A few weeks ago, I traveled to Saint-Louis, a city of more than 175,000 people on a peninsula that juts into the Atlantic from the coast of Senegal. The residents of this quiet city are in danger of losing their homes and their livelihoods due to a tragedy looming far beyond their control. At least partly because of climate change — warmer temperatures and rising seas — Saint-Louis is literally being eaten away by the sea.
The World Bank Group is moving quickly to provide short- and long-term help to the people of Saint-Louis. We’re supporting a $30 million project to move nearly 1,000 families away from the shoreline and into safe housing. We’re working on getting many millions more in funding for long-term adaptation in Senegal. And we’re partnering with the French government and others to raise $2 billion that will help countries throughout West Africa build resilience to climate change.
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Beginning a few hundred miles east of Saint-Louis, and stretching halfway across Africa, the Sahel region has some of the most challenging conditions we see anywhere in the world. Roughly half the population — 75 million people — live in extreme poverty. Climate change is causing more frequent droughts and floods, decimating livelihoods where millions depend heavily on agriculture.
At the Munich Security Conference in February, heads of state, defense ministers, and leaders of NGOs debated how to ensure stability in the Sahel, where climate change is compounding the risks posed by armed conflicts and forced displacement of millions. My message was that if we don’t make the right investments in the right places, things will get a lot worse — in the Sahel and around the world.
But we will need resources on a much larger scale to fund the critical commitments that can achieve the Sustainable Development Goals; bring stability to areas of fragility, conflict, and violence; and meet the rising aspirations of people worldwide. We can do this only by maximizing finance for development: By ensuring that grants and concessional funding are used as strategically as possible, especially to crowd in private sector investment — including from the International Finance Corporation, our private sector arm — in ways that work for developing countries and poor people.
“But the reality is, we won’t come close to achieving the SDGs unless we work to attract private sector investment and make sure it works for the poor.”—
Let’s start with the SDGs. Three years ago, the United Nations and the development banks met in Addis Ababa to discuss how to fund the global goals. It became clear that we had to move from billions in development assistance to trillions in investment of all kinds: Public and private, national, and global. Today, official development assistance is about $140 billion a year worldwide. Philanthropists provide another $4 billion. But the reality is, we won’t come close to achieving the SDGs unless we work to attract private sector investment and make sure it works for the poor.
And many countries are tackling the SDGs while also coping with fragility, conflict, and violence. Right now, nearly 2 billion people live in fragile and conflict-affected areas, where extreme poverty is becoming more concentrated. We estimate that by 2030, 46 percent of the extreme poor will be in areas embroiled in fragility, conflict, and violence. We’re doubling our work in these areas with our record $75 billion replenishment of the International Development Association, our fund for the poorest countries. But the demand will keep growing.
To maximize financing for development, we ask a very straightforward question: How can we maximize resources for developing countries to do what they must for their people, while minimizing the burden of public debt? The answer is threefold: To work upstream with developing countries to enable more private sector investment; to help create markets; and to use our full range of funding, expertise, and financial instruments to de-risk projects, sectors, and entire countries. We have seen this approach work to finance transportation infrastructure and energy reforms in the Middle East, affordable housing in West Africa, and health sector transformation in Turkey.
We’ve also found that maximizing finance for development works even in areas affected by fragility, and conflict. Last month, I attended the Kuwait conference on Iraq reconstruction. Our support for recovery and reconstruction in Iraq over the last four years has grown from $600 million to $4.7 billion, despite ongoing instability, and we are committed to helping rebuild the country now that ISIS has been defeated.
IFC has invested and mobilized $1.2 billion, supporting over $3 billion in private investments across a range of sectors, including power, transport, telecoms, hospitality, agribusiness, and banking. Rebuilding a stable economy is a key to preventing future conflict; it can also help kick-start economies, even in the most devastated areas.
This approach isn’t based on ideology or politics, nor is it a panacea for all development problems. It is based on our current circumstances and available evidence of the best way to use scarce public resources to support development needs. We’re working with our client countries to maximize their resources with the right mix of public and private financing, and we’re asking the tough questions: What are the government’s priorities? Can more private investment serve the best interest of the country and poor people? And do investments align with our core values: Access, inclusion, sustainability, and creating equality of opportunity?
By crowding in the private sector where it makes sense, we believe we can find win-win solutions. We can free up scarce public funds for countries to use where they are needed most — areas such as early childhood development, health, education, and creating social safety nets. With automation and technology sure to eliminate many low-skilled jobs worldwide, these investments have never been more important. We’re helping countries build the human capital that they will need to compete in the economy of the future. If we can help the private sector invest in sectors such as infrastructure, energy, and transportation in developing countries, more public funds can go to improving outcomes in health and education.
Our top priority is improving lives for people in developing countries — people like the farmer in Mali whose crops are devastated by drought; the shopkeeper in Somalia who lives in fear of armed militants; the pregnant refugee who fled violence in Chad, leaving behind the only life she has ever known; the schoolteacher in Saint-Louis, whose home may be washed away by the sea.
We have ambitious aims: Achieve the global goals, ensure that developing countries have the resources they need, and meet people’s rising aspirations. To realize them, we must move beyond the debate over public versus private financing. We need to focus on approaches that provide the right mix of financing — public, private, and philanthropic — with the right safeguards, to tackle the world’s most intractable challenges. If we do, we can improve the lives of billions around the world, and move closer to finally ending poverty on the face of the earth.
Update, March 5, 2018: This article was amended to clarify that the World Bank Group’s support for recovery and reconstruction in Iraq over the last four years has grown from $600 million to $4.7 billion.
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