At the first Finance in Common Summit (FICS) in November 2020, the EDFI Association, on behalf of its 15 European member development finance institutions (DFIs), together with African Development Bank (AfDB), FinDev Canada, Islamic Corporation for the Development (ICD), U.S. International Development Finance Corporation (US DFC), and West African Development Bank (BOAD) launched a coalition for a sustainable and inclusive recovery of the private sector, later joined by the Trade and Development Bank (TDB).Under this coalition, the DFIs all committed to dedicate at least USD 4 billion of financing to micro, small and medium size entreprises (MSMEs) in Africa, between mid 2020 and end of 2021.
This initial target has been exceeded, whereby DFIs jointly committed over USD 5.55 billion of financing of MSMEs in Africa over the period. In addition to this challenge, the signatories to the coalition committed to
- Deepen cooperation among their institutions,
- Focus on inclusive financial solutions for the private sector and
- Support clients with technical assistance and advisory services when needed.
In developing countries, formal SMEs contribute to more than one third of gross domestic product and account for 52% of formal employment. Improved access to, finance for MSMEs is critically important to boost growth and the prospects of the 450 million young Africans projected to join the labor market by 2050.
The viability of MSMEs is under acute pressure and efforts to expand inclusive financial solutions are an important part of the crisis response.
The 20 development finance institutions signatories to the coalition are focused on investing in vulnerable countries where COVID-19 has jeopardised decades of achievements with regard to private sector development, job creation and poverty reduction The signatories hold collectively a portfolio of nearly USD 90 billion committed to private sector operations in low and middle-income countries, supporting more than 12 million direct jobs, with over 40% of this in Africa.