Investment in Africa’s untapped private sector is key to resilient economic recovery: Al Mashat

As state fiscal pressures mount amid the COVID-19 pandemic, Minister of International Cooperation, H.E. Dr. Rania Al Mashat, urged for the World Bank and international institutions to tap into Africa’s private sector and support economic recovery through enabling the mobilization of private sector investments and strengthening public and private partnerships (PPP) transactions.

 

 

This was mentioned in her speech during the 2020 African Caucus Meeting of the Governors of the World Bank Group (WBG) and the International Monetary Fund (IMF) in the presence of Mrs. Kristalina Georgieva, Managing Director of the International Monetary Fund, David Malpass, President of the World Bank Group, Minister of Economy, Planning and Regional Development of the state of Cameroon and the current Chairman of the African Group of Governors at the International Monetary Fund and the World Bank. 

 

 

AFRICA’S UNTAPPED BUSINESS POTENTIAL

 

 

Al-Mashat highlighted the adverse impacts of the COVID-19 pandemic on African economies,  noting that it exacerbated pre-existing challenges as millions of jobs have been lost and that fiscal imbalances have widened. 

 

 

The minister noted that mounting fiscal pressures during the pandemic will result in the inefficiency of the public sector resources to address these challenges timely and adequately,  and that the role of the private sector in Africa has “become even more pivotal” to ensure a faster economic recovery.

 

 

During the pandemic, the International Finance Corporation outlined a $1.5 billion facility for Africa's business community, with a focus on small and medium sized companies.

 

 

With an untapped business potential in Africa, the minister added that further support is needed to facilitate the transition to a more diversified, private sector-led economy through creating a conducive business environment to promote startups and small size enterprises for inclusive growth and job creation in the region.

 

 

Al Mashat urged international institutions to extent its blended finance instruments and expand investment to SMEs in Africa, including through platform and regional approaches, particularly in countries in Fragile and Conflict affected Situations (FCS). 

 

 

The African governors presented a 2020 memorandum in which they called for the WBG to be bolder and more innovative in their approaches to boost countries’ capacities and financial resources to cope with the COVID-19 crisis and the consequent economic fallout. 

 

 

The governors urged the WBG to help leverage the Africa Continental Free Trade Agreement (AfCFTA) and support its implementation, as well as applying a regional approach and fostering synergies with organizations, including the African Development Bank and other initiatives such as the Compact with Africa (CwA).

 

 

They added that more support in regards to institutional capacity building and providing technical assistance to structure and manage public and private partnerships (PPP) transactions in Africa, while ensuring debt sustainability; and promoting regional integration through advisory support services to develop comprehensive and efficient regional value chains.

 

 

The governors also urged for coordination in interventions related to the implementation of the new debt policies, with a view to ensuring harmonization and avoiding overburdening countries with onerous lists of requirements. They further called on the IMF and World Bank to explore a debt relief and cancellation program for selected debt distressed countries.