Magazine article New Internationalist

Better to Chuck the Money out the Window: Peter Griffiths Recalls a Classic Example of the World Bank in Action in Africa [From: The Economist's Tale]

Magazine article New Internationalist

Better to Chuck the Money out the Window: Peter Griffiths Recalls a Classic Example of the World Bank in Action in Africa [From: The Economist's Tale]

Article excerpt

Freetown, Wednesday 26 September 1986

I SAT in as an observer at a meeting on the supply of credit to farmers as a way of increasing production. A Danish consultant was presenting his final report on a World Bank credit scheme to the Ministry of Agriculture.

Last year the World Bank lent Sierra Leone a million dollars for a credit scheme, when the exchange rate was seven leones to the dollar. This gave a credit fund of seven million leones. Administration of the loan cost seven leones for every leone lent out, so only one million leones were lent out. A World Bank staff member did the administration, so they cannot blame the incompetence of the local civil service.

Then when the time came to collect the money, only a tenth of the money could be recovered - 100,000 leones. This recovery rate squares with what I saw up-country. It is what is to be expected when prices are so low that it is uneconomic to buy fertilizers and sprays. A certain amount of dishonesty by the credit officers also helps.

Today the leone is worth a fifth of its old value and it could be worth a tenth by the time the money has to be repaid. …

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