London, June 16, GNA – More than $80 billion is to be invested in Africa’s private sector over the next five years by the Group of Seven (G7) nations, the African Development Bank, the World Bank and other multilateral finance institutions to help boost jobs across the continent.
This is the first time that G7 Development Finance Institutions (DFIs) have come together to make a collective commitment on investing in Africa – a decision taken at the just-ended G7 summit hosted by the UK.
The investments are expected to support the long-term development objectives of African economies, including those that have been negatively hit by the COVID-19 pandemic.
The UK Minister for Africa, James Duddridge, said: “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 investment is seen as is a welcome boost to support the long-term development objectives of African economies.
The IMF estimates that sub-Saharan Africa needs additional financing of around $425 billion between now and 2025 to help strengthen the pandemic response spending and reduce poverty in the region.
Solomon Quaynor, African Development Bank Vice President for Private Sector, Infrastructure and Industrialisation, said: “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.
“Given the gap between the IMF estimates and what this partnership is committing to, we will seek to crowd-in African development partners, as well as African savings from SWFs [sovereign wealth funds], pensions, and insurance pools, estimated to have $1.8 trillion AUM [assets under management].”
The International Finance Corporation (IFC), part of the World Bank Group and the largest global development institution, focusing on the private sector in developing countries, welcomed the partnership.
Its Managing Director Makhtar Diop, said: “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.”
The G7 DFIs are made up of the various overseas development assistance agencies in the UK, France, Japan, the US, Canada, Germany and Italy.
The $80 billion commitment is also supported by the European Bank for Reconstruction and Development and the European Investment Bank.
Each DFI has its own investment criteria, which are aligned to an assessment of need to achieve development impact across a range of sectors.
DFIs help to build markets, reduce risk and pave the way for other investors to enter new markets.
The UK’s CDC Group, which invests in private sector businesses in Africa and South Asia, will draw its investments in Africa over the next five years from existing capital and focus on renewable power, infrastructure, manufacturing, agriculture and technology sectors.
These investments will provide clean, reliable power to millions of people, give underserved markets better access to finance, and help create jobs and reduce poverty.
Previous UK investments, through the CDC Group, have helped more than 9.9 million people in East Africa light their homes through solar panel technology, contributed more than 40 per cent of the installed electricity capacity in Kenya, Uganda, and Benin and added more than 18,000km of fibre optic cabling from Cairo to Cape Town.
Nick O’Donohoe, the CEO of CDC Group, said: “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.”
GNA