WASHINGTON: The World Bank announced on Wednesday it will invest $2 billion to support medium and small businesses in Africa and boost trade in the region as it recovers from the Covid-19 downturn.
The International Finance Corporation (IFC), the bank's development arm focused on private-sector development in emerging markets, will invest $1 billion in direct financing for businesses and another $1 billion in support of international trade finance.
The combined $2 billion package is "among the IFC's largest ever commitments to specific initiatives in Africa," the corporation said, adding that Covid-19 "plunged the region into recession, reduced foreign direct investment flows and pushed millions more Africans into poverty."
"Long-term recovery will depend on getting funding to the pillars of the economy that need it today," IFC Managing Director Makhtar Diop said in a statement.
The announcement came as French President Emmanuel Macron hosted a summit in Paris that includes African leaders and global financial institutions.
Africa's populations have been less badly hit by the pandemic than other regions, with a total of nearly 130,000 dead compared with almost 3.4 million worldwide, according to the latest AFP tally from official sources.
But the economic cost has been devastating, with the International Monetary Fund warning in late 2020 that Africa faces a shortfall of $290 billion up to 2023, undermining efforts at development.
While the pandemic's impact has been less acute in Africa than in the United States, Europe and now India, the economic fallout has been severe. Sub-Saharan Africa is set to record the slowest economic growth of any world region this year.
The IFC, investment arm of the World Bank, said it would invest $1 billion in new direct financing for micro, small and medium enterprises, including via mezzanine financing and risk-sharing instruments.
Another $1 billion will support international trade finance "to facilitate the flow of imports and exports of essential goods, including food and medical products," the IFC said in a statement.
"This is a critical time for people, businesses, and economies across Africa. Long-term recovery will depend on getting funding to the pillars of the economy that need it today," said Makhtar.
The initiatives will be open to public and private partners, the statement said.
The IFC last year announced a global $8 billion fast-track financing facility for help existing clients and their countries' economies during the pandemic.
More than half has already been deployed, the IFC said, with more than 30% going to IFC clients in Africa. - Reuters
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