Recognition of Cabo Verde’s efforts in climate finance and energy transition.
CABO VERDE: West Africa/Atlantic Ocean – In a resounding closing speech at the 2023 Caucus of African Governors of the World Bank and IMF, UK Minister for Development and Africa, Andrew Mitchell, expressed his gratitude to Vice Prime Minister Correia, esteemed Governors of the IMF and World Bank Group, distinguished colleagues, and friends.
The event, held on the beautiful island of Sal, provided an opportunity for Mitchell to emphasize collaboration, highlight crucial partnerships, and address urgent needs in the global fight against poverty and climate change.
A Pleasure to Be in Cabo Verde and Strengthening Partnerships
Mitchell commenced his address by acknowledging the pleasure of being in Cabo Verde, a destination that attracts 300,000 tourists from the United Kingdom annually. He thanked the Prime Minister for his warm hospitality and efforts to strengthen the growing partnership between the two countries.
Mitchell also commended Cabo Verde’s influential role as a leading voice among the Small Island Developing States (SIDS) and its innovative approach to climate finance, exemplified by the recent debt-for-nature swap aimed at supporting the country’s energy transition.
A Privilege to Participate in the Caucus
Expressing gratitude for the opportunity to participate in the Caucus, Mitchell lauded the Sal Declaration presented at the event, describing it as an excellent response to the urgent need for action.
Among the initiatives that the UK strongly supports is the call for permanent membership of the African Union at the G20, a step that would bolster the representation of African nations on the global stage.
UK Partnerships and the Role of the World Bank Group
Highlighting the nature of UK partnerships in Africa, Mitchell stressed the importance of mutual respect and mutually beneficial economic development. He acknowledged the significant role played by the World Bank Group in fostering these partnerships.
The UK has proudly remained one of the largest donors to the International Development Association (IDA) and has consistently advocated for aligning IDA’s resources with each nation’s priorities, particularly in the areas of climate adaptation and job creation.
Mitchell further emphasized the UK’s efforts to allocate more resources to countries transitioning out of IDA through its shareholding in the International Bank for Reconstruction and Development (IBRD).
Additionally, the UK has been a vocal proponent of increased investments by the International Finance Corporation (IFC) across the African continent, exemplified by the establishment of a Private Sector Window.
Tackling Extreme Poverty and Climate Change
Addressing the significant challenges of extreme poverty and climate change, Mitchell emphasized the pressing need for action. At the midpoint of the Sustainable Development Goals (SDGs), progress is falling short, with 88% of the goals projected to be missed by 2030.
The COVID-19 pandemic and other global crises have further exacerbated the situation, causing a reversal in the reduction of extreme poverty. Mitchell drew attention to the impact of Russia’s invasion of Ukraine and global food price hikes, as well as the alarming debt distress or high-risk status of 45% of African countries.
The Evolution of the World Bank Group
Referencing his interactions with leaders and stakeholders across Africa, Mitchell noted a growing demand for reform in the international financial system. He emphasized the need for a bigger, better, and fairer World Bank Group that can effectively tackle global challenges, including climate change.
Citing recent natural disasters such as tropical cyclone Freddy and droughts in Somalia and Kenya, Mitchell underscored the importance of addressing both extreme poverty and climate change simultaneously.
Strengthening Financial Capacity and Collaboration
In discussing the World Bank Group’s financial capacity, Mitchell highlighted the opportunity presented by the G20 Independent Review of Multilateral Development Banks’ Capital Adequacy Frameworks.
While acknowledging the positive steps taken with the World Bank Group’s Springs package, he expressed his belief that further progress can be made. Mitchell advocated for scaling up the IBRD to better serve countries like Morocco, Botswana, South Africa, and future IDA graduates.
Additionally, he emphasized the need to sustain elevated IDA financing levels to prevent severe economic scarring across the continent.
Mobilizing Private Capital and Improving Collaboration
Recognizing the importance of mobilizing private capital, Mitchell called for the development of bankable projects by Multilateral Development Banks that can engage the private sector.
He emphasized the need to transfer risk to the private sector to free up capital and support country-specific platforms such as the Just Energy Transition Partnerships.
Mitchell expressed enthusiasm for the establishment of a new Private Sector Investment Lab by Ajay Banga and anticipated the recommendations of Mark Carney and Shriti Vadera to mobilize more investment for African economies.
Mitchell also highlighted the central role the Bank Group is expected to play at the upcoming UK-African Investment Summit, which aims to bring together African leaders, private sector partners, and international organizations to address investment priorities.
Building a Better Bank and Fairer Financial System
Mitchell emphasized the necessity for stronger collaboration within the World Bank Group to maximize its impact. He proposed that additional capital provided to the IBRD should translate into larger annual transfers to IDA.
Furthermore, he encouraged reevaluation of the IFC’s transfers to IDA. Mitchell emphasized the need for the World Bank Group to become faster in delivering liquidity to areas in need, drawing on lessons learned during the pandemic.
He urged support for countries in crisis planning, the establishment of strong social protection systems, and the implementation of pre-arranged finance options to expedite assistance.
Mitchell also highlighted the UK’s advocacy for climate-resilient debt clauses and the importance of implementing international tax rules to prevent revenue leakage and support sustainable public finances.
He called for the restructuring of public debts in countries like Ghana and Malawi and emphasized the importance of strengthening debt management capacities to prevent unsustainable debts from arising.
Amplifying African Voices and Expanding Representation
In his concluding remarks, Mitchell emphasized the importance of ensuring that institutions reflect and respect all their members to achieve a bigger, better, and fairer international financial system.
He highlighted the UK’s commitment to the African Development Bank, where African countries hold 60% of the votes.
Mitchell acknowledged the UK’s advocacy for a third African seat on the World Bank’s Board in 2010 but called for increased African representation, as the entire continent currently holds only 4.5% of the World Bank’s shareholding. He emphasized the importance of amplifying the voices of those with the most at stake.
Working Together to Overcome Challenges
Mitchell expressed gratitude for the honor of addressing the Caucus and stressed the importance of continued collaboration and impactful work.
He pledged the UK’s commitment to stand alongside African nations in tackling the challenges of extreme poverty and climate change. With upcoming events such as the SDG Summit in New York, the Annuals in Marrakech, and COP28 in the UAE, the road to addressing these issues is becoming increasingly urgent.
In closing, Mitchell thanked all attendees for their invitation, expressing his enjoyment and gratitude for the opportunity to learn and work closely with them. He looked forward to continuing the shared work with the greatest possible effect.