FROM THE OFFICE OF PUBLIC AFFAIRS

Program is part of Bush Administrationstrategy for economic growth in Africa.

The Treasury Department applauded today’s announcement by the World Bank Group that two of its institutions would join in a pilot project to begin lending to small and medium business enterprises in Africa.  The Bush Administration proposed this approach last year as part of its strategy for creating economic growth in sub-Saharan Africa.  (See Taylor: Finding New Business Models at the Multilateral Development Banks; http://www.treas.gov/press/releases/po3495.htm).

“We’re very pleased with today’s announcement,” said John Taylor, Treasury Under Secretary for International Affairs.  “We have strongly advocated this idea for Africa for some time, so it’s gratifying to see it get underway.  Lending to small and medium businesses has significant potential for generating economic growth and creating jobs and reducing poverty.”

The $225 million pilot program will combine the resources of the World Bank’s concessional lending arm, the International Development Association (IDA), with those of its private sector affiliate, the International Finance Corporation (IFC).

During the past year, Treasury Department staff has worked closely with IDA and IFC, as well as other shareholder governments, to encourage adoption of such a program. 

“Today small and medium businesses in Africa have very few if any options for financing their growth,” said Taylor. “This program will help these businesses to invest in productivity enhancements and growth.  And if these businesses can grow and demonstrate success, I believe private investment capital will follow.  I appreciate the work of the World Bank Group for overcoming challenges to implement this idea.”

Taylor credited reforms achieved in last year’s IDA replenishment negotiations where the U.S. secured international agreement that IDA resources, which have traditionally gone only to the public sector, could also be used for private sector development in IDA-eligible countries.  Collaboration between the IFC and IDA is essential to removing obstacles to private sector led-growth.