Rethinking of IDA Business Model Must Start Now, Experts Say

The ultimate barometer of the International Development Association’s success in aiding poor nations is when it eventually puts itself out of businesses, experts suggest. The World Bank’s fund for the poorest of countries may be close to achieving this goal by 2025, they add.

A new research by the Center for Global Development’s Ben Leo and Todd Moss claims that by 2025, IDA could be offering assistance to only 30 poor nations, down from about 70 countries now. The remaining IDA clients would be “overwhelmingly” African countries, the two experts suggest, noting the expected departure of huge IDA recipients such as India, Vietnam and Nigeria. 

“All of this will be driven by an expected, and much anticipated, wave of countries graduating from cheap IDA loans to borrowing from the international credit markets. Unlike other organizations, a successful IDA fundamentally means that it eventually will put itself out of business,” Leo writes in a blog post for CGDev.

Leo recommends that the IDA start rethinking its business models as early as now, urging the fund to reduce its “top-line financing envelope,” which would entail “progressively lower levels” of donor financing over time. 

The IDA could also opt to “complement or replace” its current country-based lending model with a “wholly different” approach for funding global public goods, Leo suggests, given the global scale of development challenges today. 

“Regardless of the ultimate direction taken, IDA can be assured that change is coming.  It might not come immediately, but it will come.  Instead of resisting the waves of progress, it should bask in their afterglow. But more importantly, it should begin a long-term reinvention strategy now like any other world class organization would,” Leo writes.

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About the author

  • Ma. Rizza Leonzon

    As a former staff writer, Rizza focused mainly on business coverage, including key donors such as the Asian Development Bank and AusAID.