Paris, 16 February 2022.- The Coalition for a sustainable and inclusive recovery of the private sector today announced commitments of over USD 5.55 billion of financing to small and medium size enterprises (MSMEs) in Africa between mid-2020 and end of 2021, beating their set target of at least USD 4 billion over the period.
The coalition, of which COFIDES has been a member since its launching, said it had exceeded its initial target by 40 percent, while DFIs jointly committed over USD 5.55 billion of financing of MSMEs in Africa over the period.
At the first Finance in Common Summit (FICS) in November 2020, the EDFI Association, on behalf of its 15 European member development finance institutions (DFIs), together with the African Development Bank (AfDB), the West African Development Bank (BOAD), FinDev Canada, the U.S. International Development Finance Corporation (US DFC), and the Islamic Corporation for the Development (ICD), launched the coalition. The Trade and Development Bank (TDB) joined it soon after.
In response to the unprecedented global health and economic crisis caused by Covid-19, the coalition recognised the critical role DFI’s play in supporting the crisis response in vulnerable countries.
While MSMEs are the economic lifeblood of emerging and frontier economies, they are also more vulnerable to crises than larger enterprises. In developing countries, formal SMEs contribute to more than one third of gross domestic product and account for 52% of formal employment.
Improved access to finance for MSMEs is critically important to boost growth and the prospects of the 450 million young Africans projected to join the labour market by 2050. The Covid-19 crisis put the viability of MSMEs under acute pressure and efforts to expand inclusive financial solutions are crucial for a successful recovery.
To address this challenge, the coalition’s signatories committed to: deepen cooperation among their institutions; focus on inclusive financial solutions for the private sector; and support clients with technical assistance and advisory services when needed. Consequently, the 1,400 projects contracted demonstrate a strong focus on smaller and inclusive projects as well as on a broad spectrum of SMEs, from small enterprises/start-ups to mid-sized firms with strong growth potential. In addition, signatories mobilised EUR23 million of technical assistance, including capacity building and advisory services to MSMEs.
The COFIDES Chairman, José Luis Curbelo, highlighted "the importance of multilateral efforts to achieve a significant impact in Africa and mobilise the maximum amount of private equity. At COFIDES, we are aligned with our European partners so that our investments serve as an engine for development and change. The results encourage us to continue along the path towards our main objective: the promotion of sustainable and inclusive growth through our investments".
ABOUT THE COALITION FOR A SUSTAINABLE AND INCLUSIVE RECOVERY OF THE PRIVATE SECTOR
The 20 development finance institutions signatories to the coalition are focused on investing in vulnerable countries where COVID-19 has jeopardised decades of achievements with regard to private sector development, job creation and poverty reduction The signatories hold collectively a portfolio of nearly USD 90 billion committed to private sector operations in low and middle-income countries, supporting more than 12 million direct jobs, with over 40% of this in Africa.
ABOUT COFIDES
COFIDES, a State-owned company engaging in the management of State and third-party as well as its own funds, pursues a number of aims: internationalisation of Spain’s economy, furtherance of economic development and fortification of the solvency of companies affected by COVID-19. In addition to the Spanish State, its shareholders include Banco Santander, Banco Bilbao Vizcaya Argentaria (BBVA), Banco Sabadell and Development Bank of Latin America (CAF).
