The G7 Development Finance Institutions and multilateral partners have agreed to invest $80bn to support sustainable economic recovery and growth in Africa.
The fund will be directed to the private sector investment over the next five years, according to the African Development Fund in a statement on Monday.
It said the partners include DFIs, the International Finance Corporation, private sector arm of the AfDB, European Bank for Reconstruction and Development and the European Investment Bank.
This is the first time the G7 DFIs have come together to make a collective partnership commitment to the African continent.
As a result of the Covid-19, the International Monetary Fund had estimated that sub-Saharan Africa needs additional financing of around $425bn between 2021 and 2025 to help strengthen the pandemic response spending and reduce poverty in the region.
While joining other partners to welcome the development, the AfDB Vice President, Private Sector, Infrastructure and Industrialisation, Solomon Quaynor, said, “We welcome this 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, as well as African savings from SWFs (sovereign wealth fund), pensions, and insurance pools, estimated to have $1.8tn AUM(assets under management).”
The United Kingdom Minister for Africa, James Duddridge, said, “The UK is proud to back this commitment by world leaders at the G7 Summit to invest more than $80bn in Africa’s private sector over the next five 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 Chief Executive Officer of CDC Group, Nick O’Donohoe, 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.”
The President of the European Investment Bank, said, “The EIB welcomes G7 leadership to enhance support for high-impact investment across Africa during and after the pandemic.”
The IFC’s Managing Director, Makhtar Diop, said, “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.”
The Chief Operating Officer of United States International Development Finance Corporation, David Marchick, said, “Under President Biden’s leadership, investing more in Africa is a top priority for DFC in fulfilling our development mandate.”
The Managing Director of EBRD, Southern and Eastern Mediterranean, Heike Harmgart, said, “Harnessing the potential of the private sector is essential to supporting prosperity in Africa and meeting the continent’s development needs.
“We will pursue our efforts to expand private sector investment opportunities at scale in the region in close cooperation with other development actors.”
The DFIs play an important role in helping to build markets, mitigate risk and pave the way for other investors to enter new markets.
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