A US$2 billion two-pronged finance package is set to benefit SMEs and increase African trade, as economies buckle under the strain of the pandemic.

According to the IFC, COVID-19 has seen the continent enter into its first economic recession in 25 years, ‘stifling private-sector momentum and shrinking FDI to the continent by 18%’. With this in mind, the IFC package will be split equally between direct funding for SMEs and financing international trade.

‘This is a critical time for people, businesses, and economies across Africa,’ says IFC MD Makhtar Diop. ‘Long-term recovery will depend on getting funding to the pillars of the economy that need it today.’

Focusing on agriculture/food production and other job-creating sectors, the SME finance initiative will provide smaller businesses with new sources of funding, beyond traditional ones, while accelerating access to financial services through digital channels.

Meanwhile, the trade funding will support flows of critical goods by providing trade guarantees, risk-sharing facilities, and support to SME importers and exporters. Targeted sectors include food, medical products, green energy and climate-smart agriculture.

25 May 2021
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