The President of the World Bank Group, Dr. Jim Yong Kim, says Ghana and other countries in Africa are not at risk of a debt crisis.
At a press conference at the 2016 World Bank, International Monetary Fund (IMF) Annual Meetings in Washington, DC, United State of America (USA), Dr. Kim said debt levels in most sub-Saharan Africa countries, including Ghana, were sustainable.
“I am not yet concerned that we’re reaching a debt crisis level; certainly not in most of sub-Saharan Africa,” he said, adding: “If you look at debt to Gross Domestic Product (GDP) ratios, they’re still, in most of Africa, still pretty reasonable.”
The World Bank boss was worried about the growth in the sub-region which was pegged at 1.6 per cent and expected to rise to 2.9 per cent in 2017.
“This is in the context of a population growth of three per cent. If growth can’t keep up with population growth, that’s essentially negative growth and so we’re very worried about that. It has a lot to do with falling commodity prices. If there’s any good news, it would be that commodity prices seem to have bottomed out,” he said.
Dr. Kim expressed concern over the slow pace of efforts to end extreme poverty by 2030 and boost shared prosperity.
He pointed to a new World Bank report that lay out how income inequality among all the people in the world had decreased and inequality within nations had been falling in many countries, both rich and poor.
“This means that not only do we need to focus on growth but we must also continue our work to reduce inequality, we have to make growth more equitable,” he stated.
He called for a major ramp up in infrastructure finance to boost economic growth, with far greater public-private cooperation on infrastructure investment.
He said at the same time, with increasing reliance on private sector investments, the World Bank Group would have to increase its vigilance to ensure that privatisation did not equal the exclusion of the poor and marginalised.
“Our top priority is to end extreme poverty and boost shared prosperity and our engagement with the private sector must be anchored in these two core values,” he noted.
On the second pillar, investing in human capital, Dr. Kim stated that making investments in the earliest part of people’s lives would make a big difference in countries’ ability to compete.
“Governments that do not invest early in a skilled, healthy, productive workforce are undermining their current and future economic growth,” he stated.
“We need to help countries understand that investments in human capital are just as critical as investments in ‘hard infrastructure’ if they actually want to spur economic growth and compete effectively in the short, medium and long term,” he added.
He stated that those investments would not only lead to inclusive economic growth but also establish the social foundation that could act as a bulwark against instability, violence and conflict.
He said if those investments in people were not made quickly, “not only is it a recipe for poor economic growth but we will leave a large population of people living in countries where the traditional low skilled jobs are not available and who, often through no fault of theirs, simply cannot compete”.
“To allow this to happen is to sow the seeds of future crises – crises that we can ill afford. Indeed, one of the themes that came up repeatedly during the G20 leaders’ meeting is that we are living in a time of multiple overlapping crises,” Dr. Kim warned.
To meet the challenges of those crises, he outlined the third pillar of the bank’s approach — a much-expanded role in fostering resilience in client countries against some of the most severe shocks that threaten to roll back decades of their progress against poverty.