African businesses should consider swaps- World Bank Prez


World Bank President Dr. Jim Yong Kim has urged African companies and businesses to explore the issue of ‘swapping’ among other multinationals in order to help feed the poorest countries globally.

“We have both the African Development Bank and the World Bank; we have a very good triple-A rating while most companies do not; we use that to go out on the market and borrow money at a very low rate and then we pass those savings on. What we also do is ask some of our bilateral friends to buy down the interest so we can give it to countries at even lower terms. We are beginning to do that. We are beginning to do swaps.”

Speaking at a forum on ‘Shared Prosperity’ at the University of Ghana in Accra — with panelists including Minister of Education Professor Naana Jane Opoku Agyeman; Dr. Akinwumi Adesina, President of African Development Bank; and Tony Elumelu, international business magnate and entrepreneur – Dr. Kim said: “The African Development Bank is over-concentrated on Africa, and we are also concentrated on certain countries. We can actually swap our exposures so we can provide more financing for some of the poorest countries”.

He bemoaned the “traditional and conservative” nature of multilateral development banks, and suggested that “we need to be tricky and innovative” in trying to end poverty.

He urged governments in Africa to “listen to the young folk and the women”, who he reckons when empowered can propel change in a rising continent.

The World Bank President also said the bank’s mission is to end poverty by 2030 and to boost shared prosperity for the bottom-40 percent of the populations in developing countries.

“Global poverty is now below 10 percent. This is the first time that the percentage of those living in extreme poverty has fallen into the single-digits,” he said.

Today, Ghana and all developing countries face a significant major global economic slowdown, which will have great impact on the bank’s efforts to end extreme poverty. “That means all African leaders must take tough decisions to grow their economies, invest in their people and build safety nets so people don’t fall back into poverty. These tough economic times also means that Africans must demand that their leaders make these tough choices to grow economies in the ways that include women, young people and all who are poor.”

Minister for Education Naana Jane Opoku Agyeman maintained that in order to end poverty in Africa, governments must focus on quality, relevant education delivered to the right people.

Tony Elumelu, a Nigerian international entrepreneur, believes that “creation of employment and embracing local value and industralisation” are the surest ways for Africa to combat poverty.

Ghana has been able to tackle poverty over the last 20 years – reducing it from 51 percent to just over 20 percent, the World Bank report on Poverty in a Rising Africa claims.

Despite the strong growth performance during the past two decades, the report also revealed that Ghana is facing deteriorating macroeconomic prospects. Since 2014, GDP growth has halved and is projected to slow further to 3.4 percent in 2015, as energy rationing, high inflation and ongoing fiscal consolidation continue to weigh on economic activity.

Simulations indicate that the decline in household purchasing power alone could cause an increase in the current poverty rate of about 5 percent, with the urban lower deciles being the most affected, the report found out.