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Thursday, 2 May, 2002, 16:19 GMT 17:19 UK
IMF calls for small business loans
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by Andrew Walker
BBC economics correspondent in Abidjan, Ivory Coast

Andrew Walker is travelling with IMF boss Horst Koehler on a five-nation tour of Africa. Further reports will follow.

The International Monetary Fund boss says he wants the World Bank to focus more on credit for small businesses.

The IMF Managing Director Horst Koehler was speaking during a visit to the Ivory Coast capital Abidjan, the third stop in a five country tour of Africa.

He says he will be raising the issue of what is called micro-finance with the World Bank President James Wolfensohn when he gets back to Washington.

Mr Koehler says he would like the International Finance Corporation, the World Bank's arm for lending to the private sector, to make more small loans.

Mr Koehler has been banging the drum for small scale credit on a number of occasions during his African tour. It is a bit of a departure from the IMF's traditional focus on encouraging countries to achieve economic stability - achieving low inflation and strong government finances as a foundation for sustainable economic growth.

Growth alone not enough

Mr Koehler says that growth alone is not enough to reduce poverty. He says policies need to be focussed on poverty and creating jobs.

Much of Africa's poverty is concentrated in rural areas. It can be hard for new businesses to get started in such an environment. It is particularly difficult to raise loans for investment, but Mr Koehler sees opportunities for small enterprises as key to tackling poverty in Africa.

Much of Mr Koehler's tour has been about poverty reduction strategies.

In 1999, the IMF and the World Bank adopted a new approach to the developing world that explicitly emphasises poverty reduction and participation in shaping the policy.

Mr Koehler got a taste of this participation in Abidjan's Chamber of Commerce in a series of robust interventions from business, trade union and women's organisation representatives.

Aid to come

Earlier in April Ivory Coast received the first instalment of a $366m IMF poverty reduction loan.

It could qualify for an IMF and World Bank debt relief in due course if it makes sufficient progress with policy reforms.

Mr Koehler said it is clear there is a lot of unfinished business in Ivory Coast, especially the need to fight corruption and strengthen the respect for the rule of law. The Ivory Coast had strayed from the IMF path in recent years, with the IMF and other donors' uneasy over corruption.

A coup in 1999 deepened concerns, but more recently a degree of political stability has returned, and with it Western interest in providing aid and debt relief.

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