Opinion: Historic $100 billion IDA pledge is proof we can come together

The recent $100 billion replenishment of the World Bank’s International Development Association — a record amount — marks a significant milestone in supporting low-income countries. While this outcome fell short of the $120 billion we, African leaders, called for in April during the IDA21 Replenishment Summit in Nairobi, it is nonetheless a critical step forward. These funds represent hope and an opportunity for millions of Africans and signal the commitment of global partners to address the immense challenges we face. The summit in Nairobi underscored Africa’s pivotal role in solving global crises and the importance of IDA as a cornerstone for development financing. Over the years, IDA has been a lifeline for many African countries, offering long-term, concessional financing that empowers nations to invest in critical sectors such as health, education, and infrastructure. Its swift response in times of crisis, combined with the ability to leverage $4 in capital market funding for every $1 of donor contributions, proves its value as a force multiplier. Despite these successes, the scale of our challenges demands bolder action. As the World Bank’s International Debt Report for 2024 highlights, developing countries paid a staggering $1.4 trillion in foreign debt servicing last year — a figure that dwarfs even the most ambitious climate finance commitments. It must worry us all that 19 of Africa’s 35 low-income countries are in debt distress, a situation described by the U.N. Economic Commission for Africa as ‘‘a matter of increasing concern.” This burden of external sovereign debt 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 during the IDA summit, this reality perpetuates a vicious cycle of vulnerability, compounded by the escalating impacts of climate change. In the past year alone, Africa has endured devastating floods in East Africa, persistent droughts in southern Africa, and other extreme weather events that threaten lives, livelihoods, and economies. These crises expose the urgent need for concessional financing on a scale that matches the magnitude of the challenge. The record replenishment of IDA provides a foundation to build upon, but it must not mark the end of our ambitions. African leaders have been unequivocal in our call for a partnership that enables sustainable growth and resilience. The $100 billion replenishment must be leveraged to achieve even greater impact, particularly in addressing the climate needs of the most vulnerable on our continent. Our shared goal of achieving net-zero emissions by 2050 cannot be realized without Africa’s full participation. With substantial investments in our renewable energy resources, Africa can lead the global decarbonization agenda while addressing the energy needs of 600 million people currently without access to power. We commend IDA for its continued focus on innovative solutions such as debt-for-climate swaps and support for climate-positive growth. However, achieving the scale of transformation required necessitates a collective commitment to structural reforms, including greater leverage of Special Drawing Rights, reallocation of fossil fuel subsidies, and strengthened multilateral development bank financing. According to the 2024 African Economic Outlook report by the African Development Bank, African governments pay interest rates of between 5% and 16% on loans and 10-year government bonds while European and American governments pay almost zero interest on similar bonds. We cannot fix Africa’s debt crisis without reviewing and fixing the current credit ratings that apply to our countries. As part of these debt reforms, international rating agencies should update African countries’ credit ratings based on current data to allow them to borrow without stringent restrictions and conditionalities. To enhance debt sustainability, these ratings must be flexible enough to take climate into account. The global financial system has been structurally unfair to Africans and we must consider in the reforms whether it is fair to denominate Africa’s debt in foreign currencies, for instance. This exposes our vulnerable economies to foreign exchange volatility, with some countries paying more than what was initially borrowed. As I emphasized in Nairobi, the G20 Independent Expert Group’s recommendation to triple IDA’s financing capacity to $279 billion by 2030 remains a sound and necessary target. Africa is ready to play its part. We are committed to fiscal discipline, domestic revenue mobilization, and enhancing governance to create a conducive environment for investment and sustainable development. But to succeed, we need our global partners to match this commitment with sustained support and collaboration. This includes not only meeting but exceeding the current IDA replenishment levels in future rounds. The Nairobi Declaration, adopted during last year’s Africa Climate Summit, provides a blueprint for aligning development financing with climate action. By prioritizing African-led initiatives, leveraging our vast renewable energy potential, and driving industrialization, we can create millions of jobs while securing a sustainable future for the continent and its people. The $100 billion replenishment of IDA is a welcome step, but it is not the destination. It is a call to action — a reminder of what is possible when global solidarity meets ambition. Together, let us build on this momentum to ensure that IDA remains not only the cornerstone of development financing but also a catalyst for achieving the aspirations of billions. The time to act boldly and decisively is now. Let us be the generation that turned challenges into opportunities and secured a prosperous future for all.