Of the 20 countries most indebted to the World Bank, 10 are African

The World Bank is strengthening its support for development in Africa with record financing by unlocking unprecedented financing, according to the institution’s latest Annual Report, entitled “A better bank for a better world“. In fiscal year 2024, which covers the period from July 1, 2023 to June 30, 2024, the World Bank Group provided $38 billion in loans, grants, equity investments and guarantees to sub-Saharan African countries, the largest regional commitment.

For comparison, the Europe and Central Asia region received $24.7 billion, Latin America and the Caribbean $19.4 billion, and South Asia $15.9 billion. , $12.5 billion to the East Asia and Pacific region, and only $6.5 billion to the Middle East and North Africa region.

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This massive financial package targeting Africa was deployed in various forms: loans on advantageous terms, donations, participation in projects or even guarantees to facilitate access to financing. A massive financial commitment which also demonstrates the desire to support the dynamic of structural transformation underway on the African continent, despite the multiple persistent challenges.

«To help all countries around the world address these interrelated challenges, the World Bank Group has committed $117.5 billion in FY24, including $38 billion for Africa“, specifies the report, adding that this colossal envelope is divided between the International Bank for Reconstruction and Development (IBRD) with 37.6 billion dollars, the International Development Association (IDA) with 31.2 billion dollars , the International Finance Corporation (IFC) with $31.7 billion, the Multilateral Investment Guarantee Agency (MIGA) with $8.2 billion, as well as $8.9 billion in disbursement activities executed by the beneficiaries.

Focus on IBRD and IDA disbursements

In this latest report, several key points about Africa are worth highlighting: IBRD and IDA, two key institutions of the World Bank Group, have supported development with record loans. These two institutions are commonly referred to as “World Bank» when considered together, it must be emphasized.

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Among the ten main borrowers of the International Bank for Reconstruction and Development (IBRD), two African countries appear for the 2024 financial year. These are Morocco, which contracted 1.75 billion dollars, and Nigeria with $1.5 billion. They are respectively 7th and 8th in the ranking of the IBRD’s top 10 borrowers during the last financial year.

Regarding the International Development Association (IDA), the Bank’s concessional window for the poorest countries, eight African countries are among its ten main borrowers for the 2024 financial year.

First is Ethiopia ($3.395 billion), Nigeria ranks 3rd with $2.2 billion borrowed, Tanzania is 5th with $1.815 billion, Kenya 6th ($1.654 billion) and Mozambique 7th ($1.13 billion). Then come Rwanda 8th with $801 million, Ghana 9th with $800 million and Ivory Coast 10th with $757 million borrowed.

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For the IBRD, its loans to African countries help finance development projects in key sectors such as infrastructure, energy, agriculture and education. As for IDA, its concessional financing allows low-income countries to implement programs aimed at improving the living conditions of the most vulnerable populations.

«IBRD has a credit rating of Aaa from Moody’s and AAA from Standard & Poor’s, and investors view its bonds as high quality securities.underlines the report. This allows it to borrow on advantageous terms on financial markets and transfer these savings to borrowing countries, including those in Africa.

The IDA, for its part, benefits from a hybrid financial model combining donor contributions and resources raised on the markets. “Under IDA-20, this hybrid financial model allows IDA to mobilize nearly $4 of commitment power for every dollar that development partners contribute», specifies the report.

Adaptation to external debt challenges

However, African countries face challenges in managing their external debt, particularly due to rising interest rates and financial market volatility. The World Bank strives to adapt its financing offers to the specific needs of these countries, offering innovative instruments such as the IDA Crisis Management Mechanism or the Financial Incentives Framework to encourage investments in programs of global action.

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Given the multiple crises facing the continent, African countries’ prospects for borrowing from the World Bank should remain strong in the years to come. The report also underlines “unfailing commitment» necessary from donors, client countries and the World Bank to achieve the set development objectives.

Vital funding for development

IBRD and IDA loans contribute significantly to the development of African countries, financing essential projects in key sectors such as education, health, infrastructure, energy, agriculture and agriculture. environment. “This financing enables African countries to address the challenges linked to poverty, inequality, climate change and fragility, while promoting sustainable and inclusive growth.», underlines the annual report.

IBRD offers loans on market terms, but with interest rates that are generally lower than those offered by other commercial lenders. As for the IDA, it grants grants and concessional loans, that is to say at very low interest rates, or even zero, and with longer repayment periods. Preferential conditions that allow African countries to access essential financing for their development, without excessively increasing their debt burden.

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However, debt management to IBRD and IDA remains a major challenge for many African countries, due to their high debt levels, low repayment capacity and recurring economic shocks. Thus, the IBRD and the IDA strive to constantly adapt their financing offers to the specific needs of African countries, taking into account their level of development, their sectoral priorities and their vulnerabilities to exogenous shocks.

This requires close collaboration with African governments, civil society and other development partners, in order to design tailor-made and effective intervention strategies. Despite ongoing challenges, the prospects for African countries’ borrowing from IBRD and IDA remain encouraging for the coming years, thanks to efforts to strengthen their financial and operational capacities.

Top 10 Borrowers from IDA for FY2024 (in millions of dollars):

Source : World Bank.