Monrovia – Mr. David Malpass, President of the World Bank Group says the bank is heavily supportive of private sector development in Liberia.
Addressing a regional Media roundtable for Western and Central Africa Thursday, Mr. Malpass averred that despite the economic fallout from the Covid-19 pandemic, a lot is being done to support the business climate.
Said Malpass: “We’re strongly supporting the details of private sector development. That means trade finance, for example, which had fallen off the cliff as a result of the COVID-19 pandemic. IFC has doubled its support for trade finance. And then, also, small business finance is a critical part of it and also the overall business climate.”
In March, the bank approved financing for two new operations aimed at increasing access to sustainable, reliable and affordable energy, and boost economic recovery by providing employment opportunities and business skills training to vulnerable Liberians.
Funded by the International Development Association (IDA), the project aims at improving Liberia’s economy and helping to build resilience for vulnerable households that are greatly at risk of falling into poverty due to the impact of the COVID-19 pandemic. Poverty remains widespread in Liberia and is now on the rise. An estimated 44% of Liberians were living with less than $2 a day in 2016 and is now projected to reach 52% in 2021. Access to healthcare, education, and basic utilities like energy, are also particularly low compared to the rest of the region.
Mr. Ousmane Diagana, Vice President for West and Central Africa, added that the Bank is one of the very few donor agencies heavily active in Liberia. “Most in terms of our field presence, we have significantly increased our footprint in Liberia,” Diagana explained.
Mr. Diagana said the WBG currently has about 25 staff, composed of experts in a variety of areas working in Liberia. In terms of financial assistance, Diagana said the WBG’s portfolio in Liberia is more than $400 million.
Addressing the issue of debt relief, Mr. Malpass issued a reminder that many countries in Africa benefitted from the debt reduction effort, the HIPC, Highly Indebted Poor Country, an effort that was done early in the 2000s, Liberia included. Now, he says, Sudan is moving toward the decision point. Somalia has benefited in the most recent.
Covid Taking a Toll
The WBG President however underscore the importance of having a successful debt relief effort for the highly indebted–for countries that have unsustainable debt burdens. “That was an important part of Africa’s growth in the early part of this century, meaning in 2002 through 2008. Debt reduction provided the basis for new investment and for recovery, including in Liberia.”
Mr. Malpass said the Covid-19 pandemic has taken a toll on African lives, economies, and livelihoods and has had a devastating impact on the poor, in job losses, a reversal of education gains, and rising debt levels.
Over the last ten years, the WBG has invested over $200 billion in Sub-Saharan Africa and Mr. Malpass revealed plans to invest and mobilize about $150 billion in Africa to support the continent’s recovery from the pandemic and its long-term development. “A large portion of this will be through grants and long-term, zero-interest-rate loans from IDA, which continues to provide strong positive net flows to Africa. An ambitious and successful IDA20 replenishment by December 2021 will be critical to provide the concessional financing and grants that the IDA countries in Africa urgently need.”
As part of its immediate response to the crisis, the World Bank Group has been assisting countries with the purchase and deployment of vaccines.
The International Finance Corporation(IFC) has supported the private sector in the region to create jobs across critical sectors such as manufacturing and agribusiness; and is helping pharmaceutical companies to expand their local vaccine manufacturing capacity and supporting innovative business models to expand the availability of testing and treatment.
Since the outbreak of COVID-19, Mr. Malpass explained, the Bank has made available more than $24 billion to African countries to support their health and economic recovery. Our Board has authorized up to $12 billion worldwide to support countries in their vaccination efforts. “As of today, 38 African countries (18 for West and Central Africa) have requested the World Bank’s support for vaccine financing projects. Six projects in Africa have already been approved, including Cabo Verde, Cote d’Ivoire, and The Gambia, and many more are scheduled to be approved in the coming month.”
Challenges of Vaccines
Unfortunately, the WBG President explained, the supply of vaccines in the region is an even more binding constraint than resources. Many countries now have dollars available to spend on vaccine doses, but rapid deliveries aren’t available.
He further explained that delays in starting vaccination rollouts in developing countries are deepening global inequality and leaving hundreds of millions of elderly and vulnerable at risk. “I’ve repeatedly urged countries that expect to have excess vaccine supplies to release their excess as soon as possible to developing countries that have delivery programs in place.”
Asked what the WBG is doing to address funding issues and challenges relating to storage of Covid vaccines to dire conditions in Sub-Saharan Africa, Mr. Malpass explained that the bank recognizes that as important as it is to distribute individual vaccines to various countries, it is well aware that countries will want different kinds of vaccines for their own situation.
“For example, a country may want some vaccines that need deep cold storage for their urban areas; but then, may want a different vaccine for rural areas. And that’s comprehended–that’s part of our programs and it’s an important part of the delivery effort for the vaccination effort.”
Mr. Malpass also emphasized the need for greater transparency in contracts between governments, pharmaceutical companies, and organizations that are involved in vaccine production and delivery so that financing can be directed effectively, and countries can plan for receipt and deployment.
In that spirit, the World Bank this week launched a comprehensive online portal that provides easy access to information about our projects, including individual country-financing operations. The portal also incorporates what has been learned from the vaccine readiness assessments we helped undertake with over 140 countries over the last six months. I encourage all of you to review the portal and provide feedback.
Mr. Malpass said debt sustainability and transparency will also be vital in attracting new financing and investment. “In West and Central Africa, public debt has almost tripled over the past decade from US$109 billion in 2010 to US$306 billion 2019, rising from 34.1 to 56.4 percent of GDP. The number of countries assessed at high risk of external debt distress or in debt distress has also tripled from three in 2010 to nine in 2019.”
As the COVID-19 effects persist in 2021, the WBG President said, the debt situation will certainly deteriorate further. “Comprehensive debt solutions will involve at least four elements—debt suspension, debt reduction, debt resolution, and debt transparency.”
While the World Bank Group is doing its part, Mr. Malpass said the International Development Association(IDA) expects to remain the largest provider of positive net flows in Chad over the next decade of around US$1.4 billion, strengthening Chad’s ability to sustain a moderate debt burden if that can be achieved. This new World Bank financing, Malpass said, would build on an already strong country program. “Over the past 5 years, IDA has committed over US$1.0 billion in Chad, all on grant terms, which has translated into positive net flows of over US$500 million, addressing some of Chad’s critical development challenges such as energy, health, and social protection. IDA disbursements have risen from US$21 million in FY15 to US$181 million in FY20, a more than eightfold increase. We are equally committed to supporting other countries as they go through the Common Framework process toward fiscal sustainability.”
He said as countries work to recover, tackling climate change will be key for the region: “By 2030, 26 million additional people are at risk of being pushed below the poverty line in West and Central Africa due to climate change. Droughts, floods, and coastal erosion are having a devastating impact on populations and the economies.”
Mr. Malpass said the bank is currently working with countries to strengthen their capacity to absorb, adapt, and transform systems in response to climate change. “We have included measurable indicators of climate resilience in our programs, and we will increase the shared benefits of our climate finance to 35% by 2024. Achieving adaptation and climate resilience will be pivotal for Western and Central Africa to meet fundamental food, water, and environmental security and to counter climate shocks.”