IFC Expands, Innovates to Create Opportunity in Africa
IFC, a member of the World Bank Group, today committed to do more in Sub-Saharan Africa, building upon a record $1.4 billion in new investments last year and over 50 advisory services programs active in 28 countries in the region. IFC is committed to creating new products and services and tailoring solutions to Africa’s business and development challenges so that it can reach an even wider range of countries to have a larger impact on poverty alleviation.
IFC is already demonstrating that it can do more in Africa. It doubled its investment during its last fiscal year, making new financial commitments in 17 countries, 16 of which are IFC frontier and IDA countries. These are Burkina Faso, Democratic Republic of Congo, Ghana, Guinea, Kenya, Madagascar, Malawi, Nigeria, Rwanda, Senegal, Seychelles, Sierra Leone, Tanzania, Togo, Uganda and Zambia. Relatively strong macroeconomic conditions and investment climate reforms support IFC’s expansion. Yet Africa remains the most difficult region in the world to do business. IFC is encouraging countries to step up the pace of regulatory and legal reform to make it easier to do business and expand opportunities, especially for the poor.
“Strengthening institutions and removing barriers to private economic activity is crucial to sustaining economic growth across Africa,” said Hon. Manuel Chang, Mozambique’s Minister of Finance. “Improving the business climate is a central part of Mozambique’s development plans.” IFC is a sponsor of the Sub-Saharan African Doing Business Reformers’ Club Awards that will recognize Mozambique as one of regions top five recent reformers. It will be held in Ougadougou, Burkina Faso on November 8 (www.ifc.org/africareformersclub).
Much of IFC’s work in Africa supports development of the financial sector so that domestic banks and other institutions can grow and provide access to finance for more businesses and consumers. For example, IFC is helping Ecobank Transnational International expand more rapidly in Western Africa.
“Ecobank has benefited from transparent financial regulations and an improving business environment in many of the countries where we operate,” said Ecobank Chief Executive Officer Arnold Ekpe. Ecobank is an African based and owned banking group with operations across west and central Africa. “A vibrant private sector allows Ecobank to extend banking facilities to people who previously may not have had access to such services.”
IFC is working more effectively across the World Bank Group. IFC manages the investment climate team for Africa in cooperation with MIGA and the Foreign Investment Advisory Service. The joint IDA/IFC Micro, Small, and Medium Enterprise Program for Africa responds directly to the need to accelerate and promote pro-poor private sector growth and market development. It is a multi-country initiative that focuses on microenterprises and SMEs.
IFC’s financial strength, dynamism, and growth strategy allow it to contribute even more to World Bank Group development goals, especially in the poorest countries. “IFC puts a strategic priority on supporting an improved business climate to help encourage private investments,” said IFC Director for Sub-Saharan Africa Thierry Tanoh. “Reform in countries like Mozambique where doing business is tough should be an example to other countries in Africa,” Other top reforming economies in Africa are Burkina Faso, Ghana, Kenya, and Mauritius. “An improving investment climate in Africa helps innovative private players like Ecobank do more to create opportunities.”
IFC has created new products and services to help Africa’s private sector develop. Examples include:
* IFC was the first nonresident international financial institution to issue a CFA franc-denominated bond in West Africa. The XOF 22 billion ($44.6 million equivalent) five-year bond was placed with institutional investors in the eight West African Economic and Monetary Union member countries and supported local currency financing of companies in Western Africa.
* IFC in January provided its first local currency financing transaction in Nigeria through a loan of 390 million Nigerian naira ($3 million) to Hygeia Nigeria to support the upgrade of three hospitals, expand the country’s health coverage, and help deliver high-quality care at affordable cost
* IFC’s Trade Finance Program has provided $714 million in support to banks across Africa to help banks encourage increased trade.
* Through advisory services and financing to financial institutions, IFC has helped develop mortgage and leasing markets in Ghana and is expanding these activities elsewhere in the region.
* The Africa Micro, Small, and Medium Enterprise Finance Program combines advisory services and financing to help banks in markets like Burkina Faso and Malawi serve new clients.
* IFC encourages the development of infrastructure to help bring basic services to Africans. IFC’s project with AES Sonel helps expand electricity service in Cameroon, while the Kenya-Uganda Railway improves transport and regional development.
* IFC invested $32.5 million in the East African Submarine Cable System, a landmark fiber-optic cable project that will connect 21 African countries to each other and the rest of the world with high-quality Internet and international communications services. The investment capped years of collaboration between the World Bank Group and other global and regional development institutions, governments, and the region’s private sector to establish an innovative public-private partnership to expand access to communications.
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