G7 DFIs, others in $80bn African programme to benefit Nigerian SMEs, businesses
NIGERIAN SMALL AND MEDI UMSCALE ENTER PRISES (SMEs) and other businesses in the private sector stand to benefit immensely from an $80 billion postCovid-19 African private sector investment programme by the Group of Seven’s (G7) development finance institutions (DFIs), International Finance Corporation (IFC), the private sector arm of the African Development Bank (AfDB), European Bank for Reconstruction and Development (EBRD) and the European Investment Bank (EIB).
It is the first time the G7 DFIs have come together to make a collective partnership commitment to the African continent.
The G7 DFI group consists of the CDC and Proparco of France, JICA and JBIC of Japan, DFC of the US, FinDev of Canada, DEG of Germany, and CDP of Italy. This commitment is also supported by the IFC, African Development Bank, the European Bank for Reconstruction and Development (EBRD), and the European Investment Bank (EIB).
Each DFI has its own investment criteria which are aligned to an assessment of need to achieve development impact across a range of sectors. DFIs play an important role in helping to build markets, mitigate risk and pave the way for other investors to enter new markets.
Announcement of the investment was made on the sidelines of the G7 meeting in England, in which the world’s most industrialized nations’ Group said that they were committed to investing $80 billion in Africa’s private sector over the next five years to support
sustainable economic recovery and growth on the continent.
The Covid-19 pandemic has caused severe global economic and health crisis. Many see the investment commitment as a welcome boost to support the long-term development objectives of African economies that have been negatively impacted by the crisis.
For Nigeria, with over 37 million SMEs, which are faced with huge challenges, major of which is access to funds, the G7 DFIsmultilateral partners’ $80bn postCovid-19 African private sector investment would be a key factor to their growth, thereby enable them play their supposed role as major economic drivers. A joint survey by the Small and Medium Enterprises Development Agency of Nigeria (SMEDAN) and National Bureau of Statistics (NBS) shows that Nigeria has over 37.067 million micro, small and medium enterprises (MSMEs) as of 2013. Of this figure over 36.994 million are micro, while 68,168 are small, while 4,670 are medium enterprises.
Meanwhile, the International Monetary Fund (IMF), the private sector specific arm of the World Bank estimates that sub-Saharan Africa needs additional financing of around $425 billion between now and 2025 to help strengthen the pandemic response spending, and reduce poverty in the region.
According to the UK minister for Africa, James Duddridge, “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 5 years.” Duddridge said the investment will create jobs, boost economic growth, help tackle climate change and fight poverty. He said the initiative comes at a crucial time, as the continent rebuilds its economies, severely impacted by Covid-19.
Nick O’Donohoe, chief executive of CDC Group, said that 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.
He noted that 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.