The G7 Development Finance Institutions (DFIs) have announced a commitment to invest $80 billion dollars in Africa’s private sector over the next five years to support sustainable economic recovery and growth on the continent. A statement on Monday from the African Development Bank (AfDB) said the G7 DFIs made the announcement along with the International Finance Corporation (IFC), the private sector arm of the AfDB, the European Bank for Reconstruction and Development (EBRD) and the European Investment Bank. It is the first time the G7 DFIs have come together to make a collective partnership commitment to the African continent, according to the statement. The G7 DFI group consists of CDC, Proparco (France), Japan International Cooperation Agency (JICA) and Japan Bank for International Cooperation, DFC (US), FinDev Canada, DEG (Germany) and CDP (Italy).
Each DFI has its own investment criteria which are aligned to an assessment of the need to achieve development impact across a range of sectors. DFIs play an important role in helping to build markets, mitigate risks and pave the way for other investors to enter new markets.
The UK Minister for Africa, James Duddridge, said the UK was proud to back this commitment by world leaders at the G7 Summit. “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,” he said.
Nick O’Donohoe, the Chief Executive Officer, Centres for Disease Control and Prevention (CDC) Group, said the quality capital DFIs provided was urgently needed if African economies were 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,” he said. Werner Hoyer, President of the European Investment Bank (EIB), said the EIB welcomed 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,” Hoyer said. On his part, Makhtar Diop, IFC’s Managing Director, said ensuring an inclusive and sustainable recovery for people, businesses and economies across Africa, in coordination with IFC’s development partners, was at the core of the corporation’s development mandate. “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,” he said.
Similarly, David Marchick, Chief Operating Officer of U.S. International Development Finance Corporation (DFC), said investing more in Africa, under President Joe Biden’s leadership, was a top priority for DFC in fulfilling its development mandate. “DFC is proud to be doubling down on our commitment to Africa, alongside our G7 and multilateral partners. ”We will continue to prioritise investments in vaccine manufacturing, COVID-19 response, climate mitigation and adaptation, and gender equity on the African continent,” Marchick said.
Dario Scannapieco, Chief Executive Officer, Cassa Depositi e Prestiti (CDP), said closer collaboration among DFIs and multilateral partners was an essential factor in fostering sustainable economic recovery and growth in Africa. “CDP looks forward to contributing to this strategic partnership, supporting the African continent in developing its entrepreneurial and financial private sector, to unlock its vast, untapped potential,” Scannapieco said. Solomon Quaynor, Vice President, Private Sector, Infrastructure and Industrialisation of AfDB, said the bank welcomed the global partnership and 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. Given the gap between the IMF estimates and what this partnership is committing to, we will seek to crowd in African development partners. In addition, we expect African savings from SWFs, pensions, and insurance pools, estimated to have US$1.8 trillio,” Quaynor said.
We at Peoples Daily welcome this nouvelle ide`e of the DFIs. We like it not only because the fund promise is huge and Africa desperately needs it, but also because the benefit will be mutual. The developed economies will reap from an economically strong African continent in terms of stopping illegal migration from Africa to the West.
However, we fear that the sheer novelty of this partnership may also be its Achilles heel. The fact that our AfDB is in it is only cold comfort. The paternalistic tone of the representatives of the DFIs is another worry. Africa is not a partner but a pauper that needs help from big brother. Hardly the right way to start.