It is the first time the G7 DFIs have come together to make a collective partnership commitment to the African continen
As the G7 summit comes to a close, G7 Development finance institutions (DFIs) are collaborating with several multilateral partners to invest investing $80-billion in Africa’s private sector over the next five years to support sustainable economic recovery and growth in the continent.
Contributing will be the G7 DFIs, the International Finance Corporation (IFC), the private sector arm of the African Development Bank (AfDB), the European Bank for Reconstruction and Development (EBRD), and the European Investment Bank (EIB).
With the on-going pandemic, the investment aims to boost support for the long-term development objectives of African economies that have been negatively impacted by the crisis.
It is the first time the G7 DFIs have come together to make a collective partnership commitment to the African continent.
DFIs play an important role in helping to build markets, mitigate risk, and pave the way for other investors to enter new markets.
In a recent report, the IMF estimated that sub-Saharan Africa would need additional financing of around $425 billion through 2025 to help strengthen its pandemic response spending and reduce poverty in the continent.
“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, pensions, and insurance pools, estimated to have US$1.8 trillion as assets under management (AUM),” said Solomon Quaynor, African Development Bank VP, Private Sector, Infrastructure & Industrialization.
“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, [which were] severely impacted by COVID-19,” said UK Minister for Africa James Duddridge.
The AfDB’s priority is to create jobs particularly for youth and women, with a focus on industrializing Africa, underpinned by the African Continental Free Trade Area, said Quaynor.
The EBRD’s Managing Director for Southern and Eastern Mediterranean, Heike Harmgart, expounded that the bank has invested over €11.5 billion in only 9 years in Egypt, Morocco, and Tunisia in order to boost the private sector, developing green sustainable infrastructure and promoting youth and women participation in the economy.
“We will pursue efforts to expand private sector investment opportunities in the region in close cooperation with other development actors,” she added.
Each DFI has its own investment criteria, which is aligned to an assessment of need to achieve development impact across a range of sectors.
The G7 DFI group consists of CDC (UK), Proparco (France), JICA and JBIC (Japan), DFC (US), FinDev Canada (Canada), DEG (Germany) and CDP (Italy).
