Top G7 Development Banks Pledge $80 Billion To African Businesses

The G7 Development Finance Institutions (DFIs) have announced a commitment to invest $80 billion in Africa’s private sector over the next five years to support sustainable economic recovery and growth in the continent.

A statement on Monday from the African Development Bank (AfDB) said the G7 DFIs announced 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.

According to the statement, it is the first time the G7 DFIs have come together to make a collective partnership commitment to the African continent.

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 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).

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,” Duddridge said.

Also, Nick O’Donohoe, the Chief Executive Officer, Centres for Disease Control and Prevention (CDC) Group, said the patient, high-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,” O’Donohoe 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.

Also, 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,” Diop said.

Similarly, David Marchick, Chief Operating Officer of U.S. International Development Finance Corporation (DFC) said investing more in Africa under President 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 prioritize 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.

Also, Solomon Quaynor, Vice President, Private Sector, Infrastructure and Industrialisation, 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 industrializing 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, pensions, and insurance pools, estimated to have US$1.8 trillion AUM,” Quaynor said.

Furthermore, Heike Harmgart, EBRD Managing Director, Southern and Eastern Mediterranean, said harnessing the private sector's potential was essential in supporting prosperity in Africa and meeting its development needs.

“In the North African countries where we work, Egypt, Morocco and Tunisia, we have invested over 11.5 billion euros in only nine years.

”It will be focused on boosting the private sector, developing green sustainable infrastructure, and promoting youth and women participation in the economy.

“We will pursue our efforts to expand private sector investment opportunities at scale in the region, in close cooperation with other development actors,” Harmgart said.

However, Monika Beck, a member of the DEG-Management Board, a German development finance institution, noted that many of the institution’s African partner countries had been affected by the pandemic.

“We quickly developed new services to support private sector SMEs and to help protect jobs and livelihoods.

“In Africa, DEG has always been specifically committed to creating prospects for the young, growing population. Therefore DEG welcome and is proud to be part of the G7 DFI Africa initiative,” Beck said.