The European Investment Bank (EIB) and the African Export-Import Bank (Afreximbank) are directing €300 million ($355 million) to support the resilience and recovery of African nations in response to the COVID-19 pandemic.
A quarter of the money is specifically earmarked for climate change mitigation and adaption to help Africa maximise opportunities for a green recovery.
The rest is meant ensure businesses across the continent have the working capital to sustain jobs and maintain vital imports.
This support package is the first accelerated COVID-19 response aimed at the entire sub-Saharan region under the EIB’s Team Europe initiative.
This €6.7 billion ($7,93 billion) package is meant to help the most vulnerable and exposed countries respond to the immediate health crises, mitigate social and economic impact, and build resilience for the future.
The pandemic is inflicting an unprecedented negative impact on African economies.
Manufacturing has been impacted by disruptions to the global supply chain and migrant remittances to some of the poorest economies in the world have dwindled.
As a result, many African economies are suffering serious vulnerabilities including liquidity pressure, trade payment default risks and fiscal challenges, alongside cuts to foreign direct investment, longer term financing and portfolio flows.
Professor Benedict Oramah, Afreximbank president, said the funding is welcome not only because it answers an urgent need, but because it is deployed with urgency. “With the joint experience of Afreximbank and the EIB the support will rapidly reach those most affected and be carefully designed to have the greatest effect on the post-pandemic recovery. What’s more, the package’s support for green projects will help propel Africa towards the sustainable economy of the future and all the opportunities that entails.”
The green revolution starts now
A portion of the package will target businesses owned or managed by women and at least 25% of the funds allocated will be earmarked for green projects such as renewable power, energy efficiency and climate change adaptation measures.
Ambroise Fayolle, EIB vice president said, to reflect the scale of the global impact of COVID-19, the EIB board had agreed to scale up financing with existing partners to deliver an immediate and rapid response: “Together with Afreximbank this new financing will both unlock medical investment and ensure that climate action investment to cut energy use and emissions is not delayed.”
The package will redeploy €200 million of funds previously allocated to trade-related investment, now directing the money to sectors most impacted by the pandemic.
Afreximbank and EIB have added a further €100 million to this package. Combining the existing and new funds – in addition to Afreximbank’s position on the ground – means the support can be activated immediately, which would not have been possible under a new agreement.
A portion of the support package will target ways to enable cross-border trade in medical supplies and equipment needed to slow the spread of COVID-19.
The package will also provide financing to long-term investments in trade expansion, to help both the availability of goods and growth in economic prosperity.