In a groundbreaking move to bolster Africa’s sustainable development, the International Finance Corporation (IFC) has injected a historic sum of $11.5 billion into the continent during the fiscal year 2023. This monumental investment aims to expedite Africa’s transition towards clean energy, foster eco-friendly manufacturing practices, enhance intra-African trade, fortify small-scale enterprises, and elevate local food production, even in regions grappling with fragility and conflict.
The IFC’s commitment materialized as an extraordinary feat, spanning 40 countries between July 1, 2022, and June 30, 2023. This marked the single largest annual investment drive ever witnessed on the African continent. The colossal financial support encompasses several critical sectors, including $1.12 billion designated for trade financing, $876 million to propel Africa’s green energy transition, and $1.98 billion to bolster the growth of small businesses, ultimately spurring job creation. Furthermore, the IFC allocated $1.76 billion to boost digital connectivity, with strategic investments in telecom towers, broadband expansion, and the proliferation of mobile internet access.
Of the $11.5 billion commitment, a substantial $3.5 billion was dedicated to short-term financing, while an additional $3.1 billion was mobilized. Impressively, 40 percent of IFC’s in-house financing directly confronted the pressing issue of climate change, while 48 percent was channeled towards the benefit of low-income nations and those afflicted by fragility and conflict.
Sérgio Pimenta, the Vice President for Africa at IFC, emphasized the organization’s unwavering commitment, stating, “At difficult times like these, when the shockwaves of multiple crises are shaking economies worldwide, we are stepping up our work to support a resilient, inclusive, and greener private sector that is helping provide infrastructure and digital solutions while also tackling food security and climate change. Catalyzing increased private sector innovation and financing for addressing climate change, bridging gender gaps, and empowering the next generation of startup leaders has been at the forefront of our work this past year and will continue to drive our engagements as we work with partners to create jobs and opportunities for more people.”
As Africa intensifies its efforts to combat climate change and transition to a net-zero future, the IFC has substantially augmented its funding for climate-related projects. Notable initiatives include $1.2 billion in financing to enable financial institutions to expand their climate and sustainability lending, $1.1 billion to support AMEA Power in the construction of Egypt’s largest wind and solar plants, a €242 million financial package to advance Senegal’s Sococim Industries, and a $500 million investment in BUA Cement in Northern Nigeria to promote eco-friendly, low-carbon cement manufacturing. In the realm of digital connectivity, IFC and MIGA jointly pledged $1.3 billion in equity investments, loans, and guarantees to underpin Safaricom Ethiopia’s greenfield telecommunications network across Ethiopia. To empower smaller enterprises, IFC extended $208 million to partners in 12 countries through the Base of the Pyramid Program, which also welcomed new partners from Cameroon and Madagascar.
Throughout the fiscal year, the IFC’s Africa Fragility Initiative (AFI) lent support to 18 advisory projects specifically aimed at enhancing private sector capabilities in Africa’s most fledgling and vulnerable markets. Collaboratively, IFC and its partners unveiled four new initiatives via the Alliance for Entrepreneurship in Africa. These projects seek to bolster micro, small, and medium-sized enterprises, address food insecurity, enhance trade, and boost agricultural productivity and efficiency.
To foster the growth of women-owned businesses across Africa and bridge gender disparities, IFC initiated She WINS Africa, a comprehensive program designed to unlock the potential of countless women-owned startups through guidance, training, mentorship, and improved access to financial resources. In Tanzania, IFC launched Anaweza: She Can, dedicated to advancing the role of women in the Tanzanian private sector.
In addition to its substantial investments in Africa, the IFC allocated over $445 million to Advisory and Upstream Services, spread across 275 projects aimed at refining the investment climate and stimulating market development to attract investment. For instance, IFC offered crucial support to the governments of Cote d’Ivoire and Egypt in crafting public-private partnerships that promise to unlock private investment in both countries’ infrastructure sectors. Notably, 22 percent of the Advisory and Upstream spending focused on projects addressing climate change, while 43 percent of newly approved projects aimed at enhancing gender equality.