Over 100 journalists from more than 20 countries in Africa including Rwanda, yesterday interfaced via video link with the World Bank Vice President for Africa, Ms Obiageli
Katryn Ezekwesili. This was a prelude to the 3rd High Level Forum on Aid Effectiveness that starts today in Accra, Ghana.
The purpose of the high level journalists’ conference was, as Ms Obiageli put it, in recognition of the media as important partners in fighting poverty. The journalists asked many questions, some as diverse as why the World Bank (WB) was thin on the ground in the Sudan.
Not being the proper forum to mention and explore that question and answer session, this column seeks to follow up on the issue of soft bank loans, and the seeming duplication of work that the powers that be seem to be endlessly engaged in, in their efforts to end poverty in Africa.
When asked by a journalist from Rwanda why the WB does not pursue some interventions like using commercial banks to lend out development loans at rock-bottom interest rates, Colin Bruce, a World Bank director, replied that statistical research shows that low interest rate loans have instead been abused and they have ended up not serving the purpose for which they were set up.
Instead, the WB supports market rate lending rates which stimulate development and encourage savings that will in the end be rewarded by the interest charged on borrowers.
However, there can be interventions that are geared towards such development. The freshly booming bank leasing business can be used to acquire capital at very low interest rates to kick-start businesses.
It is also true that many people fail to pay off their loans because of the fact that banks’ interest rates are prohibitive and discourage borrowers, thereby stifling development. We just need better instruments to screen prospective borrowers, and in the end we have better compliance; the few bad debtors can then be written off, with some insurance cover from the WB.
Lastly, there is the Doha Round. Then there is the G8, which put the hitherto obscure Gleneagles on everyone’s mind map. And then also this WB’s 1st, 2nd, and now 3rd, High Level Forums on Aid Effectiveness, besides the many small brother interventions on the African mainland itself, like the MDCs, NEPAD, and so on.
Statistics show that Africa is developing at over 5%, but the poverty reality on the ground belies those figures. Ladies and gentlemen in Accra, we need another intervention against all those interventions, because they seem not to be working, many as they are.