to climate change adaptation and its impacts, and in accordance with the World Bank plan in relation to the Climate Action Plan in Africa, which was launched in 2016 when the World Bank approved 176 A project amounting to about $ 17 billion, and these projects have already achieved some of the desired results, especially in respectful agriculture and on the level of renewable energy.

• Encouraging growth in the private sector

According to the 2108 report entitled Private Sector Participation in Infrastructure, the private sector participation is on the rise in the participation of development in Africa, with the volume of investments reaching 7.7 billion dollars, and these investments resulted in clean generation of energy in partnership with the private sector. The World Bank Group has provided more than $ 2 billion in aid to Kenya, which in turn improved financial performance, and also contributed to the development of some renewable energy sources such as solar energy.

Third : The volume of loans provided by the World Bank Group to Africa :

In order for the World Bank to offer its loans, it links them to the application of some policies within the receiving country, where the following are required to provide loans:

• That the loans are to finance the reconstruction and development projects in the city-state.
• It is for governments, affiliated agencies, or state-guaranteed bodies.
• The state should not have another source of funding.
• That the role of the World Bank when financing the selected projects and established in the borrowing countries is limited to the foreign exchange requirements of the project to import the materials and is not obligated to finance the part that depends on the local currency.
• That the borrowing country approves the right to supervise the World Bank over the way the loan is spent in the area specified for it.

These conditions are the focus of much criticism, as the conditions of economic policy are ineffective and impose inappropriate political options, and their harmful impact as they lead to reducing the role of the public sector and its services and laying off employees, which has severe social effects, and it is in the interest of establishing multinational companies that Harm local small and medium businesses. The failure of the debtor state to continue to pay the service of these debts (installments and interest) on time, exposes it to a very dangerous situation, as denying the debt and stopping payment affects the creditworthiness and economic reputation of the state, and may expose it to economic and political sanctions and perhaps military intervention against it. This theme will be addressed through two points, the first is related to the volume of loans provided by the World Bank and the International Development Association, and the second deals with World Bank loans at the sectoral level:

• The volume of loans provided by the International Bank for Reconstruction and Development and the International Development Association :

The World Bank Group, through the International Bank for Reconstruction and Development and the International Development Association (IDA), offers two basic types of loans and credits: investment loans and development policy loans. In this regard, the total IFC investments in sub-Saharan Africa amounted to $ 6.2 billion in 2018. Some entities, along with the Foundation, have helped create 278,000 jobs and create opportunities for more than a million farmers, and one third of the Foundation’s program services went to this region. The following is a figure that reflects the volume of loans provided by the International Bank for Reconstruction and Development and the International Development Association (IDA) to Sub-Saharan Africa during the period (2011-2018), as follows:

Figure No. (2)

The volume of loans provided by the International Bank for Reconstruction and Development and the International Development Association

 To sub-Saharan Africa during the period (2011: 2018) billion dollars

Source: World Bank: https://data.worldbank.org/indicator.

It is evident from the previous figure that the volume of loans provided by the International Bank for Reconstruction and Development and the International Finance Corporation is constantly increasing, as it is clear that in 2011 the volume of loans reached 36.33 billion dollars, compared to 65.5 billion dollars in 2018, which indicates nearly double The loan was in 2011, and thus this led to the accumulation of debts on these countries, as the total debts of sub-Saharan Africa reached 385.268 billion dollars in 2013, which is equivalent to 23% of the GDP, and increased to 416 billion dollars in 2015, and that debt had a negative impact. On development. According to the International Monetary Fund and the World Bank; The average level of debt in sub-Saharan Africa increased from 25.2% of GDP in 2010 to 34.5% in 2015, and with the exception of Nigeria and South Africa, the ratio reaches 44% of GDP, and the following table reflects the size of loans provided to some sub-Saharan African countries , As follows:

Table No. (1)

The volume of loans provided by the International Bank for Reconstruction and Development and the International Finance Corporation

For some sub-Saharan African countries

During the period (2012: 2018) in billions of dollars

Source: World Bank: https://data.worldbank.org

It is evident from the previous table that Nigeria is the country that receives the most loans when compared with the countries of Kenya and Ethiopia, where the volume of loans provided to Nigeria reached 4.6 billion dollars in 2012 compared to 8.6 billion in 2018, which indicates nearly double, but on Another aspect is that the country is the most doubled country, where the volume of loans provided has tripled compared to 2012, in which the volume of loans reached $ 2.8 billion with 8.4 in 2018, and Kenya was the least recipient country, with the total volume of loans provided amounting to $ 5.8 billion compared to With $ 3.5 billion in 2012.

• World Bank loans at the sectoral level during the period 2005-2019

We note from Table (3) that the World Bank loans to sub-Saharan Africa were on an upward trend during the period from 2005 to 2019, reaching its peak in 2018, and despite the World Bank’s increase of nearly four times during the study period, it remains Very weak when compared to the urgent need for countries in the region that are experiencing very deteriorating economic, social, environmental and health conditions.

Accordingly, it can be said that the volume of World Bank loans to sub-Saharan Africa is not up to the level of a loan from an international cooperative institution, so the bank must increase its loans so that these loans are commensurate with the needs of the region in a way that actually contributes to achieving the Millennium Development Goals.

The table also shows the diversity of sectors targeted by World Bank loans in the countries of Sub-Saharan Africa, and despite the World Bank’s announcement that it seeks to increase its financing for priority sectors in achieving the Millennium Development Goals, but as shown in Table (2), and despite That the total loans during the period 2005 to 2019 amounted to approximately 129.5 billion US dollars, and despite the fact that the sectors of health, education, water supply and sanitation are priority sectors for achieving development goals, they came in late order, while the energy and mining sector was at the top of the list, followed by the law, justice and public administration sector, which is undoubtedly not The priority sectors for development in sub-Saharan Africa, but the priority sectors to improve the infrastructure needed to improve the investment climate and prepare the entry of multinational companies, as the World Bank Group’s lending policy is affected by the considerations, factors and political positions of the major capitalist countries, in particular the United States of America with Countries borrowing by volume of loans and sectoral distribution.

The poor performance of the agricultural sector is one of the obstacles to the development of Africa and the World Bank ignored it. The limited support is reduced and decreased for this sector and does not meet its needs and the support lacks the long-term strategic vision to achieve food security. On the contrary, it was scattered support for different areas in the sector without considering the extent of these sectors interact with each other. Some, and thus successes varied across sectors.

Table No. (2) Evolution of the total value of World Bank loans to Sub-Saharan Africa during the period 2005-2019 According to different sectors

Table No. (3) The evolution of the annual distribution of World Bank loans to different sectors in Sub-Saharan Africa during the period 2005: 2019  According to different sectors

Despite the role the World Bank plays in many areas of activities that include agriculture, trade policies, health, education, energy and mining, and the achievements it has achieved, in addition to formulating policies that the bank sees as encouraging economic growth, there are many criticisms that indicate In addition to the existence of the hidden intentions of the World Bank, in addition to that the World Bank is linked to the International Monetary Fund, where the two work with the aim of influencing the policies of borrowing governments, in addition to that the ability to obtain loans from one of the two institutions depends to a large extent on the commitment to undertake specific reforms or take specific measures required by The other institution, and the two institutions use in many cases reciprocal requirements, meaning that the government becomes required to adhere to the conditions of one of the two institutions in order to be able to obtain financing from the other institution, and the most important criticism directed at the World Bank is that years have elapsed since its financing for many countries. BalanceAnd there is an imbalance between the balance of payments.

List of references:

• The World Bank: Annual Report 2014 (Washington: The World Bank Group, Annual Report, 2014).
• The World Bank: Annual Report 2015 (Washington: The World Bank Group Annual Report, 2015)
• The World Bank: Annual Report 2016 (Washington: The World Bank Group, Annual Report, 2016).
• The World Bank: Ending Extreme Poverty Boosting Shared Prosperity (Washington: The World Bank Group Annual Report, 2017)
• The World Bank : Ending Poverty and Investing in Opportunity (Washington: The World Bank Group, 2019 Annual Report).
• Talal Dehrab Al-Kaabi: The World Bank, Its Development Impact and Relationship with Kuwait , (Kuwait: Kuwait National Assembly, June 2010).
• Obeidat Yassin, Bayoud Mohamed El-Eid: Assessing the World Bank Group’s Role in Reducing Poverty in Low Income Countries (Algeria: The International Forum on Evaluating Poverty Policies Reduction in Arab Countries in the Light of Globalization, 2014) .
• Mohamed Bashir Job: African countries in a foreign debt quagmire

http://www.qiraatafrican.com/

• World Bank: https://www.worldbank.org.