A global development finance coalition, which includes the IsDB’s Islamic Corporation for the Development of the Private Sector (ICD), has announced that its commitments to financing MSMEs in Africa have reached over US$5.55 billion to date since its inception in 2020. NESSREEN TAMANO writes.
The international group, which is made up of 20 development finance institutions focused on the sustainable and inclusive recovery of the private sector, had originally set a target of US$4 billion for the period starting mid-2020 until the end of 2021, recording an excess of 40% in its efforts to assist MSMEs struggling amid the COVID-19 pandemic.
The coalition was officially launched in November 2020 by the European Development Finance Institutions together with the ICD, the African Development Bank, the West African Development Bank, FinDev Canada and the US International Development Finance Corporation, with the Trade and Development Bank joining soon after.
The group had recognized their individual and collective role in supporting the crisis response in vulnerable countries, particularly of MSMEs, which account for one-third of GDP and 52% of formal employment in developing countries, and which are more vulnerable than larger enterprises.
“Improved access to finance for MSMEs is critically important to boost growth and the prospects of 450 million young Africans projected to join the labor 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,” the coalition said.
Under the initiative, the group’s signatories focus on providing inclusive financial solutions for the private sector, along with technical assistance and advisory services as needed.
Around 1,400 projects and transactions have been contracted by the coalition and EUR23 million (US$26.15 million) has been mobilized by the signatories to provide technical assistance, capacity-building and advisory services to a broad spectrum of SMEs in Africa, from small enterprises and start-ups to mid-sized firms.
The signatories of the coalition collectively hold a portfolio of nearly US$90 billion aimed at the private sector in low- and middle-income countries, supporting over 12 million direct jobs, with over 40% of this in the African region.