Africa is getting a host of investments lately. Last week, we reported that DEG partnered with UBA to support SMEs in Nigeria, and now, the G7 Development Finance Institutions, in conjunction with some partners, will be investing the sum of $80 million in Africa's private sector for the next five years to scale economic growth in the region.
The multilateral partners include the IFC, the private sector arm of the African Development Bank, EBRD and the European Investment.
The African Development Bank (AfDB), in a statement, revealed the information relating to this plan. Let's have a look at what some of the stakeholders are saying about this deal.
“The UK is proud to back this commitment by world leaders at the G7 Summit to invest more than $80 billion in Africa’s private sector over the next 5 years. This 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 UK Minister for Africa, James Duddridge
“The patient, high quality 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.” Nick O’Donohoe, the CEO of CDC Group
“Ensuring an inclusive and sustainable recovery for people, businesses and economies across Africa in coordination with our development partners, is at the core of IFC’s development mandate today. We know 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. We therefore welcome this important partnership and are proud to provide financing and to work with partners to help create the right conditions to bring more private investment to Africa.” Makhtar Diop, IFC’s Managing Director
“The EIB welcomes G7 leadership to enhance support for high-impact investment across Africa during and after the pandemic. Last year the EU 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. We stand ready to cooperate further with African and multilateral partners to tackle both COVID-19 and accelerate the green transition in Africa.” Werner Hoyer, President of the European Investment Bank.
“Many of our African partner countries have been hit hard by the pandemic. We quickly developed new services to support private sector SME and to help protecting jobs and livelihoods. In Africa, DEG has always been specifically committed to creating prospects for the young, growing population. In addition to the continuing massive impact of Covid-19 we expect a further acceleration of the challenges connected to developments such as digitization and climate change. Therefore DEG welcomes and is proud to be part of the G7 DFI Africa initiative”. Monika Beck, member of the DEG-Management Board.
The DFIs are making their debut in Africa as this is the first they are investing in the region. They include CDC, Proparco (France), JICA and JBIC (Japan), DFC (US), FinDev Canada (Canada), DEG (Germany) and CDP (Italy). This commitment is also supported by the IFC, the Africa Development Bank, the European Bank for Reconstruction and Development and the European Investment Bank.
DFIs play an essential role in helping to build markets, mitigate risk and pave the way for other investors to enter new markets. It is important to note that each DFI has its investment criteria aligned to an assessment of the need to achieve development impact across a range of sectors.
Sub-Saharan African in focus
GDP: $1.767 trillion compared to East Asia and Pacific's $26.925 trillion in 2019
Population: 1.107 billion compared to East Asia and Pacific's 2.341 billion in 2019
GDP per capita: $1,596 compared to East Asia and Pacific's $11,502 in 2019