The International Finance Corporation, a member of the World Bank Group, invested $5.6 billion (Dh20.56bn) to support the private sector in the Middle East and Sub-Saharan Africa in the fiscal year 2020, as regional economies slow down amid lower oil prices and the Covid-19 pandemic.
The Washington-based institute committed $4.6bn in investments to private sector firms in Sub-Saharan Africa between July 1 last year and June 30, exceeding its fiscal year 2019 commitment of $4.1bn. In the Middle East and North Africa region, total investments reached more than $1bn.
“In the wake of the economic crisis brought on by the Covid-19 pandemic, we stepped up the momentum to help our clients stay in business and maintain jobs which are critical to economic growth and livelihoods,” Sérgio Pimenta, IFC vice president for the Middle East and Africa, said in a statement.
The world economy is set to slide into its deepest recession since the Great Depression, with the International Monetary Fund projecting a 4.9 percent contraction this year and a sluggish recovery in 2021.
The economies of the Middle East and Central Asian countries are projected to shrink by an average of 4.7 percent, according to the fund.
IFC’s investments focused on sectors such as healthcare, agribusiness, solar energy, housing finance, infrastructure, and financing for small- and medium-sized enterprises, including in fragile and conflict-affected situations (FCS) where the institute committed more than $1.2bn.
In addition, IFC invested almost $2bn in short-term trade financing to support SMEs across the region.
“We applaud the perseverance and resilience of the small, medium and large businesses that are the foundation of economies in Africa and the Middle East and we will continue to support them in the next phase of the crisis and through the recovery,” Mr. Pimenta said.
IFC also provided advisory services worth more than $590m to nearly 376 projects aimed at improving the business environment, investment policy and promotion, and creating markets in priority sectors.
A number of institutions in Egypt, Cote d’Ivoire, Kenya, Mauritania, Nigeria, and Uganda have benefited from the IFC investment. In Egypt, IFC offered a loan worth $100m to Commercial International Bank to help it boost the support it offers to clients and companies affected by Covid-19. In Nigeria, the institute provided a combined $200m to Access, FCMB, and Zenith banks to help SMEs overcome working capital or trade finance challenges.
In March, IFC unveiled $8bn in global fast-track financing to help companies affected by the outbreak. Since then, the institute had committed more than $3.5bn to companies globally, it said.
The IMF and the World Bank, along with other multilateral financial institutions, are also providing credit facilities and grants to help the poorest nations strengthen their health infrastructure and deal with the economic fallout from the pandemic.
In April, the group of the world’s 20 biggest economies agreed on the time-bound Debt Service Suspension Initiative (DSSI) for poor countries, allowing suspension of debt until the end of this year.
So far, 42 countries have asked for assistance under the scheme, resulting in the deferral of about $5.3bn in debt repayments. The G20 said last week it would consider extending the initiative when its financial policymakers meet later this year.