Jim Yong Kim, President of the World Bank Group, on what the group is doing to support growth and economic development in the northeast of Nigeria and bolstering entrepreneurship among the country's youth.

What can you tell us about the World Bank's intervention in Nigeria's power sector, and what is the World Bank doing to support areas in the northeastern part ravaged by the Boko Haram terrorists?

In my very first meeting with President Buhari, he said, specifically, that he would like us to support the northern regions of Nigeria, and we have done that. The work there has been very difficult. Nigeria, of course, has suffered from the drop in the oil prices. Things are just now getting better, but the conversation we need to have with Nigeria, I believe, is in many ways related to the theme that I brought to the table just recently, which is investment in human capital. The percentage of GDP that Nigeria spends on healthcare is less than
1%. Despite the fact that there is so much turbulence in the northern part of the country and hit taken from the drop in the oil prices, Nigeria has to think ahead by investing in its people and investing in the things that will allow Nigeria to thrive. A rapidly growing, private-sector led economy in the future is what the country has to focus on right now. It cannot rely just on oil prices going back up. It has to think: what are going to be the sources of growth in the future for Nigeria, in what will surely be a more digitalized economy? And this is true for most of Africa. If you look at the numbers in terms of how successfully African countries have invested into human capital versus other regions, there is a real issue. And so, over this next year, not only in Nigeria but in all of Africa, we are going to focus on accelerating investments in people—in human capital we call it—including health, education, and social protection so that Africa can prepare itself for the next phase in economic development. One of the real questions that we all have is regarding our traditional notions of economic growth, which include agriculture, light industry, and heavy industry, and how many countries in Africa will actually experience that. We must question, do we need to really think about another kind of path to economic growth that is focused on a SMEs and entrepreneurship as they have in other parts of the world? We still do not know that. However, the one thing we know is that better health and education outcomes will be critical no matter what the global economy looks like. Therefore, yes support the recovery and peace building in the north, hope that as commodity prices stabilize, oil prices come back up and the economy will grow a bit more, but very much focus on what the drivers of growth in the future will be and on mobilizing domestic revenues for investments in people.

One of the key features of the African economy today is the rise of start-ups and young entrepreneurs. What kind of support is the World Bank giving in terms of assistance to support this group of young people?

It is difficult for major institutions such as ours to give the relatively small amounts of money that are required for SMEs. That is why we are working with companies like Alibaba. Alibaba in China has developed a system where within five seconds, literally within five seconds, they can provide loans to SMEs for up to USD160,000. And they do that solely based on the online activity. So, online activity for Alibaba is a better measure of credit worthiness than the traditional processes that we call “know your customer" (KYC). We are looking to see if we can utilize some of these methods, these rapid disbursements of capital to SMEs, in Africa. Right now, the answer is not yet, because we do not have enough information on online behavior. Jack Ma, the CEO of Alibaba, recently visited Kenya because it is probably the one country that has the most information on people's online behavior, as 98% of Kenyans do some form of financial transactions online. Within Africa, we have to be much more creative. We are looking at future drivers of growth, and whether they will be traditional drivers like industry or something less conventional like investing in human capital. And then, we are looking at innovative ways of moving capital, moving capital quickly and efficiently to people who are going to start promising businesses, is probably a major direction we have to go. Right now, it is still pretty slow and difficult because we are always working with financial intermediaries, which makes things much more difficult for us.*

*Excerpted from his remarks at the opening press conference in Washington, DC in October 2017.