Growth and stability around the world is in our shared interest, write UK Minister for Development Anneliese Dodds and Sierra Leone’s Minister of Finance Sheku A. F. Bangura. To grow our economies and tackle the climate crisis, we must work together
We are in the midst of a growth crisis which is having a devastating impact on the planet’s lowest-income countries.
Growth in many of these countries has not just stalled; it has reversed. The GDP per capita of Sub-Saharan African countries was lower in 2022 than it was in 2012. This crisis is at the root of many of the issues facing the UK too, from the impact of the climate crisis to opportunities for British businesses to trade and invest overseas.
Next week the international community must step up ambition to tackle this head on. Country Representatives will meet in Seoul to pledge to the World Bank’s fund for low-income countries – the International Development Association.
The UK will increase its contribution by 40% for this replenishment and pledge £1.98 billion over three years. Doing so represents the new government’s modern approach to development, based on genuine partnership and genuine respect with the Global South.
The International Development Association (IDA) is unique. It is the largest source of grants and low interest loans for low-income and vulnerable countries, providing $93bn of finance to 75 countries over the last 3 years.
In straightened times, it’s never been more important to ensure aid spending is delivering the biggest bang for its buck. IDA leverages public contributions to unlock finance: for every $1 a country pledges, up to $4 can be delivered.
IDA focuses on country ownership – making it easier for borrower countries to choose which sectors and services to invest in – to unlock economic growth and job creation while fostering climate resilience. This model has enabled Sierra Leone to invest in key services like healthcare and education where IDA funds have supported more than 1.8m students and 56,000 teachers with improvements to education outcomes.
And most importantly, it provides finance on terms that are reasonable and sustainable. From a trusted source. This is what we mean when we talk about an approach based on respect, partnership and common interests.
IDA’s track record is strong. It can be genuinely transformative. Since its creation in 1960, 36 countries have graduated out of IDA, with many now contributing back into it. In the 1950s, South Korea was one of the poorest countries in the world. Now, with the help of IDA, it is one of the richest and hosting the donor conference next week.
And that is why it is so important for countries like the UK to continue to support IDA.
Alongside African leaders, Sierra Leone President Bio called for IDA21 to be the most ambitious replenishment ever and Prime Minister Starmer has echoed this call. IDA remains a ‘lifeline’ across the continent, supporting the most vulnerable populations in IDA countries.
We know that Africa can and will generate vast growth. It is a continent of unparalleled diversity; a hub of creativity and innovation; and it is home to many young, dynamic populations. The current pace of economic and population growth means that by 2050, more than a quarter of the world’s population will live in Africa.
The UK has made growth the core mission of the government and it’s the core mission of our partners too. In Sierra Leone, GDP figures show that a structural shift in the economy is taking place, with a promising outlook for growth. IDA support in the next 3 years can foster transformation and diversification of the Sierra Leone economy. More growth in IDA recipient countries means a more prosperous and stable global economy, which benefits all of us.
Together with other ambitious pledges, the UK’s pledge today could help unlock over $100bn of financing over 3 years to deliver growth and jobs, improve the economic situations of women and girls across the globe, tackle the drivers of conflict, and support countries to respond to the climate and nature crises.
We need more countries to follow the path of South Korea – countries that have shown the drive and vision to transform their economies, with a bit of help from the IDA. This replenishment means the fund can keep up the good work and it is a moment to demonstrate the solidarity that is core to IDA’s history.
We call on other countries to step forward, and together we can build a world free from poverty on a liveable planet.
ENDS