As I travel around the world, I am continually reminded of how much smaller the world seems to be getting. Thanks to technology—especially the Internet, mobile phones, and social media—nearly everyone can see how everyone else lives.
For many, living standards in the most developed countries, once unknown to the world’s poor, are now as familiar as their own communities.
This awareness has changed how people think about their lives, and it is raising expectations about what is possible. Aspirations, once rooted in local experiences, are converging around the world. And as people’s aspirations rise, so too will demands for education, jobs, and services like health care and transportation—opportunities for a better life for themselves and for their families. As the world is virtually shrinking, the divide between people is widening. Our role and our ambition at the World Bank Group is to bridge that divide. We need to use all of our energy, knowledge, creativity, and financing capacity to help countries meet the expectations of all their citizens.
This means accelerating progress on our two goals—ending extreme poverty by 2030, and boosting prosperity among the poorest 40 percent in low- and middle-income countries. To accomplish these goals, we are supporting investments in countries that will lay the foundations for sustainable and inclusive economic growth. We are investing in people, in the youth in particular, so that individuals—and countries—can fulfill their potential and look toward a brighter future. And we are strengthening resilience to the global shocks that affect all of us—pandemics, climate change, refugees, and famine.
Yet while the world seems to be getting smaller, our challenges are multiplying. We must constantly evolve and adapt to meet them. At the World Bank Group, we are fundamentally rethinking our approach to development finance. We have billions of dollars to work with, but the world needs trillions in annual funding for development. We must now leverage our scarce resources even more to crowd in vastly more private capital, combine it with our expertise, and invest it in developing countries.
To spur that level of financing, we need to create markets and bring more private sector rigor and innovation to our client countries, especially the poorest and most fragile ones. We have to start by asking routinely whether private capital, rather than government funding or donor aid, can finance a project. If the conditions are not right for private investment, we need to work with our partners to de-risk projects, sectors, and entire countries. Through dialogue and knowledge transfers, we can help governments reform laws and regulations, and improve economic practices. We can instill new, more efficient ways to finance development. This won’t be easy, but it’s the only way we can help countries at the scale that these times require.
This year, the World Bank Group committed more than $61 billion in loans, grants, equity investments, and guarantees to its members and private businesses. The International Bank for Reconstruction and Development (IBRD) saw continued client demand for its services and made commitments totaling $22.6 billion. And the International Development Association (IDA), our fund for the poorest, provided $19.5 billion to support the countries most in need to face their toughest challenges.
We committed to drastically scaling up IDA’s development interventions through innovative financing. For example, we are leveraging IDA’s equity by blending donor contributions with internal resources and funds raised through debt markets. As a result of these efforts and the continued strong support of our partners, we achieved a record $75 billion replenishment for IDA18. As we head into fiscal 2018, we’re using new tools, such as the $2.5 billion Private Sector Window, to mobilize private capital for the poorest countries.
The International Finance Corporation (IFC) and the Multilateral Investment Guarantee Agency (MIGA), our two institutions focused on private sector development, are leading our efforts to create markets and crowd in private sector investment in developing countries.
IFC delivered a significant amount of financing for private sector development— about $19.3 billion, including nearly $7.5 billion mobilized from investment partners. Nearly $4.6 billion of this went to IDA countries, and more than $900 million went to fragile and conflict-affected areas.
MIGA issued $4.8 billion using political risk insurance and credit enhancement guarantees to draw in private investors and lenders to developing countries. Forty-five percent of projects supported in fiscal 2017 were in IDA-eligible countries, and 21 percent were in countries affected by conflict and fragility.
Across the World Bank Group, we’re working to ensure that we have the knowledge, resources, and tools to be effective and agile in the face of rapid change. We’re ready to scale up and strengthen our engagement to help countries overcome their development challenges, create equality of opportunity, and give everyone the chance to meet their aspirations.