TheCable

The International Finance Corporation (IFC), a member of the World Bank Group, says it will invest $2 billion in African small businesses and trade to support economic recovery from the COVID-19 pandemic.

In a statement on Wednesday, the development finance institution said it plans to invest $1 billion in new direct financing for micro, small and medium enterprises (MSMEs) via mezzanine financing and risk-sharing instruments.

The remaining $1 billion will be invested in support of international trade finance for Africa to facilitate the flow of imports and exports of essential goods, including food and medical products.

According to the IFC, the combined $2 billion package is among its largest ever commitments to specific initiatives in Africa and comes as the continent grapples with the ongoing fallout from coronavirus.

“The $1 billion MSME finance initiative will provide smaller businesses—that were already credit constrained before the pandemic, and that now face increased risks and uncertainty—with new sources of funding, beyond traditional ones,” the statement read.

“The focus will be on job-creating sectors while accelerating access to financial services through digital channels, and agri-food, given the continent’s persistent food security issues.

“Meanwhile, the $1 billion for recovery in African trade will support trade flows of critical goods by providing trade guarantees, risk-sharing facilities, and support to SME importers and exporters. Besides food and medical products, the focus will be on supporting trade in the green energy and climate smart agriculture sector.”

Speaking on the investment, Makhtar Diop, IFC managing director, said: “To create the conditions for an inclusive and sustainable recovery, it is essential to expand and adapt our approach to MSME financing and ensure that trade—which is the lifeblood of economic activity—flows without interruption.”

“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.”

IFC noted that the initiatives are open to public and private partners who wish to participate.