Washington, June 25, 2003
—Peter Woicke, managing director of the World Bank Group, today outlined a new approach to the development and growth of small business in Sub-Saharan Africa, which combines an innovative blend of public and private financing.
The initiative would mark the first time that the World Bank Group has taken a coordinated, large-scale, multicountry approach to private sector development that combines the resources of its concessional lending arm, the International Development Association (IDA), with those of its private sector affiliate, the International Finance Corporation (IFC).
“Most African countries understand that sustainable job creation is the key to escaping poverty and that only private enterprise can create the large numbers of jobs urgently needed,” said Mr. Woicke, speaking at the Corporate Council on Africa in Washington D.C.. “This program will help Africa to do just that by scaling up micro, small and medium enterprises so that they can become more efficient, competitive and profitable.”
It is expected that a number of countries will take part in the $225 million pilot program over the next three to four years, drawing roughly $130 million from new or existing IDA credits, $60 million from IFC and other commercial investors, and $35 million from other sources. Different approaches will be shared to design comprehensive country-specific initiatives consistent with World Bank and IFC strategies and programs in Africa.
“This is an innovative framework for enhancing the role of the private sector in national growth strategies,” Callisto Madavo, World Bank vice president for Africa, pointed out. “The objective of the program is to increase the growth of small businesses in Africa and the contributions they make to employment and poverty reduction,” he said.
One distinctive aspect of the program’s structure is its commitment to scaling up and replicating the work of outside partners with proven track records in development. Several internationally known organizations from Africa and elsewhere are being mobilized to take part in that aspect of the program. Based on extensive research that identified the main barriers to business growth in Africa, the program will focus on three areas:
Access to Financial Services
—establishment of viable new microfinance institutions, improvement of the ability of local banks to lend profitably and development of innovative vehicles to supply risk capital to small businesses.
Capacity Building and Business Development Services
—strengthening of managerial and technical capacity of small businesses by stimulating both demand and supply within the business development market. The program will also focus on industry-specific programs to link these enterprises with large corporates through integration of supply-chain activities.
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Investment Climate and Enabling Environment
—introduction of reforms that facilitate dialogue between the public and the private sectors and improve the functioning and advocacy role of business associations.
The IDA-IFC initiative will be managed primarily by a single department that will coordinate with other relevant IFC and World Bank divisions and field offices. A mid-term review will be undertaken to evaluate possibilities for a roll-out of the program to other countries.
While specific country programs will be tailored to local realities, there will be a regional management structure to ensure the sharing of approaches and instruments and to provide the overall monitoring and evaluation of the program.
