Thursday, May 14, 2009

New Coordinated Aid Effort For Africa

The Examiner
Voice of America

In addition to fresh aid promises from the IMF, Africa will benefit from a new coordinated effort to raise up to $15 billion in capital for the continent. Led by the African Development Bank, major investors include the French Development Agency, the European Investment Bank, the Development Bank of Southern Africa, German Financial Cooperation, the World Bank, and the International Islamic Trade Finance Corporation.

The new funding is also on top of the $5 billion of funding that the AfDB provided in 2008, which was up 14% from 2007. The purpose of the coordination is to pool resources together in order to better serve Africa. As AfDB President Donald Kaberuka said, “Beyond actions taken by individual institutions, the need to join forces and pool resources and expertise cannot be overemphasized. The scope and magnitude of the current global financial crisis compels us to look for innovative means to work with maximum collaboration to increase our support to the private sector in Africa. We must act now. Through this partnership, we can make a difference.”

The $15 billion will go towards two goals. First, to help with humanitarian efforts that seek to address the toll the credit crisis. Additionally, the money will help with long-term structural issues, such as infrastructure, that have slowed Africa’s economic growth in the past. One concern, however, is how the AfDB will divvy the money out, and what the conditions of the loans will be. Regardless, the fund is good news for the credit starved Africa.

1) Should the AfDB give preference to African countries that have been strong economically in order to ensure that the big gain are not lost, or should it use the money to offer poorer countries an opportunity?
2) Is the AfDB the best conduit for such a pooling effort?

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