South Africa: New World Bank Group Partnership Framework Supports Socio-Economic Transformation for an Inclusive, Resilient Society
WASHINGTON — The new World Bank Group Country Partnership Framework (CPF) is aimed at supporting cooperation with South Africa in its efforts to stimulate investment and job creation as the country recovers from the impacts of the COVID-19 pandemic on lives, livelihoods, and the economy. The strategy covers five years from 2022 to 2026 and was today endorsed by the Group’s Board of Executive Directors.
The new CPF is aligned with the Government of South Africa’s priorities as contained in the Economic Reconstruction and Recovery Plan (ERRP), the State of the Nation Address (SONA) of 2020 and 2021 and the country’s long-term vision in the National Development Plan (NDP) 2030. It is also informed by consultations with a broad range of stakeholders and the findings of both the World Bank Group’s Systematic Country Diagnostic (SCD), and the Country Private Sector Diagnostic (CPSD), which align with the country’s own diagnostics of the persistent triple challenge of poverty, unemployment, especially high among youth, and inequality, all made worse by the Covid-19 pandemic.
“We welcome the World Bank Group’s alignment of the CPF with South Africa’s development and investment objectives of creating a sustainable, resilient and inclusive economy, said Dondo Mogajane, Director General of National Treasury of South Africa. “We look forward to tapping into the World Bank Group global experience and expertise in achieving our country’s objectives.”
This strategy is designed to offer a World Bank Group package of knowledge programs primarily from the International Bank for Reconstruction and Development (IBRD) and financing for private sector development by the International Finance Corporation (IFC) and the Multilateral Investment Guarantee Agency (MIGA) for investment both into South Africa and cross-border into the rest of the Africa Continent.
“This CPF charts a path for how the World Bank, IFC and MIGA, will leverage their relative strengths to partner with South Africa for stronger development outcomes.” said Marie Françoise Marie Nelly, World Bank Country Director for South Africa, Botswana, Eswatini, Lesotho, and Namibia. “As the World Bank Group, we will continue to support the Government in addressing both short term COVID-response needs and key longstanding constraints to sustainable and inclusive economic growth and development.”
South Africa continues to experience significant challenges that are compounded by the ongoing COVID-19 crisis which has hit the country particularly hard. It has had the highest number of infections on the continent and by mid-July 2021 nearly 67,000 South Africans had lost their lives. South Africa’s gross domestic product (GDP) contracted by 7% in 2020 and the fiscal deficit is estimated to have reached 12.9% of GDP resulting in rising public debt which reached 78.8% of GDP in 2020. The number of people living in extreme poverty increased by an estimated 10% in 2020, and the most vulnerable continue to be disproportionally affected by the economic fallout from the pandemic.
The WBG will focus on three broad areas under the new CPF: (i) increased competition and an improved business environment; (ii) strengthened micro, small, and medium enterprises and skills development to boost job creation; and (iii) improvements in the infrastructure investment framework and selected infrastructure services. Across all its activities, the World Bank Group will seek to harness the digital economy, empower women and girls, and strengthen South Africa’s institutional framework.
“As we work together to rebuild our communities and economies from the effects of the pandemic, the private sector, more than ever, has an important role to play in creating jobs, promoting greener development, and generating opportunities for young people,” said Adamou Labara, IFC’s Country Manager for South Africa, Eswatini, Lesotho, Namibia and Zimbabwe. “As part of the World Bank Group, IFC will continue to work closely with the Government of South Africa and the private sector to provide investment and advisory support that empowers more small businesses and entrepreneurs, expands financial inclusion, increases access to affordable student housing, and supports the country’s green transition.”
South Africa is IFC’s largest client in sub-Saharan Africa with a portfolio of $2.4 billion as of June 30, 2021. South Africa is also MIGA’s largest client in Africa and the third largest Worldwide portfolio of $1.6 billion.
“MIGA will continue to foster green, resilient and inclusive growth in South Africa by partnering with private sector cross-border investors on fostering job growth in support of economic inclusion and shared prosperity and on scaling up renewable energy in line with the goals of the government’s ambitious climate change agenda,” said Merli Baroudi, MIGA Director of Economics and Sustainability.