• Thursday, April 25, 2024
businessday logo


World Bank Group commits to provide up to $160bn by June 30

Nigeria spent N1.03 trillion on subsidies in 2021, according to data from the Nigerian National Petroleum Corporation (NNPC).

Guided by its twin goals of ending poverty and promoting shared prosperity, as well as its Covid-19 crisis response approach paper, the World Bank Group said it expects to deploy up to $160 billion in the 15 months ending June 30, 2021.

This funding, according to David Malpass, World Bank Group President and Chairman of the Board of Executive Directors will be through new operations and the restructuring of existing ones to help countries address the wide range of needs arising from the pandemic.

This will include over $50 billion of International Development Association (IDA) resources on grant and highly concessional terms, Malpass said in the World Bank’s annual report for 2020.

The World Bank Group is one of the world’s largest sources of funding and knowledge for developing countries. It consists of five institutions with a shared commitment to reducing poverty, increasing shared prosperity, and promoting sustainable growth and development.

They are the International Bank for Reconstruction and Development (IBRD) which lends to governments of middle-income and creditworthy low-income countries; International Development Association (IDA) which provides financing on highly concessional terms to governments of the poorest countries; International Finance Corporation (IFC) which provides loans, equity, and advisory services to stimulate private sector investment in developing countries; Multilateral Investment Guarantee Agency (MIGA) which provides political risk insurance and credit enhancement to investors and lenders to facilitate foreign direct investment in emerging economies; and International Centre for Settlement of Investment Disputes (ICSID) which provides international facilities for conciliation and arbitration of investment disputes.

Read also: Nigeria’s naira reverses loss to close at N394 after CBN intervention

The Group committed $77.078billion in 2020 but disbursed $54.367billion. The Group’s commitment to Sub Saharan Africa was $25.4billion.

Engaging with the private sector is critical to the emergency response, and International Finance Corporation (IFC) expects to provide $47 billion in financial support through June 2021 as part of the Bank Group’s response.

In early 2020, the coronavirus pandemic (COVID-19) struck countries around the world, presenting enormous challenges to health systems and spurring widespread shutdowns, school and business closures, and job losses.

Nearly all countries are facing an unprecedented economic downturn requiring them to respond quickly to major disruptions in healthcare, economic activity, and livelihoods.

In fiscal 2020, International Bank for Reconstruction and Development (IBRD) net commitments rose to $28 billion, while disbursements remained strong. IDA’s net commitments were $30.4 billion, 39 percent higher than the previous year. The 19th replenishment of IDA was approved in March, securing a three-year $82 billion financing package for the world’s 76 poorest countries.

“This will increase our support to countries affected by fragility, conflict, and violence (FCV) and strengthen debt transparency and sustainable borrowing practices,” the president of World Bank Group further added.

“The World Bank Group has been at the forefront of that response, mobilizing rapidly to deliver much-needed support to countries to provide critical supplies, reduce loss of life and economic hardship, protect hard-earned development gains, and deliver on our mission of reducing poverty and boosting shared prosperity”, Malpass said.

“By May, we reached the milestone of emergency health operations in 100 countries. Our initial projects focused on limiting the pandemic’s spread and boosting the capacity of health services. We helped countries access essential medical supplies and equipment through support for procurement and logistics, including negotiations with suppliers on their behalf. Many developing countries are dependent on imports for supplies, making them highly exposed to price fluctuations and trade restrictions,” he stated.

Through International Finance Corporation and Multilateral Investment Guarantee Agency (MIGA), the World Bank provided vital working capital and trade finance for the private sector in developing countries, particularly firms in core industries, and helped financial sectors continue lending to viable local businesses.

World Bank helps countries strengthen their private sectors, which are central to creating jobs and boosting economic growth.

In fiscal 2020, IFC’s long-term finance commitments increased to $22 billion, which includes $11 billion of its commitments and $11 billion in mobilization, commitments from private investors, and others.

In addition, IFC extended $6.5 billion in short-term finance. MIGA’s commitments totaled $4 billion, with an average project size of $84 million.