Business
World Bank To Lend $5bn To Africa
The World Bank’s investment arm will increase lending to sub-Saharan African countries by up to a quarter this year as private sector companies flock to the fast-growing region.
The Vice-President, International Finance Corporation, an arm of the World Bank, Mr. Jean-Philippe Prosper, said the IFC would make new investments of between $4.5bn and $5bn for the fiscal year ending in June, up from $4bn the previous year.
The least developed continent is experiencing an economic growth surge, outpacing global averages.
The World Bank sees sub-Saharan Africa’s Gross Domestic Product accelerating to more than five per cent over three years, driven by investment and commodity prices.
Prosper said projects to upgrade infrastructure for the region’s one billion people were attracting yield-hungry investors, while governments were keen to share the costs to free budget resources for poverty relief.
Reuters quoted Prosper as saying, “In the past, nobody wanted to talk about Africa. Now more people are coming. We would not be able do this level of financing without private sector projects. We did not invent these projects ourselves.”
Roughly half the IFC’s annual lending in the region goes to financial markets and institutions to help improve the flow of credit to small businesses, which employ most of Africa’s workers.
Another third goes to infrastructure projects – mostly transport and electricity – and natural resources investments.
The IFC holds a five per cent stake in the giant Simandou south iron ore project in Guinea, managed by Rio Tinto, which was due to start production in 2015 but has been hit by lower iron prices and political and regulatory concerns.
Prosper, who met Guinean officials last week, voiced confidence the $15-$20bn project would go ahead.
There have been doubts the government can finance its 51 per cent stake in a 700 km (430 mile) railway and offshore loading berth.
“Our discussions were extremely positive. There was interest from government officials to go ahead with the project,” he said. “Simandou is a good test. If it works, you will be amazed by the level of investment which will follow in Guinea.”