Explainer: What is the IDA Replenishment Summit currently underway in Nairobi?

On Monday, Nairobi hosts a gathering of numerous African leaders for the World Bank's International Development Association (IDA) summit, co-hosted by President William Ruto and the global bank.

At this summit, African leaders will advocate for a robust replenishment of the International Development Association's concessional lending arm.

In the draft "Nairobi IDA Communique" to be deliberated upon, African leaders will outline urgent priorities for IDA's upcoming three-year funding cycle.

These priorities include bolstering human capital, fostering job creation, improving access to energy and digital services, enhancing climate resilience, and promoting sustainable growth.

Countries around the world are struggling to make ends meet—none more so than the poorest in the world, which have been caught in a cycle of debt, crisis, pandemic, and fragility that seems nearly impossible to escape.

This summit builds upon previous IDA meetings held in Abidjan in 2021 and Dakar in 2022, where leaders from across the continent united to call for ambitious replenishment efforts for IDA20 from donor countries.

But what exactly is IDA?

Established in 1960 with the aim of providing grants and affordable loans to the globe's most impoverished nations, IDA stands as the largest singular anti-poverty fund worldwide.

Some of the leaders present during the World Bank's International Development Association Summit at the KICC, Nairobi on April 29, 2024. (Photo: PCS)

In 2022 alone, it pledged $42 billion towards initiatives spanning energy, transportation, education, healthcare, private sector growth, and social welfare.

Remarkably, it holds the distinction of being the sole AAA-rated concessional fund globally, operating on three-year funding cycles.

For years, concessional finance, comprising grants and highly affordable loans, has served as a vital support system, transforming lives through investments in crucial areas such as healthcare, education, sanitation, and infrastructure.

The IDA of the World Bank stands as the foremost provider of this type of lending, serving as a key ally in the journey out of poverty for millions worldwide.

Somalia President Hassan Sheikh Mohamud during the World Bank's International Development Association Summit at the KICC, Nairobi on April 29, 2024. (Photo: PCS)

Historically, IDA has relied heavily on contributions from its member countries' governments.

Every three years, donors convene to replenish IDA's resources and assess its policy framework.

The latest replenishment, IDA20, concluded in December 2021, securing a groundbreaking $93 billion financing package for IDA countries spanning fiscal years 2022-2025.

In the fiscal year ending June 30, 2023, IDA's commitments amounted to $34.2 billion, with $7.3 billion designated for grants. Notably, the Africa region received 75 per cent of these commitments, totalling $25.8 billion.

Since its establishment in 1960, IDA has disbursed $533 billion across 115 countries. Over the past three years (FY21-FY23), annual commitments have seen a steady increase, averaging approximately $36 billion.

Among the leaders attending is Mohamud Ould Ghazouani, the President of Mauritania and current AU chairperson. From East Africa, Presidents Yoweri Museveni (Uganda), Samia Suluhu Hassan (Tanzania), Hassan Sheikh Mohamud (Somalia), Evariste Ndayishimiye (Burundi), Ethiopia Prime Minister Abiy Ahmed and Kenya's former Prime Minister, Raila Odinga, who is seeking to become the next African Union Commission chairperson are in attendance.

Others are Mohamud Ould Ghazouani, the President of Mauritania, Julius Maada Bio (Sierra Leone), Andry Rajoelina (Madagascar), Lazarus Chakwera (Malawi), Azali Assoumani (Comoros), Faustin-Archange Touadera (Central African Republic), Nana Akufo-Addo (Ghana).

Prime Ministers Amadou Oury Barh (Guinea) and Nadir Larbaoui (Algeria) as well as the President of the World Bank Group Ajay Banga are in attendance.

Central Bank Governor Dr Kamau Thugge (left), Azimio leader Raila Odinga (centre) and Chief Justice Martha Koome (right) at the World Bank's International Development Association Summit at the KICC, Nairobi on April 29, 2024. (Photo: PCS)