More Money to Help Africa Weather Financial Crisis

By Scott Stearns

Dakar
12 May 2009

Africa's biggest investors and lenders are making available another $15 billion to help the continent weather the global financial crisis.

The $15 billion is meant to promote trade, strengthen Africa's financial sector, and increase lending for agricultural projects, infrastructure, and small- and medium-size businesses.

The increased support to help Africa cope with the global financial crisis is a coordinated response from the African Development Bank, 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.

Those agencies say pooling resources enables African governments to more effectively reduce the humanitarian costs of the global economic slowdown while addressing longer-term structural issues that have traditionally hampered growth.

Opening the African Development Bank's annual meeting in Dakar, Treasurer Pierre Van Peteghem says the agency has been meeting the challenges of the financial crisis with more than $5 billion worth of grants and loans approved last year. That is up nearly 14 percent from 2007.

Van Peteghem says the principle task for the bank in this difficult time is accelerating support for countries that are economically distressed, particularly those who no longer have enough equity to meet emergency expenses.

He says the African Development Bank is working to maintain commercial flows affected by the significant withdrawal of foreign banks which have caused local banks to lose their lines of credit and have thus undercut financing for infrastructure.

Van Peteghem says the Bank's response to the financial crisis aims to limit the danger of economic recession and the negative effect that would have on meeting United Nations millennium development goals.

He says the slowdown could wipe out African gains in the recent past with economic crises leading to financial and social crises as growth slows and debt is more difficult to repay.

The bank expects falling commodity prices will result in average African budget deficits of more than five percent for 2009, compared to an average three percent surplus last year.