Iyabo Masha, director of the Intergovernmental Group of Twenty-Four, has spent decades handling the fault lines between wealthy economies and developing nations. In a recent interview, she outlined how countries in Africa, Asia, Latin America, and the Caribbean should position themselves in an era of tightening credit, rising protectionism, and chronic infrastructure shortfalls.
When should central banks act
Masha, who previously worked at the International Monetary Fund negotiating lending programmes for emerging markets, argues that central banks face a fundamentally different challenge when inflation stems from external shocks rather than domestic demand pressure. “The main mandate of a central bank is to fight inflation which helps to promote economic growth, employment generation, and all the other indicators,” she said. But the calculus changes when the driver is not runaway consumer spending but a sudden spike in commodity prices.
Oil serves as the input for more than 200 industrial products worldwide, according to Masha. An energy shock that goes unaddressed can ripple through an entire economy. Yet she cautions against reflexive rate hikes. “If it’s going to be temporary, the best thing is not to increase the interest rate because that also complicates other things,” she said. The key judgment call is whether the price pressure will snowball into sustained wage growth. Central banks have extensive data at their disposal, she added, allowing them to distinguish between transitory price moves and something that threatens broader economic stability.
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The borrowing cost problem
Developing nations face borrowing costs that often run three to four times higher than those paid by advanced economies. Masha points to a fundamental flaw in how credit agencies assess risk. “The way credit agencies frame their methodology is just based on income,” she said. “But if they take into consideration the long-term potential of an economy or the endowments of an economy, then they may be able to rate the economy in such a way that the interest rates will be lower.”
The G20 presidency under South Africa commissioned a study on this disparity, producing a set of recommendations that the G-24 continues to push. The group also sees a larger role for multilateral lenders. “If they are able to provide more financing to the countries, demand for loans from the private market creditors will reduce,” Masha said. Some multilateral loans carry zero interest.
This dynamic matters because private market rates can cripple development budgets. When a country spends heavily on debt service, less remains for health, education, or infrastructure. The gap between what wealthy nations and developing nations pay to borrow creates a compounding disadvantage that standard credit ratings fail to capture, in Masha’s view.
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Infrastructure and the missing public investor
Nigeria faces a nearly $100 billion annual infrastructure funding gap, a figure that illustrates a broader pattern across the developing world. Masha notes that major infrastructure has historically been a public sector function. “In most cases the return is low and that’s why at least 90 to 99 percent all over the world, major infrastructure are public sector projects,” she said. Private investors demand higher returns, which makes them ill-suited to fund roads, ports, or power grids at the scale required.
Between 30 and 40 years ago, the World Bank financed much of this work. The Kanji Dam, major ports, and rail lines across Africa and elsewhere bore the Bank’s imprint. But roughly 20 to 25 years ago, the institution shifted away from infrastructure financing. That retreat forced many countries toward private markets they were not well-equipped to access on favorable terms.
The G-24 has been pressing the World Bank to return to infrastructure lending. Last year, the Bank launched new energy projects for Africa. “The discussion has started,” Masha said. “It may take a long time before results begin to show but it is already in the works.” The outcome of those conversations could reshape development finance for decades.
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A three-part prescription for African nations
Masha’s advice to African governments amounts to a three-part framework. First, maximize available multilateral resources from the World Bank, IMF, and regional development banks. Second, pursue bilateral assistance where it still exists, even as overseas support has diminished from historical peaks. Third, and most critically, prioritize domestic policy design.
“No international organisation can know your economy better than you do,” she said. “The partnership is important but the countries should be at the drivers’ seat.” That message runs counter to narratives that emphasize external assistance as the primary engine of growth. Masha’s record at the G-24, which coordinates developing country positions in IMF and World Bank negotiations, suggests she holds institutions accountable while still recognizing their value. The tension between those two convictions defines much of her current work.
