MICROCAPITAL BRIEF: World Bank’s IDA Lending $15m to Djibouti for Low-income Housing Finance, Policy Reform

The International Development Association (IDA), a unit of the World Bank, recently agreed to lend USD 15 million to Djibouti for a project intended to: (1) scale up an existing partial guarantee fund to boost mortgage lending to women as well as men; and (2) help residents access loans to buy out their rent-to-own housing contracts. The guarantee portion of the project has a budget of USD 7 million that is scheduled to raise USD 70 million in private capital to fund mortgages for roughly 2,000 low-income households.

The project also is meant to assist poorer households – whether they be led by women or men – seeking to build their own homes via: (1) access to innovative financing for home construction; and (2) policy reforms that reduce construction costs. To be eligible for financing, these homes must meet building criteria regarding resistance to floods and fires. The goal of this element of the IDA project is to serve 450 low-income households.

Established in 1960, IDA provides interest-free credits and grants for programs in the world’s poorest countries. Loans from IDA have repayment terms stretching from 35 to 40 years, including a 10-year grace period. IDA also provides grants to countries at risk of debt distress. During 2022, IDA’s investments totaled USD 38 billion. Since its establishment in 1960, IDA has funded projects in 114 countries.

The World Bank Group is a multilateral organization whose goal is “to end extreme poverty and promote shared prosperity in a sustainable way.” As of 2023, it has 189 member nations. The group encompasses: (1) the International Bank for Reconstruction and Development and IDA, which make up the World Bank; (2) the International Finance Corporation; (3) the Multilateral Investment Guarantee Agency; and (4) the International Centre for Settlement of Investment Disputes. During the 12 months ending June 2022, the World Bank Group disbursed funds totaling USD 67 billion.

By Renata Samadova, Research Associate

Sources and Additional Resources

World Bank press release
https://www.worldbank.org/en/news/press-release/2023/01/11/djibouti-new-world-bank-project-will-expand-access-to-affordable-housing

IDA homepage
https://ida.worldbank.org

World Bank homepage
https://www.worldbank.org

World Bank annual report 2022
https://www.worldbank.org/en/about/annual-report

Previous MicroCapital article on the World Bank
https://www.microcapital.org/microcapital-brief-ccaf-world-bank-study-finds-regulators-in-africa-tops-for-increasing-focus-on-fintech-cybersecurity-main-concern-worldwide/

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