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World Bank, Government of Korea Join Forces to Support Achievement of SDGs

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The Government of Korea (GoK) and World Bank Group (WBG) today announced a $900,000 contribution from the GoK to the recently launched WBG Partnership Fund for the Sustainable Development Goals (SDG Fund). The funding will support the SDG Acceleration Toolbox to help WBG member countries achieve an inclusive and sustainable development path toward the SDGs.

The SDG Acceleration Toolbox will focus on the following countries: Kazakhstan, Vietnam, and Egypt. A comprehensive country development diagnostic combined with an in-depth thematic and sector-focused assessment of policies and institutions, the SDG Acceleration Toolbox will strengthen countries’ ability to implement the 2030 Agenda and attain the SDGs.

The activity will be conducted in partnership with the Government of Korea and the Institute for Global Engagement and Empowerment (IGEE) Ban Ki-moon Center for Sustainable Development at Yonsei University. The Government of Korea is the second donor to join the SDG Fund after Sweden, which helped launch the SDG Fund with an initial contribution of  $7 million. 

“The SDGs are a comprehensive vision and a daunting challenge for countries. The Government of Korea is pleased to partner with the World Bank Group to develop innovative approaches that help WBG client countries achieve the SDGs” said Chang Huh, Director General, GoK Ministry of Economy and Finance.

“We are very pleased to launch the SDG Accelerator Toolbox with the Government of Korea and the Ban Ki-moon Center for Sustainable Development,” said WBG Senior Vice President Mahmoud Mohieldin. “This is an excellent collaboration between the World Bank Group, Government of Korea, and our client countries, and it is aligned with WBG SDG Fund objectives in promoting partnerships under SDG 17.”

Established in October 2018, the multi-donor WBG SDG Fund provides financing to strategic and high-impact initiatives that can help countries strengthen implementation of the global goals. It focuses on capacity building, quality data, knowledge generation, and institutional strengthening for the achievement of the SDGs. Since its launch, the WBG SDG Fund has financed 15 activities led by World Bank Group teams, in many cases in partnership with the UN, private sector, academia, and other development partners.

Activities cover a broad range of sectors including, for example, supporting sustainable energy (SDG7) and climate change (SDG13) through the provision of renewable energy in emerging markets, enabling access to credit for marginalized groups, creating decent work (SDG8), promoting gender equality (SDG5), strengthening welfare analysis frameworks and tools for inclusive growth (SDG8), and reducing inequalities (SDG10).

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Finance

GCC returns to growth amid high oil prices and strong responses to COVID-19

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Gulf Cooperation Council (GCC) economies are expected to return to an aggregate growth rate of 2.6% in 2021, according to the latest issue of the World Bank Gulf Economic Update (GEU), “Seizing the Opportunity for a Sustainable Recovery.” The six-member GCC is composed of the United Arab Emirates, Saudi Arabia, Qatar, Oman, Kuwait, and Bahrain.

Their robust recovery, which is due to stronger oil prices and the growth of non-oil sectors, will accelerate into 2022 as OPEC+-mandated oil production cuts are phased out and higher oil prices improve business sentiment and attract additional investment. These favorable oil market conditions have shrunk fiscal and external imbalances as export earnings recover. However, the outlook in the medium-term is subject to risks from slower global recovery, renewed coronavirus outbreaks, and oil sector volatility.

The World Bank’s latest GEU report focuses on addressing the wage bill in the GCC—the amount of government spending devoted to the salaries and benefits of state employees. Well-paid, public sector jobs are part of the region’s social contract, as well the free health care, education, social security benefits, and subsidized housing and utilities which citizens are often also offered.

“With high population growth and limited options in the private sector, the wage bill has become unsustainable in some GCC countries, as it is a large part of government spending and of the economy overall,” said Issam Abousleiman, World Bank Regional Director for the GCC. “Given their improved fiscal situation, this is an opportune time for GCC governments to accelerate their reforms agenda and reach the goals they set for themselves.”

According to the report, the average GCC wage bill over the past two decades has exceeded the Organisation for Economic Co-operation and Development (OECD) average, except in Qatar and the UAE. Many GCC countries have public sectors that are well within OECD norms size-wise, in terms of the numbers of employees. However, public servants are paid a wage premium of between 50–100%, which results in a high wage bill relative to the countries’ total spending and GDP.

Despite the oil price crash, spending on the wage bill and the numbers of people employed in the public sector have both risen inexorably upwards. Kuwait’s 2022 budget allocated KWD 12.6bn (about US$42bn) for salaries and benefits, or 55% of its total expenditure. Other countries in the GCC are in a similar position: Oman’s wage bill has doubled in the past decade despite efforts to cap its growth. Saudi Arabia’s allowances for civil servants rose from SAR 44bn in 2016 to SAR 148bn in 2019 and now form more than a third of the government’s total wage bill.

These high wage bills are adding excessive pressure to GCC budgets, especially in countries with fewer resources and limited fiscal buffers. In consequence, most are either introducing or expanding their tax bases, trimming back benefits, and exploring early retirement options for some staff. Rather than providing a prescriptive solution in their report, World Bank economists highlight some of the options adopted by other countries and suggest GCC countries reach consensus among stakeholders before moving forward.

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Africa Today

New Project to Support the Emergence of a Digital Economy in Djibouti

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The World Bank today approved a US$10 million credit from the International Development Association (IDA), the World Bank’s program for the poorest countries, in support of Djibouti’s efforts to accelerate the digital transformation and build a more inclusive digital economy.

While Djibouti has made significant inroads in becoming a digital hub in regional connectivity and data markets, many Djiboutians do not fully benefit from the country’s connectivity infrastructure. The new Digital Foundations Project aims to ensure that more citizens and businesses have access to quality and affordable internet by developing an enabling environment for the gradual introduction of competition and private-sector investment in information and communication technology (ICT), and by fostering the uptake of digital skills and services. The project is aligned with the new Country Partnership Framework and Djibouti’s Vision 2035, which recognize the role of ICT in economic growth.

Accelerating digital transformation in Djibouti is an urgent necessity for post-COVID-19 recovery,” said Ilyas Moussa Dawaleh, Djibouti’s Minister of Economy and Finance in charge of Industry. “Stimulating economic growth, innovation and job creation through technology is an opportunity that will benefit present and future generations.

The new financing will strengthen the capacity of the public sector, specifically the Ministry of Communication, with responsibility for Posts and Telecommunications, the Delegate Ministry in charge of Digital Economy and Innovation and the Multi-sectoral Regulatory Authority of Djibouti, to promote digital economy and market competition. It will provide support to micro, small and medium enterprises (MSMEs), while boosting Djibouti’s resilience to external shocks, including disaster response and climate monitoring.

COVID-19 has highlighted the importance of digital technologies,” said Boubacar-Sid Barry, World Bank Resident Representative in Djibouti. “With this new project, the Bank supports Djibouti in its efforts to address vulnerabilities and create a favorable environment for the development of an inclusive and safe digital economy.

The project will also support the development of digital skills programs for entrepreneurs and the integration of basic digital skills into school and university curricula. It is anticipated that the project will benefit all segments of Djibouti’s economy and society, including the public and private sectors, women, youth and underserved rural populations. Citizen engagement will be an essential component of the program.

According to Eric Dunand and Tim Kelly, co-Task Team Leaders, “The project will help Djibouti to harness its digital potential. A high-performing digital economy in Djibouti, based on a well-developed ICT sector, will have many benefits. Wider use of digital technologies will help the government improve service delivery, offer youth more job opportunities, and entrepreneurs, more business prospects in diversified economic sectors.

The World Bank’s portfolio in Djibouti consists of 14 projects totaling US$258 million in financing from IDA. The portfolio is focused on education, health, social safety nets, energy, rural community development, urban poverty reduction, the modernization of public administration, governance, and private sector development with an emphasis on women and youth.

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Development

Saint Lucia Builds Investment Reference Guide to Boost Sustainable Development

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In partnership with the Government of Saint Lucia, the World Economic Forum is launching the Country Financing Roadmap for the SDGs. It aims to help Saint Lucia unlock sources of funding, remove investment bottlenecks and develop a more coordinated approach for financing projects that are environmentally friendly or can help people develop new skills.

The Country Financing Roadmap for Saint Lucia provides an overview of priority initiatives for leaders to assess and action project work – potentially saving money and helping to identify synergies across funding areas.

For example, the initiative brought together reskilling programmes with $12 million in total budget that can support the country’s economic recovery efforts – potentially supercharging efforts. These include a collaboration between the European Commission and Forte, to help 500–600 people develop skills related to hospitality, digital skills and green or blue economy by the end of 2022, at no upfront cost to the government.

Another project, the Caribbean Climate-Smart Fund initiative by the Rocky Mountain Institute (RMI) and Lion’s Head Global Partners (LHGP), is working towards mobilising both private and below market rate capital to finance a $80 million project pipeline dedicated to renewable energy in Saint Lucia.

“Finding viable solutions in the short, medium and long term to the myriad challenges that plague small island developing states (SIDS) like Saint Lucia is critical to safeguarding and putting the needs of our people first while achieving meaningful post-COVID socioeconomic recovery and implementing the Sustainable Development Goals,” said Wayne Girard, Minister in the Ministry of Finance, Economic Development and the Youth Economy, Government of Saint Lucia. “The CFR not only presents Saint Lucia with actionable options to unlock some of the financing and investment bottlenecks that limit sustainable development, it also presents a useful mechanism for replication across other SIDS in the Caribbean region. Saint Lucia is committed to continuing its work with the Sustainable Development Investment Partnership (SDIP), to advance a regional approach to driving our collective capacities to build back better.”

“Saint Lucia has demonstrated its commitment to meeting the SDGs by embarking on several important initiatives, with some of the most important focusing on financing targets,” said Sean de Cleene, Member of the Executive Committee of the World Economic Forum. “We hope that this CFR initiative will create opportunities for Saint Lucia and other countries to fast track similar impact projects.”

The CFR is a country-led initiative in collaboration with the Sustainable Development Investment Partnership (SDIP) and a joint initiative of the World Economic Forum and the Organisation for Economic Co-operation and Development (OECD). Its goal is drive economic recovery and achieve the Sustainable Development Goals by presenting viable solutions that address barriers to investment and attract greater sources of capital.

As a small island nation, Saint Lucia is vulnerable to economic shifts and continues to expand recovery efforts due to the consequences of the COVID-19 pandemic, which pushed the country to an 86.5% debt-to-GDP ratio for 2020. In 2019, tourism accounted for 80% of the nation’s labour market which faced a reduction in jobs from 63,400 in 2019 to 41,600 in 2020 as a result of the crisis, according to the World Travel and Tourism Council. Barriers to sustainable growth also hinge on the population’s dependence on fossil fuels which, through a successful transition to renewable energy, could increase self-sufficiency, equity, and environmental sustainability.

Alongside the CFR, the government in collaboration with the United Nations Office for Project Services (UNOPS) and the University of Oxford launched the Saint Lucia National Infrastructure Financing Strategy developed using the Sustainable Infrastructure Financing Tool (SIFT), which complements the CFR and further explores the opportunities for sustainable infrastructure financing in the country.

The Sustainable Development Investment Partnership plans to continue its support to the Government of Saint Lucia and regional organisations in hosting a series of discussions on reskilling and renewable energy solutions with over the next six months.

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