Development finance institutions (DFIs) of the Group of Seven (G7) economies, together with several multilateral partners, have announced their commitment to investing $80-billion in the private sector over the next five years to support sustainable economic recovery and growth in Africa.
Among those contributing are the International Finance Corporation, the private sector arm of the African Development Bank (AfDB), the European Bank for Reconstruction and Development and the European Investment Bank (EIB).
UK Africa Minister James Duddridge says the investment will create jobs, boost economic growth, help tackle climate change and fight poverty. “It comes at a crucial time as the continent rebuilds its economies, severely impacted by Covid-19.”
The G7’s DFIs include the CDC, Proparco (France), JICA and JBIC (Japan), the US International Development Finance Corporation, or DFC (the US), FinDev (Canada), DEG (Germany) and Cassa Depositi e Prestiti (Italy).
The International Monetary Fund (IMF) estimates that sub-Saharan Africa needs additional funding of about $425-billion between now and 2025 to help strengthen the pandemic response spending and reduce poverty in the region.
With the Covid-19 pandemic inflicting a severe global economic and health crisis, the G7 notes in a statement that the investment will boost and support the long-term development objectives of African economies that have been negatively impacted by the crisis.
The G7 economies also state that this is the first time its DFIs have come together to make a collective partnership commitment to the African continent.
AfDB private sector, infrastructure and industrialisation VP Solomon Quaynor says this global partnership is welcomed, as is the opportunity to provide the African voice, "as Africa builds back better and boldly".
“The opportunity to create jobs particularly for youth and women, from a focus on industrialising Africa underpinned by the African Continental Free Trade Area, will be our priority,” he says.
Quaynor adds that considering the gap between the IMF estimates and what this partnership is committing to, the AfDB will seek to crowd-in African development partners, as well as African savings from sovereign wealth funds, pensions and insurance pools, estimated to have $1.8-trillion in assets under management.”
CDC Group CEO Nick O’Donohoe says the capital that DFIs provide is urgently needed if African economies are to start to rebuild quickly from the impact of the pandemic. “CDC is committed to building long term investment partnerships in Africa that fuel sustainable private sector growth in support of the UN’s Sustainable Development Goals.”
EIB president Werner Hoyer says that, in 2020, the bank’s engagement in Africa, as part of Team Europe, represented the largest ever support for climate action and investment in fragile States in 55 years of EIB operations on the continent.
IFC MD Makhtar Diop says that the private sector will play a major role in financing Africa’s future by creating millions of jobs that are essential to ensuring sustained economic growth and poverty reduction.
DFC COO David Marchick says that under President Joe Biden’s leadership, investing more in Africa is a top priority for the institution in fulfilling its development mandate.
“DFC is proud to be doubling down on our commitment to Africa alongside our G7 and multilateral partners and will continue to prioritize investments in vaccine manufacturing, Covid-19 response, climate mitigation and adaptation, and gender equity on the African continent,” he says.
Cassa Depositi e Prestiti CEO Dario Scannapieco, notes that closer collaboration among DFIs and multilateral partners is an essential factor in fostering sustainable economic recovery and growth in Africa.