The World Bank’s Board of Executive Directors has approved a no-interest loan of USD 50 million from the International Development Association (IDA), a unit of the World Bank, to the Women Entrepreneur Development Project, a nonprofit that was created to help female Ethiopians find employment opportunities and gain skills  to increase their contributions to the country’s economic growth. The project aims to facilitate the growth of micro-and small enterprises (MSEs) owned by female entrepreneurs and improve the capacity of microfinance institutions (MFIs) to provide services to these entrepreneurs. The World Bank estimates that the resulting reduction IN gender inequality may increase annual gross domestic product growth in Ethiopia by 1.9 percent.

The World Bank is a member of the World Bank Group, whose mission is to improve living standards for people in the developing world. In 2009, IDA disbursed USD 14 billion for 173 projects in 63 countries.

By Brett Cohen, Research Associate

About the International Development Association

Established in 1960, the International Development Agency (IDA) is the arm of the World Bank that provides interest-free credits and grants for programs in the world’s poorest countries. Loans from IDA have repayment terms stretching over 35 to 40 years, including a 10-year grace period. IDA also provides grants to countries at risk of debt distress. IDA provides assistance to 79 of the world’s poorest countries, 39 of which are in Africa. In 2009, IDA disbursed USD 14 billion for 173 projects in 63 countries.

About the World Bank Group
The World Bank Group consists of five institutions, all of which are owned by its member countries. The Group’s mission is to improve living standards for people in the developing world. The World Bank Group encompasses the International Finance Corporation (IFC); the Multilateral Investment Guarantee Agency (MIGA); the International Centre for Settlement of Investment Disputes (ICSID) and the World Bank, which consists of the International Bank for Reconstruction and Development (IBRD) and the International Development Association (IDA).

Established in 1944, the World Bank was initially comprised of two development institutions, IBRD and IDA, which provide leveraged loans to developing countries for capital programs. IBRD makes loans and grants and provides analytical and advisory services to middle-income countries and poorer countries that are deemed creditworthy, with the aim of promoting sustainable development to reduce poverty. IDA offers interest-free credits and grants to the world’s 81 poorest countries, where a majority of the people lives on less than USD 2 per day. IDA resources and technical assistance support country-led poverty reduction strategies in the following policy areas: increased productivity, better governance and accountability, an improved private investment climate and access to education and healthcare.

Established in 1956, IFC was created to support financial private sector development, mobilize private capital and provide advisory and risk mitigation services to businesses and services in emerging markets. Unlike the World Bank, which finances projects with sovereign guarantees, the IFC finances projects without sovereign guarantees, which means that the IFC is primarily active in private sector projects.

Established in 1988, MIGA’s mission is to promote foreign direct investment (FDI) in developing countries to help support economic growth, reduce poverty and improve people’s lives. It does this by providing political risk insurance (guarantees) to the private sector.

Established in 1966, ICSID facilitates the settlement of investment disputes between governments and private foreign investors through conciliation and arbitration. Its aim is to foster an atmosphere of mutual confidence between states and investors in order to promote increased flows of international investment. ICSID is an autonomous international organization. However, ICSID’s Administrative Council is chaired by the World Bank Group’s President.

Also housed in the World Bank is the Consultative Group to Assist the Poor (CGAP), an independent policy and research center guided by the aim to promote financial access for the world’s poor. The World Bank was one of the founding donors of CGAP in 1995.

Sources and Additional Resources:

AllAfrica.com, Press Release: “Ethiopia: World Bank Provides Funding to Unleash the Economic Potential of Women Entrepreneurs”
http://allafrica.com/stories/201205250525.html

MicroCapital.org story, May 28, 2012: “MICROCAPITAL BRIEF: World Bank Group’s ‘Measuring Financial Inclusion: The Global Findex Database’ Indicates 2.5 Billion Do Not Have Access to Formal Banking”
https://www.microcapital.org/microcapital-brief-world-bank-groups-measuri…

MicroCapital.org story, January 27, 2012: “MICROCAPITAL BRIEF: Grameen Foundation’s Bankers Without Borders Alliance Partners with Association of Ethiopian Microfinance Institutions on Financial Forecasting Tools, Management, Information Systems”
https://www.microcapital.org/microcapital-brief-grameen-foundations-bankers-without-borders-alliance-partners-with-association-of-ethiopian-microfinance-institutions-on-financial-forecasting-tools-management-informatio/

MicroCapital.org story, May 25, 2012: “MICROCAPITAL BRIEF: World Savings Bank Institute Members to Offer Financial Training, Products Aimed at Unbanked”