Poverty to Prosperity

UNDERSTANDING HOW THE WORLD BANK FINANCES ARE ALLOCATED:

ABOUT

Do you ever wonder how our world’s poorest countries provide adequate education, transportation, infrastructure restoration, social services, agricultural services, or health services to its people? As terrible storms recently wiped-out numerous homes, businesses, and schools in the mid-west of our country, I thought about the many programs that the US has in place to help restore economies after disaster. My thoughts were immediately followed by what if scenarios – what if we were in a country that didn’t offer such services? How do the low-income regions receive assistance? I leveraged my inner-monologue’s curiosity as a probing tool for my current financial analysis project.

The world solution to these problems - The International Development Association (IDA). The IDA is a branch of the World Bank that is responsible for assisting the world’s low-income countries with investing in their future economic development through a series of grants, credits, and low-interest funding. As one of the largest sources of assistance for the world’s poverty-stricken countries these credits act as a catalyst for rapid economic development and restoration. The following analysis explores how the IDA accomplishes this huge venture by looking into how the finances are distributed.

Key insights:

• There have been 1,283,819 loans issued by the IDA of which only 728,786 loans have a balance
• There are currently 123 countries receiving services/funding from the IDA; with a total due to IDA of $23,405,266,717,910.93
• India has the most transactions of all countries with 65,829 projects: 5% of all transactions. Ukraine has the least with 22 total projects.
• There are 8,133 different project types with the most prevalent being related to transportation and education funding
• India has the highest balance owed of the countries; $3,651,109,901,480.03
• South Asia is the highest owing region with a balance owed to IDA of $8,917,137,972,490.52 = totaling 38% of all monies owed
• The average interest rate for all loans is 0.71%
• 56% of all loans go to the continent of Asia; 41% to Africa regions, and 3% to Latin America and Caribbean regions.

?

THE DATA

The dataset was retrieved from The World Bank Group Finances Statements of Credits and Grants and was last updated on April 15, 2024. It contains 1.28 million rows and 30 columns of data; each row representing a credit or grant issued. The different variables representing recipient specifications such as, Country, Region, Credit Issued, Borrower, Total Due to IDA, Credit Status, Service Charge Rate, Original Principal Amount, Project ID, Project Name, Repaid Amount, Dates of Payments, and other pertinent date categories. ?

?

The dataset is updated monthly and can be accessed through this link.

?

ANALYSIS

For this project, I elected to use SQL for my analysis due to its ability to manage and wrangle datasets with over a million rows. First, I created a database (schema) and table in MySQL Workbench. Then, I provided access to file privileges in the host to export results in csv format by using the commands SHOW VARIABLES LIKE and GRANT FILE ON. I imported the information from a text file into the database by using the command LOAD DATA INFILE.

The next step was to determine the total due to IDA for all credits issued and to understand how many countries/regions these funds are allocated to. The collective balance owed to IDA was determined by using an aggregate function and renaming the created column with an AS function.

Total due to IDA:

Then, I aggregated how much was due to IDA by country via ROUND and SUM functions, filtering out any countries that have 0 balance owed through a WHERE clause, which returned 123 countries in DESC order that hold a positive balance. Countries with the highest balance owed are India, Bangladesh, and Pakistan; all from the South Asia region.

Top 3 countries with the highest balance to IDA:

To determine the region loan volume in descending order I used the COUNT, GROUP BY, and ORDER BY functions. Africa comprises the majority of loans per region with 34% of transactions.

Total transactions by region:

Out of 11 regions, Africa and South Asia are the most prominent recipients of IDA funding.

An interesting insight here is that despite Africa having more transactions between the IDA South Asia is the region with the highest balance owed with 38% of the total due; $8,917,137,972,490.52. (shown below)

Total due to IDA by region:

To drill down on this, I looked at the transactions per country and found that the top 3 yielding transactions are also in the South Asia region, India, Bangladesh, and Pakistan. India has 65,829 loans totaling 5% of all transactions, followed by Bangladesh at 47,032, and Pakistan at 40,465.

Total number of transactions by country:

Now that the top region and country have been identified I wanted to see what projects the loans were being allocated toward, so I applied the COUNT and DISTINCT functions to determine how many variations of projects there were identifying 8,133 variations.

Total number of project name types:

Once the project type variations were noted I sorted them in descending order to determine which project was the most frequently funded. Of the top 10 shown in the results pane, you can see that funding for education projects has the highest project count with Education II at 6,084 projects to date. With multiple project types having education as a keyword, I applied a WHERE clause with a LIKE statement identifying 272 different types with the term education. I then ran a subquery including wildcards for any project that had education in the name with a SUM function and the results returned 57,546 rows for all countries. Education projects comprise 4% of total projects.

Most frequently funded projects:

Total education projects in all countries:

To identify India’s most common projects I applied similar code with a filter using COUNT, WHERE, GROUP BY, ORDER BY, and LIMIT statements.

What project type is most prevalent in India:

An interesting insight is that though educational funding is the most frequent in all transactions it is not listed in the top 5 project types for India. I applied a subquery to include all education projects in India which totaled 1,449 (2.2%) that have been funded to date.

Total education projects in India:

The top project funded by the IDA for India appears to be social safety net projects, which are in place to protect families from natural disasters, economic shocks, and other crises. Other loans for the top 5 projects were geared toward telecommunications and transportation developments. However, seeing multiple keywords for all loans above I pulled the individual project with the highest cost for India specifically, using the MAX, WHERE, GROUP BY, and ORDER BY functions which highlighted the most expensive individual project as an irrigation project. I then applied a subquery to include keywords (irrigation, transportation/road/highway/railway, education) with SUM, WHERE, AND, OR, and LIKE functions determining that social safety net projects were not the most common. The most common projects for India were Transportation (roads, highways, railways) at 30,557 (46%), Irrigation at 4,206 (6%), and then Education projects come in at 1,449 (2%).

Identifying most common projects using keywords:

We know the most funded projects, so now I am looking to find the most expensive. I aggregated the original principal amounts approved via SUM sorting India’s projects in descending order to identify the project with the highest credit approved and to compare it against the total balance owed to the IDA. Elementary Education development holds the highest credit approved with over 210 billion funding 312 projects.

Project with the highest approved funding cost for India:

Subsequently, this same project is the holder of the current highest debt owed by India to IDA with just shy of 156.5 billion remaining. This remaining balance makes up 4% of the total balance owed to IDA by India.

?

The final query was to understand the average interest rate charges for all loans by using a ROUND and AVG aggregate clause. The average interest rate is an impressive deal at 0.71%.

CONCLUSION

The IDA is a blessing to 123 poverty-stricken countries funding over 1.28 million loans spanning 8,133 variations of projects to aid in their economic development. Overall, 56% of all loans are attributed to the continent of Asia, 41% to Africa, and 3% to Latin America and Caribbean regions.

Of the total balance due to IDA South Asia is the highest owing region totaling 38% of the debt. The South Asian country India is the largest recipient of loans with 65,829 received with the most funded projects centered around transportation and trade access development. Though transportation and irrigation are the most frequently noted projects, the highest credit received, and current highest debt is attributed to elementary education.

It is evident that providing quality primary education for the population and allowing ease of travel and transportation methods for goods to be exchanged is a priority for the country. The projects funded by the IDA will help India and other countries transition from poverty to a life of prosperity.

?

?

?