The global fragility landscape has worsened significantly in the last few years, impacting both low-income and middle-income countries. Violent conflicts have increased to the highest levels observed over the past three decades. In 2021, an estimated 44% of people below the poverty line were in countries on the World Bank’s fragile and conflict-affected situations (FCS) list.¹ The world is also witnessing heightened geopolitical tensions – most notably the far-reaching impacts of the current conflict in Ukraine. Concurrently, the COVID-19 pandemic and its socioeconomic impacts are increasing poverty and aggravating existing fragility, conflict, and violence (FCV) risks, amid a context of rising food insecurity, natural hazards, and climate-related stresses.

The World Bank Group (WBG), comprising the International Bank for Reconstruction and Development (IBRD), the International Development Association (IDA), the International Finance Corporation (IFC), and the Multilateral Investment Guarantee Agency (MIGA), has steadily expanded support for programmes and institutions that boost economic growth, reduce inequalities, and improve the living conditions of people and countries impacted by FCV. The WBG tripled the share of IDA financing for FCS between IDA16 and IDA19, with $30.3 billion going to these countries under IDA19. In fiscal year 2022, the Bank approved $16.3 billion in IDA19 commitments for FCS countries. The IDA20 replenishment, approved in December 2021, builds on this support, allocating over $39 billion for FCV settings between July 2022 and June 2025. Similarly, the share of the IBRD portfolio under implementation in FCS countries has doubled, from US$ 2.8 billion in 2016 to US$ 5.6 billion in 2021.² The IFC’s own-account long-term investment commitments in IDA17 and FCS countries³ stood at 33% of all investments as of FY22 Q2 end, compared to 21–26% over the past five years.⁴ MIGA’s FCS portfolio stands at a record US$ 2.24 billion, an increase of 17% over the past ten years.

The World Bank has estimated that by 2030 around half the global extreme poor will live in fragile and conflict-affected settings, meaning collective action on the FCV agenda is critical to ending extreme poverty and achieving the Sustainable Development Goals (SDGs). In addressing this challenge, the scale-up in WBG funding for FCV has proved critical – not only has it served as a catalyst for the change in our FCV approach, but it has also helped us articulate a more tailored response to diverse situations of fragility.

As part of this scale-up, the IDA strengthened its role in preventing the onset, escalation, and recurrence of violent conflict. To this end, we have established the FCV Envelope under IDA19 to enhance support for FCV-affected countries. The FCV Envelope resources serve as top-ups to regular efforts supported by performance-based allocation aimed at developing tailored solutions to FCV drivers and leveraging sources of resilience.

The three distinct categories of the FCV Envelope have facilitated tailored solutions addressing conflict prevention, development gain preservation and transition management. The Prevention and Resilience Allocation (PRA) has supported upstream efforts on prevention, including in Burkina Faso, Mozambique, and Niger; the Remaining Engaged during Conflict Allocation (RECA) has helped IDA remain effectively engaged in high-intensity conflict settings, such as Yemen and South Sudan; while the Turn Around Allocation (TAA) has enabled timely, nimble responses in countries such as Somalia and Sudan. The dialogue and process around FCV Envelope eligibility has created renewed impetus for stronger partnerships, including across the humanitarian–development–peace nexus.

Pivoting to prevention

Over the years we have learned that, if the SDGs and the WBG’s mission to end extreme poverty are to be achieved, it is vital to prioritise prevention and scale up support for preventive action in fragile settings. The joint United Nations–World Bank report, Pathways for Peace, found that for every US$ 1 invested in prevention, about US$ 16 is saved down the road.⁵ Furthermore, we know that conflicts drive 80% of all humanitarian needs. In addition to the devastating human toll, the economic and social costs of conflict are often staggering. Investing in prevention is therefore critical not only to saving lives, but to directing more resources towards sustainable development outcomes (rather than repeated emergency and reconstruction efforts).

Pathways for Peace demonstrates that development policies and programmes must be a core part of preventive efforts. As such, we need to address the exclusion-related grievances – for example, lack of access to power, natural resources, security, and justice – at the root of many violent conflicts today. It is particularly vital that preventive action adopt a more people-centred approach. This entails both addressing immediate challenges such as gender-based violence, and promoting the longer-term policies needed to address the aspirations of, among others, women, and youth – this is vital in effectively preventing conflict and sustaining peace.

The adoption of the FCV Strategy in February 2020 and the establishment of the FCV Envelope under IDA19 demonstrates strong support for preventing
and transitioning out of conflict and fragility as a development issue. Across IDA and IBRD countries, the WBG is employing diagnostics and country engagement in its prevention and transition work. Using analytics such as risk and resilience assessments (RRAs), economic and sector analyses, and impact and needs assessments we can identify the drivers of fragility. This information can then be used to ensure country strategies and programming properly address the core grievances fuelling fragility, sustaining conflict, and undermining institutional resilience.

Work on prevention is further reinforced by the IDA19-specific allocations – the previously noted PRA, RECA and TAA – supporting programmes aimed at preventing conflict escalation and promoting turnaround. These dedicated resources have led to deeper dialogues with governments regarding the prevention and transition agenda, as well as stronger collaboration with partners. For example, rapidly increasing insecurity in northern Mozambique led to a rethink of our country engagement. Constructive dialogue with the government, as well as international and national stakeholders, on the country’s conflict risks and resilience (based on the RRA) supported access to the PRA, opening new opportunities for engagement. This led to the IDA programme becoming more tightly focused on supporting conflict prevention. The IFC has also addressed prevention by engaging with excluded groups in rural settings through micro-, small- and medium-enterprise finance and agricultural supply chains, and has worked to enhance engagement with women and youth. Through such approaches, we are actively helping governments address the type of grievances that can potentially lead to violent extremism and conflict.

Support for refugees and host communities

In recent years, we have scaled up our role in addressing one of the most important challenges of our time. With the global number of forcibly displaced people, both internally displaced populations and refugees, having more than doubled in a decade from 41 million in 2010 to over 100 million by the end of 2020 – including large flows of people from and within countries and regions such as Ukraine, Afghanistan, Syria and the Sahel – the international community faces the most significant forced displacement crisis since the Second World War. Given that these populations are often displaced for years – sometimes even decades – this poses both a humanitarian and development challenge. As such, we have taken concrete steps to partner with the UN High Commissioner for Refugees (UNHCR) and others to significantly increase our support to refugees and host communities.

IDA18 introduced the Sub-Window for Refugees and Host Communities (RSW) to support host countries responding to refugee crises. A country is eligible for the RSW if it is hosting at least 25,000 refugees (or at least 0.1% of the country’s population). Moreover, the country must have in place an adequate protection framework and an action plan/strategy containing concrete steps for the protection of refugees. Under IDA18 and IDA19, US$ 3.4 billion of funding under the Refugee Sub-window/Window for Host Communities

and Refugees has been made available, with a further US$ 2.4 billion allocation planned under IDA20. This has led to 50 approved projects in 14 countries. In parallel, the Global Concessional Financing Facility (GCFF), established after the Syrian refugee crisis, has provided concessional financing to help IBRD host countries address refugee crises. GCFF support has benefited Jordan, Lebanon, Colombia and Ecuador, and has helped strengthen the partnership between the Bank and the UNHCR around the humanitarian– development nexus. Following the outbreak of war in Ukraine in 2022, Moldova has applied to join the GCFF as a beneficiary.

Mobilising private sector support

Around 90% of jobs in fragile and conflict-affected settings are created by the private sector. As such, the private sector has a key role to play in such settings. However, there are significant barriers to operating in these environments, including poor infrastructure, regulatory and institutional barriers, elite capture, and lack of access to finance. Moreover, high capital risks associated with FCV contexts deter both domestic and foreign investors, as well as hampering access to external markets.

The FCV Strategy, IFC 3.0 Strategy and MIGA’s FY21– 23 Strategy all emphasise the critical role of private sector development in resolving FCV situations, as well as the importance of developing integrated solutions. We are not only deepening our financial support but deploying innovative products and additional resources to achieve impact at the sectoral and market level in FCV contexts. Thus, the IFC has increased the share of short-term finance in IDA and FCS, and MIGA is adapting its political risk insurance instrument to FCV settings, which it plans to augment with the newly introduced Trade Finance Product, aimed at accelerating growth in private capital mobilisation with a special focus on FCV. We are also leveraging IBRD, IDA and grant resources to support productivity-enhancing innovation in FCV contexts. In Jordan, for example, World Bank lending has supported private sector jobs and the financial inclusion of refugees. In West Bank/ Gaza and the Sahel, meanwhile, the IFC is investing in platforms aimed at increasing financial and insurance services to female-led and -owned small enterprises.

One of our main tools facilitating the de-risking of projects in FCS markets is the IDA Private Sector Window (PSW), introduced under IDA18 to create markets and catalyse private investment where fully commercial solutions are not yet possible and the WBG’s other financial instruments are insufficient. The PSW has enabled us to invest in the most challenging FCV contexts. For example, MIGA was able to offer political risk insurance for the Tulu Moye project, an early exploration-stage geothermal energy project in Ethiopia, and for the Escotel project, which provides captive renewable energy to support telecoms infrastructure in Sierra Leone and Liberia, driving digitalisation in both countries.

These types of engagements and operations have mobilised substantial private capital – since FY17, the IFC and the MIGA have respectively mobilised US$ 19.4 billion and US$ 11.4 billion of private capital in IDA and FCS countries.

Strengthening partnerships

In the past few years, we have intensified mission-driven partnerships, leveraging the complementary mandates, capacity, and expertise of partner organisations to maximise collective impact. Intensified collaboration and more systematic coordination are taking place regarding joint analyses and assessments of multidimensional risks; coordinated efforts to address forced displacement crises; dialogue on the conflict prevention agenda; and data and information sharing. In addition, working in effective partnerships is becoming part of the core FCV learning modules, to which UN resource personnel are regularly invited, with training slots also allocated for external partners.

In many FCV countries, the World Bank is leading donor efforts on issues of development impact. The Bank works closely with multilateral, bilateral and domestic partners, including the UN, the International Monetary Fund (IMF) and other multilateral development banks (MDBs), the European Union, regional organisations such as the African Union (AU), bilateral partners, civil society organisations, and the private sector. Cooperation with the UN is particularly strong, incorporating both direct and indirect financing, as well as collaboration on policy, operations, and analysis. The World Bank now has a structured partnership with the UN in more than 40 crisis-affected situations. Over the course of FY16–21, US$ 3.72 billion of IDA financing has been implemented with the support of UN agencies. We have also increased cooperation with the IMF and other MDBs to ensure alignment on policy frameworks and reforms, and country programmes.

With COVID-19 bringing new challenges to FCV settings, we have partnered with UN agencies, the Asian Development Bank, and others to strengthen health systems and social safety nets, reaching vulnerable communities in FCV countries such as Papua New Guinea, Haiti, Niger and Yemen. Finally, in 2020, the World Bank formalised an agreement with the International Committee of the Red Cross (ICRC).

Working with entities such as the ICRC has enhanced our engagement in insecure settings where no one else is present, including in parts of Somalia and South Sudan.

Partnerships will remain central to our work in FCV countries, with special attention paid to those that are helpful in crisis preparedness and resilience building. Doing so will facilitate the leveraging of comparative advantages and deployment of complementary technical expertise in fragile settings. Moreover, partnerships will be closely linked to implementation of the IDA20 FCV policy and financial package, as well as the strengthening of regional cooperation in Africa through organisations such as the Intergovernmental Authority on Development, the Economic Community of West African States, and the AU. Finally, we will reinforce our engagement with civil society in FCV settings to strengthen resilience and promote inclusive economic growth.

Conclusion

Conflict prevention, reduction and turnaround are complex processes requiring sustained long-term engagement. Countries with deeply entrenched drivers of FCV cannot be expected to transition out of conflict in a short timeframe. Many of the FCV Envelope’s recipients have been in or in-and-out of conflict for many years, if not decades. Thus, engaging in these countries is not a linear process. The flexible and context-driven approach backed by the FCV Strategy and FCV Envelope has enabled us to support countries in their long journeys towards peace and stability. We must now build on the progress made and continue our collective efforts to build hope, opportunity and prosperity for the millions of people still living in the most challenging situations.