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
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.
● 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