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Financing a bright future for South Asia

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Sifting grain. India. Photo: Ray Witlin / World Bank Photo credit: Ray Witlin/World Bank

South Asia is a land of vast opportunity. Home to 2 billion people and rich with natural resources, fertile land, and staggering natural beauty, the region has made impressive development progress in recent decades. Strong economic growth and advancement across sectors like education, health, and agriculture have helped reduce poverty and improve millions of lives.

But its challenges are as immense as its opportunities. One in 10 people live in extreme poverty. Polluted air and water, poor health and nutrition, lack of economic empowerment for women, and the lingering effects of the pandemic all conspire to undermine South Asia’s productivity—and its people’s chance to thrive. Climate change only adds to the region’s woes, with roughly 800 million people living in climate hotspots where unpredictable rainfall and rising temperatures are reducing crop yields, causing both droughts and floods, and displacing tens of thousands of people from their homes. 

The development challenges in South Asia are complex and interrelated, but harnessing the region’s vast capacity for production and innovation can create enormous opportunity. South Asia has long demonstrated its ability to compete in global markets, but continuing to do so—and do it better—will require critical investments in roads, bridges, renewable energy, and telecommunications systems

Financing these investments and the desperately needed funding for climate adaptation and mitigation initiatives will require strong commitment from governments, development partners, and the private sector. No one entity can do this alone. The World Bank’s International Development Association (IDA) will be a critical—and invaluable—piece of the puzzle. 

Since its inception 60 years ago, IDA has transformed millions of lives and created opportunities for people around the world to thrive. It is the world’s largest source of development finance for low-income countries, and its grants and low- or no-interest loans deliver tangible results. With a unique funding model that can transform each donor dollar into nearly four dollars of life-changing impact, IDA has helped countries in South Asia achieve sustainable growth and chart their own futures

India, among the first IDA clients nearly six decades ago, is a testament to IDA’s vast potential. Using IDA support to invest in its people and communities, India drastically reduced poverty, remarkably improved literacy and health outcomes, and transformed its infrastructure—and in turn became an IDA donor itself.

Today, South Asia is second only to Sub-Saharan Africa in terms of IDA funding, with more than 500 million people in Afghanistan, Bangladesh, Bhutan, Maldives, Nepal, Pakistan, and Sri Lanka benefiting from its support. Over the past four years alone, more than 84.7 million people in the region have accessed safety net programs; more than 24.5 million have received essential health, nutrition, and population services; more than 2.6 million gained access to improved water sources; and over 11.5 million directly benefited from IDA-focused investments in jobs.

Nepal is another IDA success story. Since 1969, IDA has provided Nepal with $8.2 billion in credits and $1.2 billion in grants; and the lives of millions of Nepalis have been improved through investments in education, health, jobs and skills, connectivity and infrastructure, social protection, food security, and biodiversity conservation. 

Despite difficult setbacks ranging from internal political conflict and COVID-19 to earthquakes and extreme weather events, the country has made impressive strides over the past decade. Its gross domestic product grew by an average of 4.9 percent per year, enabling it to attain lower-middle-income status in 2020. Between 2011 and 2023, poverty declined from 25 percent to just 3.6 percent. 

Nepal has used IDA funding to increase access to quality basic and secondary education, improve health care resulting in better outcomes for mothers and babies, and boost access to clean water for more than 1.4 million people. Investments in infrastructure, such as the upgrading of 1,800 miles of roads, have connected rural communities with services and markets. Access to electricity rose from 53 percent in 2010 to 95 percent in 2022. Green energy projects have added 154 megawatts to the country’s power generation capacity. And the country’s dedication to preserving its biodiversity is impeccable, making it the first in the world to meet—even surpass—the global commitment to tiger conservation.

But IDA’s resources are not limitless. As IDA beneficiary and donor countries meet in Kathmandu this week, IDA’s future is as much a part of the discussion as Nepal’s and the rest of South Asia’s. The meetings come at the halfway mark of an IDA replenishment cycle that concludes in December, when donors commit to contributions for the cycle that runs from July 2025 to June 2028.

IDA’s contributions to South Asia’s development journey are clear—and more necessary than ever. We should all champion a robust IDA21 replenishment to ensure that Nepal and other countries in the region continue to receive the support they need to invest in healthy, productive, and prosperous futures for their people. 

This blog originally appeared in The Banker.

Akihiko Nishio

World Bank Vice President of Development Finance (DFi)

Martin Raiser

Vice President for the South Asia Region, World Bank Group

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