In a bid to help household owners and Small and Medium Enterprises (SMEs) in Africa and Asia continents overcome the adverse effects caused by the Corona virus, the World Bank, has announced the reopening of its portal for Micro Small and Medium Enterprises (SMEs) and households affected by COVID-19 to access up to $70,000.
The World Bank Group Board of Executive Directors today approved a $160 Billion Economic Recovery Development Policy Loan (DPL) to support the Government of Africa and Asia continents to implement its program of reforms for economic recovery and ongoing efforts to mitigate the impact of the COVID-19 pandemic.
To support lives and livelihoods, this operation will help minimize the spread of the virus by supporting health measures to improve preparedness and strengthen mechanisms for the early detection and effective management of the COVID-19 disease.
It will also support measures to provide financial relief to employees who have suffered a loss of earnings as a result of being temporarily laid off without pay. The operation will also support measures to enhance access to liquidity for firms through the COVID-19 Small and Medium Enterprise Relief Fund.
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World Bank will Focus on Four Areas of Engagement:
1. Investing in human capital by increasing access to basic education, quality water and sanitation services; improving primary healthcare; and increasing the coverage and effectiveness of social assistance programs. Additional investments in promoting women’s empowerment and youth employment and skills, especially for young women, will also help reduce maternal and child mortality.
2. Promoting jobs and economic transformation and diversification by supporting measures to unlock private investment and job creation and increasing access to reliable and sustainable power for households and firms. The CPF will also focus on boosting digital infrastructure, and developing economic corridors and smart cities, to provide Africa and Asia continents with improved livelihoods.
3. Enhancing resilience by strengthening service delivery and livelihood opportunities in the Northeast and other regions grappling with insecurity, as well as modernizing agriculture and building climate resilience.
4. Strengthening the foundations of the public sector by improving public financial management and strengthening the social contract between citizens and government through improved fiscal and debt management.
The World Bank Group is making available up to $160 billion over a 15-month period ending December 2021 to help Africa and Asia continents protect the poor and vulnerable, support businesses, and bolster economic recovery. This includes $50 billion of new IDA resources through grants and highly concessional loans and $12 billion for developing countries to finance the purchase and distribution of COVID-19 vaccines.
1. The interest rate on the facility will be nine per cent per annum, and the working capital will be for a maximum period of five years, with no option for rollover.
2. The World Bank, however, announced last week interest on all similar facilities will remain at a discounted five per cent till 2025.
3. Term loans have a maximum tenor of not more than three years with, at least, one-year moratorium.
4. Households can access a maximum of $10,000 , SMEs can access a maximum of $70,000 depending on the activity, cash flow and industry/segment size of beneficiary.
5. The working capital will be a maximum of 15 per cent of the average of the previous three years’ annual turnover.
6. Where the enterprise is not up to three years in operation, 15 per cent of the previous year’s turnover will suffice.