World Bank and German government pledges to infuse cash into microcredit

Both the World Bank and the German government have pledged to put some cash into microcredit banks. They plan on spending $500 million dollars and hope to withdraw the money when the credit crisis is over.

Some microcredit institutions have had trouble securing extra funds during the world's credit crisis.

The International Herald Tribune writer Carter Daugherty details the plan.

"You have some viable projects here where the financing has simply dried up," the World Bank president, Robert Zoellick, said by telephone from Berlin, where he and the heads of other leading economic organizations met with Chancellor Angela Merkel.

The microcredit investment fund is part of a broader effort by the bank and other development agencies to mobilize rich-country cash for poorer countries during the credit crisis, Zoellick said. Other funds are focused on infrastructure projects, bank recapitalization and trade finance.

Microcredit institutions, which generally make tiny loans of $100 or less to individuals or small businesses, gained attention in the 1990s as a way to foster private enterprise in poor countries. In 2006, Mohammed Yunus, the founder of the Grameen Bank in Bangladesh, one of the first microbanks, won the Nobel Peace Prize for his work.

Though many banks were seeded with money from western aid agencies, a long process of drawing more investment from private sources was well under way - until the credit crisis began in August 2007.

"In general, there was a lot of momentum from the private sector," said Jack Lowe, president of BlueOrchard Finance, one of the firms that have been selected to manage the new fund. "But when you have the wind at your back and financial markets are heady, it is easier to raise money."

Under the plan, the World Bank would initially provide $150 million alongside another $130 million from the German government. Zoellick said the bank was soliciting contributions from other countries and agencies, and hopes to mobilize up to $600 million. That would be enough to help 150-200 microfinance banks based in 40 developing countries, he said.

German assistance pledge to Bangladesh

German Foreign Secretary Reinhard Silberberg made pledges of continued aid to help meet the Millennium Development Goals during a recent visit to Bangladesh. Secretary Silberberg also pledged to continue aid to Bangladesh despite the current financial credit crisis.

Bangladeshi newspaper The Daily Star made record of the visit and pledge.

Silberberg who had one and a-half-hour discussions on trade, investment, aid and cooperation in international arena said, “We will keep high level of assistance and increase step by step as we promised as part of the Millennium Development Goals (MDG) policy and this is a commitment that we will not put into dark.”

Germany has so far provided 4.4 billion euros (5.8 billion dollars) as direct assistance or indirect multilateral aid contributions to help combat poverty, protect human rights and achieve economic development.

On German investment in Bangladesh, he said the investment is made by private companies adding, “What we can do we can talk about to improve the framework for foreign investment.” He, however, said, “I think something could be done for further improvement of environment for foreign investment.”

About bilateral trade, he said Bangladesh has been enjoying trade surplus with Germany and EU, saying, “We have positive trend in bilateral trade and we favour a lot of Bangladeshi exports.”

Germany is the second-largest export destination for Bangladesh after the United States. The annual trade volume between the two countries is set to reach about 2 billion euros, with Bangladesh enjoying a trade surplus of more than 1.3 billion euros annually.

Merkel charms rural women from Pune

from the Financial Express

German chancellor Angela Merkel on Wednesday met a group of rural women who were part of a Pune-based self help group (SHG) to discussed about the impact of SHGs in their lives.

Merkel visited the National Bank for Agricultural and Rural Development (NABARD), which initiated the SHG Bank Linkage Programme with the German Technical Co-operation (GTZ) on behalf of the Federal Ministry for Economic Co-operation and Development from Germany.

During her interaction with rural women, Merkel was so engrossed that her short stint supposed to be for seven minutes went on for more than 45 minutes. Her attempted to understand the problems faced by the rural women and the kind of assistance they required.

Merkel visited a handicrafts exhibition displaying the works from Andhra Pradesh, Maharashtra, Rajasthan, and West Bengal. Merkel’s kind gesture touched the hearts of rural women. She also reviewed an array of rural development projects taken up by NABARD in collaboration with KfW and GTZ, the German development agencies mainly in the field of watershed, tribal development and microcredit.

Germany Joins Forces with Britain to Fight Poverty in Africa

from Deutsche Welle

Germany and Britain have announced that they are to join forces to help Africa. The two countries' development aid ministers vowed to better coordinate and extend their policies during Berlin's G8 and EU presidencies.

German Development Minister Heidemarie Wieczorek-Zeul and Britain's International Development Secretary Hilary Benn recalled the success of Germany's debt cancellation initiative which has freed enormous resources in many of the world's poorest nations.

Both ministers agreed that everything must be done to preserve the spirit of the previous G8 meeting in Gleneagles, Scotland, and see to it that promises of financial aid for Africa must be fulfilled without any if or buts. Benn welcomed announcements made in Berlin that development policies would remain a top priority throughout Germany's current G8 and EU presidencies.

Benn welcomes German emphasis on development

"If we care about the future of this small and fragile planet of ours, we must be moved by the conditions of fellow human beings, children who can't yet go to primary school at the beginning of the 21st century, children who die of diseases that our children don't die of in the rich world," Benn said. "And we have both a moral and a practical responsibility to play a part.

"That's why we welcome enormously the focus which Germany and its G8 and EU presidencies is putting on development, on education, the fight against HIV and AIDS, good governance and honoring the promises which we have made."

Wieczorek-Zeul warned that climate change could have a devastating impact on Africa, wiping out all benefits from earlier and current measures to help the continent. She reiterated her call on the industrialized world and threshold nations to heed the writings on the wall.

Wieczorek-Zeul highlights importance of renewables

"We'll have to spend 20 times as much on curbing climate change effects in future if we don't act now," the German minister said. "This is why the promotion of renewable energy and energy efficiency are central planks of our policies during our G8 and EU presidencies.

It's clear that increased cooperation in this area among our countries is to gain currency."

Wieczorek-Zeul's British counterpart added that efforts had to be increased to arrive at a fair international trade order.

"We have to be determined not to give up the fight to get a trade deal that allows developing countries to earn their way out of poverty," Benn said. "Because in the end they don't want charity. They don't to be patted on the head by the rest of the world. They want a chance to do it for themselves.

"The trouble is we're stuck," he continued. "We've got three big blocs. We have Europe, we have the US, we have the big developing countries China, India and Brazil, and each is saying to the other we think we've made a good offer -- it's up to you to move. But we must not lose this most important opportunity.

Wieczorek-Zeul and Benn also indicated that the G8 summit at Heiligendamm in June this year would have something special in store for the developing world. However, both ministers refused to be more specific, as preparations for the meeting have only recently started.