29/11/24

UK: UK pledges almost £2bn to support low-income countries

As published on: edie.net, Friday 29 November, 2024.

The IDA provides grants and low-interest loans to low-income countries, and the UK’s contribution, 40% higher than the one it made last year, will support more than 1.9 billion people globally.

The funding will come from the UK’s Official Development Assistance (ODA) budget and is designed to unlock additional resources from other sources, including private markets. This unique mechanism allows for every dollar pledged by a country to mobilise up to four additional dollars.

In the past three years, IDA has provided $93bn in finance to 75 countries, including 39 in Africa. The funds have been used to improve education and electricity access, helping to reduce poverty and boost economic growth.

The UK’s pledge is part of a broader effort to strengthen ties with developing nations as well as help address issues that directly affect the UK, such as climate-caused migration and supply chain shocks.

Climate-related disasters accounted for more than half of newly reported displacements in 2022. Additionally, nearly 60% of refugees and internally displaced persons currently reside in countries highly vulnerable to climate change, according to the UNHCR.

Minister for Development Anneliese Dodds said: “Britain is back with a voice on the world stage. When we said we would take a new approach to development, built on genuine partnerships and based on respect, we meant it.

“Leaders of low-income countries around the world called for stronger IDA contributions and we listened.

“We listened because we understand that more growth in IDA countries means stronger global growth, which benefits all of us. This funding will unlock billions to support vital economic growth, changing and saving lives.”

With Reform UK climbing in opinion polls, Ministers were warned last month by Jonathan Porritt that they should do more to prepare for climate-caused migration and to educate policymakers on climate risks.

Climate finance for Global South

At COP29 in Baku, Azerbaijan earlier this month, a new global climate finance goal was adopted, mandating developed countries to provide $300bn annually to support climate action in developing nations by 2035.

The goal replaces a previous commitment for wealthy nations to provide $100bn each year by 2020 to the global south for adaptation and mitigation. This pledge was first made in 2009 and reaffirmed in 2015; however, it was only fully met for the first time in 2022.

For the new goal, exact proportion to be allocated as grants is still undecided and will be determined by wealthier nations. Developing nations have repeatedly expressed concerns that climate finance in the form of loans exacerbates debt cycles for low-income countries, worsening their economic challenges.

Following the recent IDA funding announcement, UK Foreign Minister David Lammy has called on other countries to boost their contributions at the IDA replenishment meeting in Seoul next week (5-6 December), stressing that global challenges require collective action and that the funding will help promote stability and growth worldwide.

Lammy said: “If we are to grow our economy, tackle the climate crisis and reduce irregular migration, we need to work in partnership with these countries.

“IDA’s track record shows that it is one of the best ways to do this. I urge other donors to step up at next week’s conference.”