Bank aid to African Nations hits record US$5.8 billion - - Funding to reduce poverty and promote growth is up 21 percent over fiscal year.

During fiscal year 2007, ending June 30, the World Bank Group committed US $34.3 billion in loans, grants, equity investments, and guarantees to its members and to private business in its member countries – up $2.7 billion (7.8 percent) from fiscal year 2006.

The recipients are using these funds in more than 620 projects designed to overcome poverty and enhance growth – for example, by improving education and health services, promoting private sector development, building infrastructure, and strengthening governance and institutions.

“During Fiscal Year 2007, the World Bank Group provided over $34 billion of financial support for developing countries to invest in practical plans to move from poverty to prosperity,” said World Bank Group President Robert B. Zoellick. “But we can and should do more. Given the great needs among diverse developing countries, the World Bank Group can make its capital work for people by creating development solutions for all. That would help advance an inclusive and sustainable globalization.”

The World Bank Group institutions contributing to this financial outcome are: the International Bank for Reconstruction and Development (IBRD), which provides financing, risk management products, and other financial services to members; the International Development Association (IDA), which provides interest-free loans and grants to the poorest countries; the International Finance Corporation (IFC), which makes equity investments, and provides loans, guarantees and advisory services to private-sector business in developing countries; and the Bank Group’s political risk insurance agency, the Multilateral Investment Guarantee Agency (MIGA).

IDA commitments were $11.9 billion, 25 percent higher than the previous year, and the highest in IDA’s history. IBRD commitments in FY07 totaled $12.8 billion. IFC committed $8.2 billion for private sector development in developing countries, an all-time high, which topped last year’s total by $1.5 billion – $3 billion of the total, went to IDA countries. Of MIGA’s $1.4 billion in guarantees, $387 million went to projects in IDA countries. MIGA’s exposure in IDA countries now stands at 41% of its portfolio.

In addition, IBRD carried out $5.4 billion in interest rate and currency risk management transactions on behalf of its members. This is an increase of more than three-fold over totals for the past several years and highlights the expanding portfolio of financial services we offer.

Financial commitments provided by the World Bank Group to the countries of sub-Saharan Africa increased by $1.8 billion in FY07 to $7.5 billion and included a record $5.8 billion in IDA credits, grants, and guarantees to sub-Saharan Africa, (up by $1billion from the previous year); $1.4 billion from IFC for private sector development projects, (double last year’s effort); and $311 million in MIGA guarantees for projects in the region, up $131 million from 2006.

While many challenges remain in Africa, there have been clear signs of progress, according to Obiageli Ezekwesili, Vice President for Africa. “We are now seeing increases in African countries’ per capita income consistent with those of other developing countries and African countries have made great strides in expanding access to health and education,” she said. “African leaders are well aware of the support that IDA provides and this is why they are strong supporters of a robust replenishment of IDA this year.”

IFC involvement in projects often serves to increase confidence in sectors or projects, which generates additional investment from the private sector. In FY07, IFC mobilized an additional $3.9 billion through loan participations, structured finance, and parallel loans. For example, IFC has helped increase cellular access in the Democratic Republic of Congo (DRC), Madagascar, Malawi, Sierra Leone, and Uganda by mobilizing loans from international commercial banks to rebuild the communications infrastructure and providing a basis for future economic growth, while at the same time encouraging investor confidence in other sectors in these countries.

Speaking of IFC’s activity in Africa, Lars Thunell, IFC Executive Vice President and CEO, said. “Last year we doubled our financial commitments to the private sector in Sub-Saharan Africa, which continues to be a priority frontier region for IFC. We helped 166,000 small African businesses get access to finance last year. Our projects gave 6 million new customers access to power and created 11 million new telephone connections across the region. We also substantially increased our advisory services and local currency financing capabilities in the region.”

MIGA Executive Vice President Yukiko Omura said, “Supporting investments into sub-Saharan Africa continues to be a priority for MIGA. Since the agency’s inception in 1988, we have issued $2.3 billion in guarantees in support of projects in 27 countries in the region. In fiscal year 2007, MIGA provided guarantees ranging from support to a micro-credit institution in Cameroon to backing a large telecommunications project in Guinea.”

During Fiscal Year 2007, the World Bank Group committed some US$6 billion in loans, credits, equity investments and guarantees to its members and to private business in the Europe and Central Asia (ECA) region.  The recipients are using these funds in more than 130 projects designed to overcome poverty and enhance growth—for example, by improving education and health services, promoting private sector development, building infrastructure, and strengthening governance and institutions. 

The World Bank Group committed loans, grants and credits worth $US4.3 billion for development projects and operations in 10 countries in the East Asia and Pacific region during fiscal year 2007. This was more than $600 million over the previous year, reflecting the stronger economic performance of most countries in the region.

The World Bank Group extended loans, credits, grants, equity investments, and guarantees totaling nearly US$6.9 billion to South Asia in fiscal year 2007. This is an increase of US$2.3 billion over the previous year, demonstrating the institution’s continuing role in fighting poverty as South Asian countries look for ways to tackle their social challenges even while most of their economies grew aggressively.

The eight countries of South Asia are using World Bank Group support in more than 78 projects designed to overcome poverty and enhance growth – for example, by improving education and health services, promoting private sector development, building infrastructure, and strengthening governance and institutions.

Contributing to this increase was: US$1.6 billion from the International Bank for Reconstruction and Development (IBRD), which provides financing, risk management products, and other financial services; US$4.03 billion from the International Development Association (IDA), which provides interest-free loans and grants; US$1.18 billion from the International Finance Corporation (IFC), which makes equity investments, and provides loans, guarantees and advisory services to private-sector business in developing countries; and US$76 million from the Multilateral Investment Guarantee Investment Agency (MIGA), the group’s political risk insurance agency.

“South Asia is home to the largest number of people in the world living below one dollar a day, so the agenda for poverty alleviation in the region remains very large,” said Praful Patel, World Bank Vice President for South Asia. “The lending numbers from the IDA and IBRD in Fiscal Year 2007 are in line with the scaling up strategy we developed for the region three years ago.”

Globally, the World Bank Group committed US US$34.3 billion in fiscal year 2007, up US$2.7 billion (7.8 percent) from fiscal year 2006. India was by far the largest borrower from IBRD and IDA, accounting for US$3.75 billion, or 15 percent of total lending from these two institutions. The World Bank’s program in India focuses on providing basic services such as access to clean water and education, improving infrastructure for rural areas, and employment. The increase also reflects US$700 million in lending to the health sector to India which was carried over from the previous year. Pakistan was the Bank’s seventh largest borrower with US$985 million in loans and credits.

Nearly 60 percent of the World Bank Group’s commitments to South Asia came from IDA, and more than two-thirds of this lending financed projects in the areas of rural development and human development such as health, education, nutrition, and HIV/AIDS.