With the need to develop large amounts of hydro capacity, there is a concurrent need for large amounts of capital to meet the cost. Traditionally the World Bank has been the leader in meeting this need. Through IDA, it's loan affiliate, or the Bank itself, lead financing has been provided for many projects in the past and will undoubtedly continue to be made available for major projects in the future. Other funding sources have participated such as the European Development Fund, the African Development Bank, the Kuwait Fund, the Islamic Development Bank, the European Investment Bank, and various direct bilateral sources and commercial banks. All of these sources are presently involved in financing projects, but they look to the World Bank and its affiliates for leadership and guidance.
On a typical project the World Bank supplies up to one-fourth of the foreign funding, and other foreign sources the remainder of the external financing. The country itself is expected to meet the local costs. It has been estimated that up to one half of the investment funds have been supplied by governments as direct bilateral aid on concessionary terms or as grants. These aid-sourced funds rose by 4 percent in the 1970s, but both the World Bank and the OECD predict that the increase will be only one half of that rate, about 2 percent, in the 1980s. This will make it more difficult to “package” projects, even if the World Bank has the “seed” money. The signs are that the World Bank itself is experiencing a shortage of funds, at least in the near term. The anomaly is that Africa, with one-third of the world's hydro potential and only 5 percent of it developed, will be hard pressed to find financing for more development, even though it is urgently needed.
