World Bank Approves $500M to Revitalize Türkiye’s Earthquake-Affected Economy

The earthquakes, which claimed over 50,000 lives, displaced more than 3.3 million people, and left a path of destruction across 18 provinces, severely disrupted the local economy.

In a decisive move to support Türkiye's recovery from the devastating earthquakes of February 2023, the World Bank Board has approved $500 million in funding to help create inclusive jobs and stimulate the economy in the regions hardest hit by the disasters. The funding is part of a broader effort aimed at rebuilding the affected areas, focusing on revitalizing local economies, supporting businesses, and providing long-term job opportunities, particularly for women and youth.

The earthquakes, which claimed over 50,000 lives, displaced more than 3.3 million people, and left a path of destruction across 18 provinces, severely disrupted the local economy. In the wake of the disasters, many businesses have struggled to recover, exacerbating long-standing challenges in Türkiye’s labor market. The Formal Employment Creation 2 Project is specifically designed to address these challenges by providing support to small and medium-sized enterprises (SMEs) in the affected regions.

Supporting SMEs and Creating Jobs

The key goal of the project is to create approximately 17,000 new or improved jobs, with more than a third of those expected to be for women and young people. Small and medium enterprises (SMEs) are critical to the recovery process, and they form the backbone of Türkiye's economy. However, the lack of access to finance has been a significant obstacle to their growth and ability to provide employment.

To address this, the project will provide long-term financing to businesses in the affected regions, particularly SMEs. By easing credit constraints, the World Bank aims to enhance conditions for formal employment creation, enabling firms to hire or retain employees, increase productivity, and ultimately boost labor demand. In addition, the project will support businesses in strengthening their operations through capacity-building programs in areas such as financial management, environmental and social issues, gender, climate resilience, and market analysis.

This comprehensive support will help firms build resilience, improve their business models, and foster long-term economic stability in the earthquake-affected provinces. By focusing on strengthening the local economy, the project will create a sustainable environment for job growth and entrepreneurship.

Focus on Women and Youth Employment

One of the key aspects of the Formal Employment Creation 2 Project is its emphasis on inclusive job creation. With a particular focus on women and youth, the project aims to provide greater access to formal employment opportunities in the region. Women and young people in Türkiye have often faced challenges in accessing the labor market, and the project is designed to create pathways for these groups to gain meaningful employment.

By prioritizing gender equality and youth empowerment, the project aligns with global goals for sustainable development, offering a pathway to economic independence for vulnerable populations. This focus on inclusive job creation not only benefits individuals but also helps to reduce gender disparities and foster social cohesion in the affected provinces.

Enhancing Capacity and Long-Term Economic Recovery

Beyond financial support for SMEs, the World Bank’s funding will extend to capacity-building efforts that focus on strengthening the business environment in the affected regions. These efforts will include training for entrepreneurs on best practices for managing finances, improving market access, and increasing their resilience to future environmental and economic shocks.

The project will also encourage businesses to adopt sustainable practices by focusing on environmental and social considerations, as well as climate resilience. These elements are particularly crucial in a region already vulnerable to earthquakes, flooding, and other natural disasters. The World Bank will work alongside local governments and stakeholders to ensure that these practices are incorporated into business operations, promoting sustainable growth in the years ahead.

Comprehensive Support for Türkiye’s Earthquake Recovery

This initiative is part of a much larger, ongoing effort by the World Bank to help Türkiye recover from the February 2023 earthquakes. The World Bank is already involved in multiple projects aimed at reconstruction and economic recovery, including infrastructure restoration, housing rebuilding, and the provision of critical public services.

These efforts are being complemented by additional World Bank-financed projects aimed at strengthening the labor market and fostering a broader economic recovery. Among these are projects focused on green and resilient infrastructure, disaster risk management, and healthcare preparedness.

The World Bank’s support also extends to specific initiatives such as the Türkiye Earthquake, Floods, and Wildfires Emergency Reconstruction Project, which seeks to promote environmentally sustainable and resilient infrastructure in municipalities affected by the 2020 and 2021 disasters. Other projects like the Climate and Disaster Resilient Cities Project and the Disaster Risk Management in Schools Project further emphasize building resilience in both urban and rural areas.

Looking Ahead: Rebuilding for the Future

Humberto Lopez, the World Bank Country Director for Türkiye, emphasized the significance of this new project, saying, “The World Bank has been accompanying Türkiye since the day of the earthquakes, sharing our international experience in disaster risk management and reconstruction. This project is a crucial step towards rebuilding local economies and providing much-needed employment opportunities in the formal sector.”

As Türkiye embarks on the challenging road to recovery, this $500 million initiative is poised to play a vital role in transforming the earthquake-affected provinces. By creating jobs, strengthening businesses, and enhancing the resilience of the local economy, the World Bank’s support will help Türkiye rebuild not just infrastructure but the foundations for a brighter and more inclusive future.