Ida's Crucial Role in Fragile and Conflict-Affected States

The International Development Association (Ida) has emerged as a pivotal player in supporting fragile and conflict-affected states (FCS) over the past two decades. As global conflicts and instability have risen, Ida has significantly increased its focus and funding for these vulnerable countries, becoming the largest multilateral donor in many cases. This shift reflects the growing recognition that addressing fragility and conflict is essential for achieving broader development goals.

Ida's Expanding Role in Fragile States

Since 2000, Ida has systematically reprioritized its lending to fragile and conflict-affected situations:

• In 2000, only about 15% of Ida's total credits and grants went to the 39 countries classified as fragile
• By 2022, this share had grown to 41%
• Ida is now the top donor in 13 of these countries and among the top 3 donors in 22 of them

This trend stands in contrast to some other major donors like the United States, whose share of aid to fragile states has declined over the past decade. Ida now contributes over 20% of country programmable aid in fragile states on average.

The scale of Ida's support varies by country:

• In 24 fragile states, Ida provides more than 10% of total country programmable aid
• The highest share is in Nigeria at over 50%
• Other countries with large Ida shares include DRC, Ethiopia and Niger
• In some small island states, other bilateral donors like Australia play a larger role
• The U.S. remains a larger donor than Ida in some countries like Haiti

The Importance of Fragile States

While fragile states account for only about 7% of developing country GDP (excluding China), they represent:

• 20% of developing country population
• 55% of people living in extreme poverty in developing countries
• A similar share of official development assistance (ODA)

This underscores why focusing on fragile states is so critical for global development goals. These countries face compounding challenges:

• More vulnerable to shocks from conflict and climate change
• Less resilient economic structures
• Shocks create additional stresses and fragilities in a vicious cycle

Breaking this cycle requires sustained support and innovative approaches.

Ida's Financial Support to Fragile States

Ida has dramatically scaled up its financing for fragile states over the past two decades:

• Ida commitments to FCS countries grew from $2.6 billion in 2000 to a peak of $16.4 billion in 2020 during the COVID-19 pandemic
• In 2022, commitments were $15.2 billion
• Between 2010-2022, Ida provided $112 billion in total to FCS countries

Importantly, Ida's support has remained highly concessional:

• 99.7% of Ida commitments to FCS are concessional
• 43.8% are provided as grants

This contrasts with an overall decline in the grant share of aid to fragile states from other donors.

Ida's Comparative Advantages

Several factors make Ida particularly well-suited to support fragile states:

Scale and Flexibility

Ida's large resource base allows it to provide substantial, predictable financing. It can also flexibly adjust terms based on countries' debt situations.

Multidimensional Approach

Ida can tackle interconnected challenges in fragile environments, from basic services to institution building to climate resilience.

Focus on Country Systems

Unlike many donors that circumvent government systems, Ida aims to strengthen country institutions and build capacity.

Leveraging Concessional Finance

Ida can multiply donor resources nearly four-fold through its financing model.

Knowledge and Expertise

Ida brings deep experience working in fragile contexts and can share lessons across countries.

Key Areas of Ida Support in Fragile States

Ida's priorities in fragile states align closely with other donors but with some key differences:

Emergency Relief

This is the top priority, with Ida providing 44% of multilateral aid for emergency relief in FCS from 2010-2022.

Governance

Ida places strong emphasis on strengthening governance, providing 65% of multilateral aid in this sector. Focus areas include public financial management and administrative capacity.

Climate Finance

Ida is the largest provider of climate finance to fragile states among multilateral development banks:

• $26 billion in climate finance to FCS from 2013-2022
• 56% for adaptation, 44% for mitigation

Debt Sustainability

Ida adjusts financing terms annually based on debt risk, offering only grants to high-risk countries.

Challenges and Opportunities

Despite Ida's growing role, supporting fragile states remains extremely challenging:

Local Ownership

Ensuring local leadership and buy-in is critical but difficult when government capacity is weak. Ida aims to work with local leaders and institutions where possible.

Donor Coordination

Better collaboration among donors is needed to maximize impact. Differing timelines and requirements can hinder joint efforts.

Private Sector Engagement

Attracting private investment to fragile contexts requires overcoming significant risk barriers. Ida's Private Sector Window aims to derisk investments.

Sustaining Support

Addressing root causes of fragility requires long-term, consistent engagement beyond typical project cycles.

Looking Ahead: Ida's Continued Focus on Fragility

As Ida finalizes its 21st replenishment, supporting fragile states will remain a top priority. Key focus areas are likely to include:

• Maintaining high levels of concessional financing
• Enhancing flexibility to respond to crises and changing conditions
• Strengthening partnerships with other donors and actors
• Expanding private sector engagement through de-risking
• Applying lessons learned to improve effectiveness

By 2030, up to two-thirds of the world's extreme poor may live in fragile states. Ida's continued leadership and innovation in these challenging contexts will be critical for achieving global development goals and fostering stability.

As conflicts and fragility persist globally, Ida's role as a key partner for the most vulnerable countries is more important than ever. Its ability to provide substantial, flexible financing while strengthening local institutions positions Ida to make a unique contribution. However, success will require sustained commitment from donors and close collaboration with governments, civil society, the private sector and other development partners. With the right approaches and resources, Ida can help fragile states chart a path toward greater resilience, stability and prosperity.

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