IFC, African and European Partners launch Alliance to support private sector growth in Africa

Photo credit: IFAD

To support a stronger private sector, entrepreneurship and the growth of small and medium-sized businesses across Africa, African, European, multilateral and bilateral partners today launched the Alliance for Entrepreneurship in Africa (AforE).

The Alliance will combine and focus the technical and financial strengths of its members to improve Africa's business environment and support the growth and success of small and medium-sized enterprises (SMEs), women in business and young entrepreneurs. In addition to its core members, the Alliance aims to bring together multilateral and bilateral development banks, bilateral donors and African national development banks.

The Alliance was first announced at the Summit on Financing of African Economies in Paris in May 2021.

Alliance core members include the African Development Bank (AfDB); the European Bank for Reconstruction and Development (EBRD); the European Investment Bank (EIB); the European Development Finance Institutions (EDFI); the French Treasury; the International Finance Corporation (IFC) and Proparco, the private sector financing arm of Agence Française de Développement Group (AFD Group).

Photo credit: IFC

The launch of the Alliance comes as African economies recover and rebuild from the effects of the COVID-19 pandemic, with small businesses seen as important drivers of job creation, innovation and the delivery of essential goods and services.

The creation of the Alliance reflects the strong commitment of African, European, multilateral and bilateral institutions, in coordination with the African Union, European Commission and others, to bolster Africa's private sector amid ongoing African and global economic challenges.

Alliance members today signed the working arrangement for the Alliance. IFC will serve as the Alliance Secretariat helping to coordinate the activities and operationalize the initiative in partnership with the French Treasury.

“Small businesses and entrepreneurs in Africa are drivers of inclusive growth, economic stability and resilience. Supporting their growth will be critical to creating jobs and helping Africa recover from the COVID-19 crisis. And the Alliance for Entrepreneurship in Africa stands ready to do that. IFC is proud to be part of this initiative, which deepens the partnership between international partners to give small businesses the support they need and deserve,” said Makhtar Diop, IFC's Managing Director.

Solomon Quaynor, the African Development Bank's Vice President for the Private Sector, Infrastructure and Industrialization, said: “Micro, small, and medium-sized enterprises are vital to Africa's prosperity. They represent 90% of all businesses and generate more than half of all jobs. Supporting existing businesses and the ecosystem for entrepreneurs to create innovative new ones lies at the heart of our private sector development strategy. The African Development Bank is committed to the Alliance for Entrepreneurship in Africa. We want to ensure that African entrepreneurs have the means to thrive and can play an important part in solving Africa's development challenges.”

Odile Renaud Basso, EBRD President, said: “The EBRD is committed to supporting financially and technically small businesses in the North African countries where it invests, Egypt, Morocco, Tunisia and soon Algeria. We offer an extensive suite of financial tools and advisory programme that we put at the service of small and medium enterprises and by joining forces with partners in Alliance we can archive a better impact on the economic growth of these countries.”

“Ensuring that African entrepreneurs and companies can access finance is crucial to accelerate growth and create jobs. Over the last two years EIB has been very active to support financial institutions that help SMEs particularly hit by the COVID-19 pandemic. We are pleased to be a core member of the Alliance for Entrepreneurship in Africa. This initiative combines the financial and technical strengths and local insight of African and international partners and together we can ensure a better future for African business,” said Ambroise Fayolle, European Investment Bank Vice President.

“The European DFIs welcome the opportunity to join hands with international and African partners to boost entrepreneurial growth in Africa. EDFI member institutions have been able to increase financing for SMEs across Africa, demonstrating our commitment to this important priority. The deeper collaboration through this new alliance can help mobilise even more investment in the inclusive development of Africa's private sector,” said Søren Peter Andreasen, CEO at EDFI.

“Proparco is proud to count among the founding members of the Alliance for Entrepreneurship in Africa. Proparco has long been committed to supporting African entrepreneurs and will build on the expertise acquired through the French initiative Choose Africa to contribute to this new global Alliance,” said Gregory Clemente, CEO of Proparco.

“Last May, the international community gathered in Paris at the Summit on the Financing of African Economies to devise jointly actions that will help boost a strong and inclusive recovery in Africa, grounded in a dynamic private sector. Today, we are proud to deliver with the official launch of the Alliance for entrepreneurship in Africa, gathering prominent development partners to support private sector development in Africa, as the main driver for growth and job creation. We will remain committed in the implementation phase to deliver on the ground, mobilize additional financing, promote tangible and high value added projects developed by the Alliance core members, with the objective to effectively make a difference for African SMEs through innovative financial products,” said Mr. Emmanuel Moulin, Director General of the Treasury.

Through a private-sector focused cooperation platform, the Alliance will support the roll-out of new initiatives to expand financing options for Africa's SMEs, which cite a lack of access to finance as a major constraint to growth. According to the World Bank, SMEs account for up to 90 percent of all businesses in sub-Saharan Africa and represent 38 percent of the region's GDP. Prior to COVID-19, IFC estimated the funding gap faced by SMEs in the region at $331 billion.

In addition to financing projects, the Alliance will support reforms aimed at strengthening the business and investment climate across Africa and facilitate the growth of private sector initiatives in more sustainable green and digital sectors.

Banking and non-banking financial institutions, other public and private sector organizations (such as foundations, philanthropic organizations, venture capital firms), and business and innovation training providers (including incubators, accelerators, universities), may also join the Alliance.

This article was originally published by IFC.