By Jeph Ajobaju, Chief Copy Editor
Private enterprises expanding economies and creating jobs across Africa have been given a boost with $80 billion pledged investment spread over the next five years from developed countries in the Group of 7 (G7).
G7 comprises the United Kingdom, France, Japan, the United States, Canada, Germany, and Italy.
The latest commitment comes after the G7 invested $251 in 2019 to support African women entrepreneurs through Affirmative Finance Action for Women in Africa (AFAWA), an initiative of the African Development Bank (AfDB).
AFAWA helps improve women’s access to financing through funds disbursement, training and mentorship.
“I am particularly proud, as the current G7 president, that the programme we are supporting today, the AFAWA initiative, comes from an African organisation, the African Development Bank, which works with African guarantee funds and a network of African banks,” French President Emmanuel Macron said at the time.
G7 countries plan to make the new investment along with multilateral partners, such as the G7 Development Finance Institutions (DFIs) and the United Kingdom’s CDC Group, to support sustainable economic recovery and growth in Africa.
Other investors include the World Bank’s International Finance Corporation (IFC), AfDB, European Investment Bank (EIB), and European Bank for Reconstruction and Development (EBRD).
Long term objectives
The investments will support the long-term development objectives of African economies, including those which have been negatively hit by the pandemic.
It is the first time the G7 DFIs have come together to make a collective partnership commitment to the African continent, according to the UK government website, GOV.UK.
CDC Group invests in private sector businesses in Africa and South Asia, to bring about positive environmental, social and economic change.
British investments in Africa over the next five years will be drawn from existing capital and focus on renewable power, infrastructure, manufacturing, agriculture and technology sectors.
These investments will collectively provide clean, reliable power to millions of people, give underserved markets better access to finance, and help create jobs and reduce poverty.
“The UK is proud to back this commitment by world leaders at the G7 Summit to invest more than $80 billion in Africa’s private sector over the next five years,” UK Minister for Africa, James Duddridge, said.
“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.”
Previous UK investments through CDC Group have helped over 9.9 million people in East Africa light their homes through solar panel technology.
According to GOV.UK, the investments contributed over 40 per cent of the installed electricity capacity in Kenya, Uganda, and Benin and added over 18,000km of fibre optic cabling from Cairo to Cape Town.
CDC Chief Executive Officer, 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.
“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.”
G7 DFI group
The G7 DFI group consists of
· CDC (UK)
· Proparco (France)
· JICA and JBIC (Japan)
· DFC (US)
· FinDev Canada (Canada)
· DEG (Germany)
· CDP (Italy)
Impact of intervention
This commitment is also supported by the IFC, AfDB, EBRD, and EIB, said the British government.
CDC’s investments in Africa include helping 700,000 people across East Africa to light their homes through solar panels bought from one of CDC’s investees, M-KOPA.
In the Democratic Republic of Congo, where 72 per cent of the population lives in extreme poverty, CDC has backed Liquid Telecom to help it expand its network and lay 2,600km of fibre optic cable in DRC – the equivalent distance of London to Moscow.
Greenlight Planet provides pay-as-you-go solar home systems to 9.9 million people across Kenya, Tanzania, Uganda, and Nigeria – 80 per cent of them rural customers.
EIB President Werner Hoyer recalled that “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.”
IFC Managing Director Makhtar Diop said 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 partnership will provide financing and work with partners to help create the right conditions to bring more private investment to Africa, Diop added.
