Thank you Vice Prime Minister Correia, esteemed Governors of the IMF and World Bank Group, distinguished colleagues, friends, your excellencies.
What a pleasure it is to be in Cabo Verde and on the beautiful island of Sal. I can well understand why 300,000 of my fellow citizens of the United Kingdom come here every year on holiday. I want to thank the Prime Minister, who I met this morning, for his hospitality and for his personal efforts to strengthen our growing partnership. I also welcome Cabo Verde’s leading voice amongst the SIDS and on innovative climate finance, including their recent debt for nature swap, which will free up funds for the country’s energy transition.
It has been a privilege, your excellencies, to participate in your Caucus today.
The Sal Declaration, which you have set out here today is excellent, responds to the urgent need for action. And there is a great deal that the UK strongly supports, including the call for permanent membership of the African Union at the G20.
The UK’s partnerships in Africa are defined by mutual respect and mutually beneficial economic development. And the World Bank Group has played a central role. We are proud to have been one of the largest donors to IDA. And we have always sought to ensure that IDA delivers on each nation’s priorities, calling for more resources for climate adaptation, and a sharper focus on job creation.
We have also used our shareholding in IBRD, the International Bank for Reconstruction and Development, to argue for more resources to countries graduating out of IDA. And we have been a vocal champion for the IFC to scale up its investments across the continent, including through the creation of a Private Sector Window.
We meet today at an important moment to tackle extreme poverty and climate change.
The challenges are very significant. We are off-track on the SDGs at this halfway point, set to miss 88% of them by 2030. Progress on reducing extreme poverty has stalled, and in many places has reversed in the face of the pandemic and Russia’s appalling invasion of Ukraine. Global food prices are at historic highs and 45% of African countries are in debt distress or high risk of entering it. And while we welcome enormously the recent agreement to restructure Zambia’s debt, this has taken far too long to deliver. This is also a significant moment in our journey to evolve the World Bank Group.
I met and listened to many of you in Paris at last month’s Summit for a New Global Financial Pact, at the recent African Development Bank Annuals and World Bank Spring meeting, and during my visits to 12 of your countries since I took this role again at the end of last year.
I have consistently heard a growing anger and a clear demand to reform the international financial system, as Barbados Prime Minister Mia Mottley has so eloquently articulated. I have also heard that we urgently need a bigger, better and fairer World Bank Group at the heart of this.
The Evolution discussion has rightly shone a light on the Bank’s role in tackling global challenges like climate change. That role is absolutely crucial. We only need to look to tropical cyclone Freddy, which did such awful damage in Madagascar, Mozambique and Malawi earlier this year, and recent droughts in Somalia and Kenya, to see the scale of the challenge we face.
But these efforts must not detract from a laser focus on ending extreme poverty. Indeed, these are two sides of the same coin; as my friend Ajay Banga says, we need a world free of poverty on a liveable planet.
To deliver the new President’s vision, we need a bigger World Bank, which recognises the growing needs of borrowers.
The G20 Independent Review of MDB Capital Adequacy Frameworks presents a huge opportunity here. The World Bank Group Springs package was a strong start, but I believe we can still go further.
This would allow it to scale up IBRD to better serve clients such as Morocco, Botswana, and South Africa, as well as future graduates from IDA. Beyond these capital adequacy measures, we should explore how much additional capital is needed to scale up the Bank even further.
If we are to prevent deep economic scarring across the Continent, we should also sustain our elevated IDA financing levels.
IDA20 responded rapidly to recent crises, but the result of frontloading financing commitments is that volumes are set to drop by around $5bn for each of the next two years.
I hope that many will contribute to the fundraising efforts for the Crisis Response Window. But alongside this, we must explore all the other balance sheet optimisation measures to stretch IDA’s financing further.
We should then start to build a common agenda for a very strong IDA21 replenishment – an IDA which reflects your priorities and is big enough to meet the challenges we all face, that you have made so clear today.
But the Bank cannot do this alone. That is why we also need it to mobilise much more private capital for your countries.
I want to see the Multilateral Development Banks develop more bankable projects that the private sector can engage in, transfer more risk to the private sector to free up capital, and strengthen their support for country-specific platforms, like the Just Energy Transition Partnerships.
I am also excited to see that Ajay Banga has established a new Private Sector Investment Lab and look forward to hearing the recommendations made by Mark Carney and Shriti Vadera to mobilise more investment for African economies.
We also expect the Bank Group to play a central role at next year’s UK-African Investment Summit, which will bring together African Leaders, private sector partners, and international organisations to deliver on your investment priorities.
Crucially, amongst all of this, we need to work on stronger collaboration within the World Bank Group so that it becomes more than the sum of its parts. So if we provide extra capital to IBRD, that should mean even larger annual transfers to IDA. And we should look again at the question of IFC’s transfers to IDA as well.
That brings me to how the Bank must become better. As President Ruto of Kenya so clearly articulated in Paris, the World Bank Group needs to be much faster in getting liquidity to where it is most needed. On average it takes two years from project concept to disbursement. And this is simply far too long. But the lessons of the pandemic show that we can act faster when we must, and now we must.
We need the Bank to better support countries to plan for crises, to build strong social protection systems, and put in place pre-arranged finance like CAT DDOs so the money flows quickly and to the right places. The Global Shield against Climate Risk also provides the Bank with an opportunity to help countries respond to climate risks.
The UK has also been leading the call for creditors to adopt climate resilient debt clauses, which allow repayments to be paused automatically when a shock hits. I was delighted that in Paris the World Bank, US and Spain followed the UK to promise to introduce these clauses.
We also need a Bank that supports a fairer international financial system.
This means supporting better and faster implementation of international tax rules to stop revenues leaking away and undermining your efforts to build sustainable public finances. It also means supporting countries such as Ghana and Malawi to restructure their public debts, and strengthening the debt management capacity of others, to avoid unsustainable debts in the first place.
Friends, I leave with a final thought. We will never deliver a bigger, better and fairer international financial system, unless we have institutions that properly reflect and respect all their members.
This is why the UK has chosen to be the leading partner of the African Development Bank, where African countries own 60% of the votes.
We have guaranteed to expand its financing capacity by $3 billion, and we are the largest donor to the African Development Fund.
In the World Bank, the UK championed the creation of a third African seat on the Board in 2010. But the entire African continent still holds just 4.5% of the World Bank’s shareholding.
So if and when capital increases are needed, it will be important to amplify your voice. A greater say for those with the most at stake.
The road to the SDG Summit in New York, the Annuals in Marrakech and COP28 in UAE. That road is getting shorter every day.
I welcome this urgent to call action, and the UK will be right alongside you as we tackle these challenges together.
I want to thank you all for the very great honour you have given me to address you today. You’ve invited me to join your meeting, and I’ve enjoyed it and learnt so much from it. I look forward to continuing our work together closely, and with the greatest possible effect that we can achieve.
Thank you very much indeed.