The Japan International Cooperation Agency (JICA) signed a loan agreement of up to $200m with the African Export-Import Bank (Afreximbank) on 30 March to support COVID-19 responses through private sector investment and finance.
The loan will be co-financed with the Sumitomo Mitsui Banking Corporation (SMBC) and Mitsubishi UFJ Financial Group (MUFG).
The COVID-19 pandemic has significantly affected the entire African continent. Social and economic activities have been hindered due to the pandemic, which in 2020 resulted in its worst historical GDP growth rate, recording -1.7% in Sub-Saharan Africa and -1.1% in North Africa, according to the International Monetary Fund.
In order to recover smoothly from the pandemic, provision of health and medical services, including COVID-19 vaccination, is essential. Also, the COVID-19 pandemic revealed that Africa lacks medical and pharmaceutical products as well as infrastructure such as hospitals, and that the continent’s healthcare system is quite fragile. Thus, strengthening its healthcare system is critical.
Afreximbank is a multilateral financial development institution which has 51 member states in Africa. It has been supporting Africa in mitigating the impact of the coronavirus since it broke out.
Afreximbank will deploy the loan to advance the development of local production capacities for vaccines and medical products, with the overarching ambition to promote the self-reliance of African countries in their response to the pandemic and reduce their dependence on non-African products and international supply chains.
The JICA’s loan will be used to manufacture medical and pharmaceutical products, including vaccine manufacturing lines, development of supply bases for those products, and development of medical and health facilities such as hospitals, through Afreximbank.
It will also mobilise Japanese commercial banks’ capital within the continent. This will lead to the creation of a stronger healthcare system as well as a smoother recovery of social and economic activities from COVID-19.
It is also aligned with sustainable development goal 3: Good health and well-being, goal 9: Industry, innovation, and infrastructure, and goal 17: Partnerships for the goals.
The SMBC-JICA Sustainable Finance Framework, which was launched on 30 March 2021, will also be applied to this loan agreement.
Africa relies heavily on imported vaccines, with 99% of the vaccine doses on the continent — whether for COVID-19 or otherwise — being imported.
