Devex Invested: Was the World Bank’s IDA replenishment a win?

The World Bank is celebrating a record replenishment but development experts have been left disappointed by the same event. What just happened in South Korea?

After months of talks, hopes and advocacy, officials on Friday announced $23.7 billion in contributions to the bank’s International Development Association, which provides grants and low-interest loans to 78 low-income countries.

As my colleague Jesse Chase-Lubitz reports, that’s a 0.8% increase from the last replenishment in 2022 of $23.5 billion but falls short of the $27 billion that some advocates had hoped for. The bank said this contribution will result in $100 billion using IDA’s “unique leveraging capacity.” (The previous total was $93 billion.)

Friday’s result, announced at a martial-law-disrupted meeting in Seoul, left World Bank President Ajay Banga “proud.”

But Clemence Landers, senior policy fellow at the Center for Global Development, was “sad,”  while Kate Donald, head of the Washington, D.C., office at Oxfam International, says the result was “very disappointing.”

Overall, Jesse writes, donor contributions to IDA have gone down in real terms by 20% over the last decade. That’s due to shifting global politics, budgetary constraints in donor countries, and the emergence of other funds that are competing for limited resources, as well as the fact that IDA has needed to increase its grant-giving due to rising debt distress among many lower-income countries.

“It’s sort of a sign of the times,” Landers says. “A lot of the governments that are big donors are in major political crises right now and a big part of these are budget related. I think this was a replenishment where you were really swimming against the current.”

Read: World Bank calls IDA pledges a win. Critics aren’t so sure

Adesina watch

My colleague Ayenat Mersie was in Rabat, Morocco, last week for the African Development Bank-led Africa Investment Forum.

She reports that AfDB President Akinwumi Adesina remained tight-lipped about what he’ll do once a new president is elected next year, but hinted at a continued focus on African development. “Whatever I do will be in Africa. The only thing that makes me tick is how can we fast-track Africa’s development. So, watch this space.”

Read more: Inside the African Development Bank’s new 10-year strategy

Related: African Development Bank should focus on jobs, innovation, says Amadou Hott (Pro)

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What’s up Down Under

I was in Canberra last week for the 10th Australasian AID Conference, run by the Development Policy Centre at the Australian National University. It was an enlightening look at a mid-range donor that gives roughly as much official development assistance ($3.3 billion, or 0.19% of gross national income, in 2023) as South Korea, Denmark, and Spain.

Three takeaways:

• Climate finance is murky … still: Researcher Terence Wood gave an interesting presentation on Australia’s climate finance numbers, arguing for more transparency on how “climate-significant” (as opposed to “climate-primary”) projects contribute to the overall total.

• Contractors are king … for now: It was striking how the likes of DT Global and Abt Global were present on panels and as sponsors — in contrast to Europe where the big fish perhaps prefer to keep a lower profile. And with cause: A parliamentary report last month called for the government to examine “the share of Overseas Development Assistance received by for-profit managing contractors, with a view to increasing the share received by Pacific civil society organisations and Australian non-government organisations.”

• Australia wants NGOs doing blended finance … somehow: The government last month announced a 10 million Australian dollars Indo-Pacific NGO Blended Finance Accelerator. Save the Children welcomed the initiative at the time, but it’s still a little murky what it is and how it will work. The government press release says it is about strengthening  “the role of NGOs in blended finance transactions, enabling them to design, pilot and scale innovative projects — as impact managers, technical assistance providers and, where suitable, fund managers.” But a few chats during the coffee break in Canberra last week gave the impression the details are still coming together for now. One to watch.

Tender is the right

We’ve been writing a lot about the European Union’s Global Gateway initiative, designed to combat China’s Belt and Road initiative. A key thorn in the EU’s side, however, has been procurement, i.e. how to make sure the European Investment Bank and others do not end up financing projects implemented by Chinese contractors — like a certain bus route in Dakar, Senegal.

Now there are signs that the European International Contractors, an industry body, is liking what it’s hearing too. It met with the commission and EIB last week and wrote on LinkedIn that it highly appreciated the pair’s readiness to continue a “fruitful dialogue,” including on how to “enable fair competition when procurement rules of so-called ‘Team Europe’ financiers prescribe the participation of competitors that are benefiting from subsidies from their national governments.”

One option, outlined in May by the European Federation of Engineering Consultancy Associations, is to restrict eligibility conditions in strategic tenders. That might have stopped the commission from having to block an EIB investment in an undisclosed country four years ago, for instance, on the grounds that the contract to expand a mobile network would likely have been won by a Chinese firm.

Of course, the OECD Development Assistance Committee tries to prevent donors from tying aid to their own suppliers. But as the (largely commission-funded) European NGO confederation CONCORD wrote in its AidWatch report this year, “Recent policy developments do not inspire confidence that EU Member States and other DAC members are committed to reducing tied ODA in future years.”

Gateway to 2025

The European Commission has just released its latest batch of 46 flagship initiatives for the Global Gateway in 2025 and my colleague Rob Merrick has the breakdown.

• Energy and climate account projects are up from 44% to 54% of the total projects.

• Transport projects are down from 23% to 11%.

• Information is scarce: One project is listed as a “Private Mobilisation Fund for Climate Resilient Investments in Land-Use and Water” — worth up to $1 billion — in “Developing Countries, unspecified.”

• And questions remain over whether the gateway is intended to help the world’s lowest-income countries: One digital scheme is the expansion of the “world’s largest 200-mm semiconductor production plant” in Malaysia, a highly industrialized upper-middle-income country — a plant owned by German giant Infineon Technologies AG.

Read: Energy projects dominate new EU Global Gateway ‘flagships’ list

ICYMI: EU’s Global Gateway ‘risks diverting aid budget to big business’

What we’re reading

My last day at BII — reflections and predictions, by Nick O’Donohoe. [LinkedIn]

For developing economies, the finance landscape has become a wasteland. [Project Syndicate]

This French diplomat thinks nutrition is a “magic wand” for development. [Devex Pro]