Egypt’s Minister of International Cooperation Rania Al-Mashat has urged the World Bank and international institutions to tap into Africa’s private sector and support economic recovery.
As state fiscal pressures mount amid the novel coronavirus (COVID-19) pandemic, the move would enable the mobilisation of private sector investments. It would, as a result, also strengthen public and private partnerships (PPP) transactions.
Minister Al-Mashat’s comments came during her speech at the 2020 African Caucus Meeting of the Governors of the World Bank Group (WBG) and the International Monetary Fund (IMF). The caucus took place in the presence of the IMF’s Managing Director Kristalina Georgieva; President of the World Bank Group David Malpass; and Minister of Economy, Planning and Regional Development for Cameroon and the current Chairperson of the African Group of Governors at the IMF and the World Bank.
Minister Al-Mashat highlighted the adverse impacts of the COVID-19 pandemic on African economies. She said that it exacerbated pre-existing challenges as millions of jobs have been lost and fiscal imbalances have widened.
She said that mounting fiscal pressures during the pandemic will result in the inefficiency of public sector resources to address these challenges in a timely and adequately manner. She added that the private sector’s role in Africa has “become even more pivotal” to ensure a faster economic recovery.
During the pandemic, the International Finance Corporation (IFC) outlined a $1.5bn facility for Africa’s business community, with a focus on small- and medium-sized enterprises (SMEs).
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. This would need a conducive business environment to promote startups and SMEs for inclusive growth and job creation in the region.
Minister Al-Mashat urged international institutions to extend their blended finance instruments and expand investment to SMEs in Africa. It includes through platform and regional approaches, particularly in countries that are considered Fragile and Conflict affected Situations (FCS).
The African governors presented a 2020 memorandum in which they called greater boldness from the WBG, as well as greater innovation in their approaches. This would then 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 (ACFTA) and support its implementation. This would come in addition to applying a regional approach and fostering synergies with organisations, including the African Development Bank (AFD) 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. At the same time, this would ensure debt sustainability, and promote 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 harmonisation 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 programme for selected debt distressed countries.
