By William Ruto
NAIROBI – The recent, record-breaking $100 billion replenishment of the World Bank’s International Development Association (IDA) is a significant milestone. While the final tally fell short of the $120 billion that I and other African leaders called for in April at the IDA21 Replenishment Summit in Nairobi, it nonetheless represents a critical step forward. The new funding offers hope to millions and signals that our global partners are committed to addressing the immense challenges we face.
The Nairobi summit not only underscored the importance of the IDA for development financing; it also called attention to Africa’s pivotal role in solving global crises such as climate change. Over the years, the IDA has been a lifeline for many, offering the kind of long-term, concessional financing that empowers countries to invest in critical sectors such as health, education, and infrastructure. By responding swiftly during crises and leveraging $4 in capital market funding for every $1 of donor contributions, it has proven its value as a force multiplier.
Even so, the challenges we face demand an even bolder response. According to the World Bank, developing countries’ foreign debt service reached a staggering $1.4 trillion last year – a figure that dwarfs even the most ambitious climate-finance commitments. Africa’s debt burden has become a barrier to achieving sustainable development and climate resilience, with high interest payments diverting resources away from critical investments in health, education, and infrastructure.
As I noted at the Nairobi summit, this reality perpetuates a vicious cycle of vulnerability, compounded by the escalating effects of climate change. In the past year alone, eastern Africa has endured devastating floods that displaced thousands and destroyed vital infrastructure, while persistent droughts in southern Africa have crippled agricultural output in Zambia and Zimbabwe. In western and central Africa, floods have wreaked havoc in Nigeria, Niger, and Chad, displacing entire communities and submerging farmlands.
Meanwhile, desertification continues to encroach on arable land, threatening food security in countries like Mali, while extreme heatwaves have strained energy systems in parts of North Africa. These crises – which disrupt lives, livelihoods, and economies across the continent – heighten the need for concessional financing on a scale that matches the magnitude of the challenge.
While negotiations over the New Collective Quantified Goal (NCQG) at this year’s United Nations Climate Change Conference (COP29) stressed the urgency of mobilizing $1.3 trillion in climate finance per year by 2035, the delegates ultimately fell short, with commitments reaching only $300 billion. For Africa, this outcome illustrates the persistent inequities in global financing and highlights the need for institutions like the IDA to play an even greater role in plugging the gap.
The overlap between the IDA replenishment and the NCQG is clear: both aim to secure the resources needed to advance sustainable development. The IDA’s $100 billion replenishment must be leveraged for maximum impact, particularly in addressing vulnerable countries’ need to invest in climate resilience.
The world cannot achieve its mid-century net-zero emissions target without Africa’s full participation. With sufficient investment in our renewable energy resources, Africans can lead the global decarbonization agenda while providing electricity to the 600 million people on the continent who currently lack access.
I and other African leaders commend the IDA for its continued focus on innovative solutions such as debt-for-climate swaps, and for its support for climate-positive growth. But our economic transformation requires a collective global commitment to structural reforms. We must do more to leverage Special Drawing Rights (the International Monetary Fund’s reserve asset), reallocate fossil-fuel subsidies, and strengthen the lending capacity of multilateral development banks. As I emphasized in Nairobi, the G20 Independent Expert Group’s recommendation to triple the IDA’s financing capacity to $279 billion by 2030 remains a sound and necessary target.
The Nairobi Declaration, adopted at last year’s Africa Climate Summit, provides a blueprint for aligning development financing with climate action. By focusing on African-led initiatives, leveraging our vast renewable energy potential, and driving industrialization, we can create millions of jobs while also securing a sustainable future for the continent.
Africa is ready to play its part. We are committed to fiscal discipline and enhanced governance to create a conducive environment for investment and sustainable development. But to succeed, we will need our global partners to match this commitment with sustained support and collaboration, which means exceeding the current IDA replenishment levels in future rounds.
For all of us in Africa, the $100 billion replenishment is a step, not a destination. Together, we must build on the momentum generated this year to ensure that the IDA and the NCQG deliver on their promise of equitable, effective, and accessible financing. It is up to us to transform today’s challenges into opportunities to secure a prosperous future for all Africans.
Copyright: Project Syndicate, 2024.