World Bank’s Response: Africa’s Business Market Situation

By Atlanta Mahanta 

The economic impacts of COVID, owing in some ways to stronger production contractions in South Africa and Angola, hit the eastern and southern African countries the most hard. Disruptions in the tourism and lockdown industries in Ethiopia, Kenya and on the island states will result in major slowdowns. The decline in growth is expected to mainly be led by oil exporters in West and Central Africa. Activities between non-resource intensive countries, like Côte d’Ivoire and Ghana, will slow down, but not contract, and the agriculture sector will have a relatively more robust development. Fragile countries in the region are expected to suffer a heavy growth decline as COVID-19 exacerbates fragility drivers. 

The region is expected to recover in 2021, but growth will vary between countries. In East and South Africa, though South Africa is expected to rebound marginally, overall growth is estimated to average 2.7 percent. Although the economic upturn in Nigeria will be slow, a medium growth of 1.4% will be expected in Western and Central Africa. Many countries took the opportunity in the context of the crisis to step faster towards essential and critical long-term development reforms and investments. However, second wave issues fuel additional insecurity. 

In this context, the path towards recovery is long and difficult and calls for policies and investments that link people to employment that can help end extreme poverty, especially following COVID-19. In an age of lock-outs and social separation investments will also be critical in the digital economy and the infrastructure to mitigate the effect of the COVID-19 pandemic and encourage sustainable recovery. Digital technologies are also deficient behind those of other regions of the world in Sub-Saharan Africa by the governments, households and companies of Sub-Saharan Africa. Government interference would also be crucial in reducing system and service prices, preventing disconnections due to non-payment, and rising bandwidth. 

The World Bank will use up to 160 billion dollars over the next 15 months for the purpose of helping more than 100 countries protect the poor and vulnerable, support businesses and improve economic recovery as part of a global response. This includes up to US$ 50 billion to support countries to respond to the crisis by combination of new activity in the areas of health, social security, economic stimulus and other fields, as well as the redeployment of their existing capital, for the African countries with nearly US$ 12 billion since the start of the pandemic in March 2020.

The World Bank’s response is focused around four main areas, simultaneously: Saving lives: The World Bank has taken fast action to help African countries strengthen their pandemic response and health care systems. As of October 15, the first set of emergency health projects in 34 African countries, amounting to a total of $757 million.Protecting poor people: To protect poor and vulnerable citizens and respond to the impact on their livelihoods, the Bank is helping African countries to scale up and adapt social safety net programs and ensure food security. Protecting and creating jobs: The World Bank supports public works and urban programs that are being launched or scaled up to facilitate job creation in low income communities project and to help increase access to livelihood support for extremely poor and vulnerable people like women and the youth. Meanwhile, World Bank Group’s private sector arm – the International Finance Corporation (IFC) – is working to help the private sector navigate the pandemic and recover from the economic and financial impact of the crisis. Building back better: While addressing the immediate impacts of the COVID-19 pandemic, the focus on recovery remains central to the Bank’s response and support to countries. More than 20 countries in Sub-Saharan Africa have requested development policy operations or budget support from the Bank to assist them to manage the fiscal impacts of the pandemic. These operations are focusing on supporting governments to mitigate the effects of the COVID-19 pandemic, and at the same time promoting reforms that will create the conditions for economic recovery. As of October 15, the World Bank has approved 20 Development Policy Operations in Sub-Saharan Africa for more than $2.7 billion provided by the International Development Association (IDA). Beyond, the COVID-19 response, The World Bank Group strategy for Africa also prioritizes investments in human capital and digital economy. It supports initiatives in favor of climate change adaptation and mitigation and deploys an approach to address the drivers of Fragility, Conflict and Violence. Finally, the World Bank is scaling up its work on regional integration, taking a holistic view of the continent to improve connectivity, leverage economies of scale, and advance collective action to address shared challenges.

In September 2020, in International Development Organization commitments, the World Bank granted lending to the country for 40 operations in the financial year 2021 at $5.3 billion. The bank has an active portfolio in Africa of $93 billion for all the product lines. Over 12 trillion dollars is spent on emergencies in health, social security and the economic stimulus of COVID-19, in response to the COVID-19 pandemic. Additional operations totalling $50 billion are under planning. Key areas of long-term involvement include boosting human capital and empowerment of women, acceleration of the digital economy of Africa, support for regional integration, in particular in the Horn of Africa and the regions of the Great Lakes, enhancing access to affordable renewable energy, building climate change resilience and mobilisation of all sources of development finance. 

With over 80 initiatives under development, the current portfolio of Regional Integration amounts to over $14.1 billion. Speed identification, timely testing and rapid response require cross-border cooperation and a clear commitment to fight against the spread of infectious diseases between the neighbouring countries and the international community. In the wake of the Ebola crisis in West Africa, the World Bank has spent more than $600 million to launch the REDISSE project to improve health systems and to promote successful disease monitoring in 16 countries of western and central Africa. The Bank also supported EUR 250 million to support Ethipia, Zambia and the African Union to introduce a project to resolve regional and continental public health problems in the Africa Centers for Disease Control and Prevention. Both initiatives have mobilised money to assist countries in acquiring laboratory equipment and increasing their ability to deal with the COVID-19. 

SWEDD is working in the Sahel to increase access to and affordability for reproductive health services, strengthen specialist training centres for rural midwives, improve health services, pilot and exchange awareness in the areas of adolescent girls. SWEDD works to improve the quality of reproductive health services. Nine countries with 675 million dollars in Bank financing would soon be included in SWEDD. 

One-third of 250 million children in Africa under the age of five are stunted, with fewer than a fifth enrolled in pre-school school. Childhood development investments are vital to the release of human resources and to drive economic and social growth and development because they provide children with generations-length advantages. The area of Africa is being considered for the World Bank by all children as good, trained, and productive adults to reach school, and ready to learn and acquire real learning in classes. Throughout 162 projects for human growth, the existing portfolio contains $22 billion in investments and almost $14 billion in new investments for over 100 projects for human development. 

For example, in Niger, the World Bank is funding a 100 days Rapid Results Initiative (RRI) that brings health workers and community members together often for the first time. The project aims to reach 15 million people (60 percent women) and helps reduce mother and child mortality and increase family planning, helping children grow, empower women and reduce poverty. The World Bank supports the establishment of free primary education within the Democratic Republic of Congo, which has helped 2.5 million more children to go to school and 23 million Congolese from poverty by 2050. 

The Africa Climate Business Plan has achieved substantial results since its launch in 2015 in agriculture, integrated management of watersheds, ocean economies, coastal climate resistance and renewable energy. ACBP funding has led to the development of Climate-Smart Agriculture Investment Plans in Zambia, Mali, Côte d’Ivoire, Lesotho and Zimbabwe to help boost rural poor food safety through crop diversification, solar irrigation and regenerated waterways as well as through national development plans. 

In East Africa the World Bank has contributed in decades to combat the worst locusts in impacted communities and households. The Bank is providing Sahel with funding of over a million pastoralists with the goal of adjusting to and sustenance of the impacts of climate change.  The World Bank supports Africa’s vision of achieving universal and affordable access for Africans, business and government by 2030 to information and communication technology, with the interim objective of doubling broadband connectivity in each country by 2021. 

In Malawi, the Digital Foundations Project complates public digital transformation initiatives by promoting reforms in the legal / regulatory system and building institutional and human capacity. The project will promote accessible and high quality Internet connectivity for everyone. 

The Bank has led country diagnostics of digital economy (DE4A) around the mainland to determine the current condition of the digital economy in more than 20 (completed and in progress FY20) countries with 15 more FY20 countries calling for diagnoses. It has 15 active and 29 African pipeline investments which contribute to the DE4A initiative’s operationalization, which includes over $5.5 trillion in broadband infrastructure. 

Just 37% of Africans have access to energy travel from other countries, and growth is unsustainable. The Bank supports African operations to enhance access through network expands and transmission system expanses, creative off-grid electrification technologies, renewable capacity growth, regional power pools creation and service efficiency improvement. 

African-wide, several projects sponsored by the World Bank including the Côte d’Ivoire Azito Power Project crowd private capital and public debt reduction, and the overall cost of energy services lower. Moreover, we promote emerging technologies, such as the production and implementation of solar storage solutions, smart metres, mobile payment services, satellite mapping and imaging, high-voltage DC transmission, solar house and mini-grid systems. In Burundi, a solar energy project would almost double the country’s electricity access rate by expanding access to rural households, local businesses, schools and health centres in some of the country’s poorest regions. 

The Bank’s work on governance and inclusion in Africa is focused on the effective and inclusive provision of services like judicial courts, waste management, safety networks, and institutional structures and systems responsive to economic, social and environmental pressures. Businesses can expand and people can access the necessary services, achieving greater stability, by creating sound conditions for investments and by ensuring continuity of state services. Increased accountability and effective service delivery have also changed how the governments function and communicate with people. By 2030, every African person, business and government will continue to work together in the region. 

In March 2020, the enhanced HIPC Initiative started debt relief to Somalia, which, once it has reaches the HIPC completion point in around three years, will help Somalia minimise its debt from US$ 5.2 billion at the end of 2018 to US$ 557 million. Somalya has played a major role by contributing $140 million in FY19 Clearance Grants and $375 million in development policy funding, including $140 million in government capacity building, financial management and accountability, and in supporting inclusive private sector growth. Since March, the Bank has given almost $400 million in funding to resolve Somalia’s emergency crises while preparing long-term reform and growth objectives. In order to further its two objectives of poverty reduction and wealth sharing, the World Bank Community uses alliances, expertise, and funding instruments. Depth and accelerated support for African growth needs cooperation, harmonisation of goals and synergies and the leveraging of competitive advantages with a wide range of players. The World Bank Group and France, Germany, the European Union (EU), African Development Bank (AFDB) and the United Nations Development Agenda have joined the founding members of the Sahel Alliance (UNDP). The alliance is intended by increasing access to services and economic opportunity, to reinforce the peace-security-development link in G-5 Sahel countries. 

The WGB supports Horn of Africa countries, along with the EU and the AFDB, to develop a regional strategy aimed at deepening cooperation on infrastructure, trade and economic integration, as well as resilience and human resources. The World Bank also assists countries in coping with forced migration and refugees. The World Bank projects implementing a development approach to forced transportation of the Great Lakes, Horn of Africa, Sahel and Chad Lake countries are underpinned by the collaboration with the United Nations High Commissioner for Refugees (UNHCR), the EU and the African Union Committee. In order to promote Africa’s African Continental Free Trade Region, the World Bank is collaborating with the AUC and UN Economic Commission for Africa (UNECA). 

The AUC, AFDB, UNECA, China, the UK’s International Development Agency (DFID), the Japan International Coordination Agency ( JICA), the EU, the European Investment Bank (EIB), the Bill and Melinda Gates Foundation, the International Telecom Union and Smart Afrique are strengthening their support for digital transformation. We are strengthening the Africa-based digital transformation support in partnership with the AUC. The main objective of collaborations with AFD, the Islamic Development Bank (ISDB), Arab Coordinating Group (ACG), JICA, AfDB, and the Chinese National Energy Administration (EEA) is enhanced access to renewable energy, including in rural areas. In addition, it is working together with the IFC and the Multilateral Energy, Agri-Business, Water, Transportation and other priority areas to depend on the collective strength of the World Bank Community as a whole.

Data Reference:The World Bank in Africa