A new action plan to counteract the impact of the global economic crisis, which has the potential of reversing decades of progress, growth, and investment in Africa, has been devised among African, European, Islamic and global investment groups. The newly developed coordinated effort will bring at least an additional $15 billion to Africa. The joint action plan includes the participation of the African Development Bank Group, the Agence Francaise de Development Group, the Development Bank of Southern Africa, the European Investment Bank, German Financial Cooperation, the International Islamic Trade Finance Corporation, and the World Bank Group.
According to the African Development Bank Group, the initiative enables governments and institutions to more effectively reduce the humanitarian toll resulting from the global economic slowdown, by promoting trade and strengthening the financial sector. A range of instruments to effectively respond to the crisis and address long-term structural issues that have hampered Africa’s economic growth will be utilized. This will include more dialogue and increased lending and investments.
The 2009 edition of the African Economic Outlook, launched on May 10, 2009, covers 47 African countries. It reports that after a half decade of above 5 per cent economic growth, Africa can expect only 2.8 per cent in 2009. Growth is anticipated to rebound to 4.5 per cent in 2010. Regionally, Southern Africa is expected to slow dramatically in 2009 to 0.2 per cent from last year's 5.2 percent and increase to 4.6 per cent in 2010, while Northern Africa is expected to slow to 3.3 per cent in 2009 from last year's 5.8 per cent and increase to 4.1 per cent in 2010.
African Development Bank President Donald Kaberuka said, “Beyond actions taken by individual institutions, the need to join forces and pool resources and expertise cannot be overemphasized. The scope and magnitude of the current global financial crisis compels us to look for innovative means to work with maximum collaboration to increase our support to the private sector in Africa. We must act now. Through this partnership, we can make a difference. The African Development Bank is fully committed to this process and will spare no effort for its successful implementation.”
World Bank Group President Robert B. Zoellick said, “The last decade saw robust economic growth and welcome progress in overcoming poverty in a growing number of African countries and these significant achievements are now at risk because of the gravest economic crisis in sixty years. The World Bank Group will work hard with the partners in this initiative to ensure that the impact of the global economic crisis, which is not of Africa’s making, does not turn into a human crisis on the continent.”
Among the various programs that will benefit from these large scale investments from the participating investor groups, the plan shows boosted funding in development financing for priority infrastructure projects; increased support for energy projects; increased funds for the financial sector, the private sector and infrastructure; and assistance to agriculturally-based private companies and cooperatives to increase their production and capability to diversify. As part of the World Bank Group’s support, they will contribute $1.0 billion to facilitate trade, strengthen the capital base of banks, improve infrastructure, increase microfinance lending and promote agribusiness companies. The Islamic Development Bank Group, through the Islamic Corporation for the Development of Private Sector, will contribute $250 million toward investments and programs during the next five years. The African Development Bank will provide $1.5 billion of financial support to eligible countries and operations that are suffering from a lack of liquidity. Additionally, they will provide a trade finance line of credit of $500 million and $500 million for global trade finance liquidity programs for commercial banks and finance trade institutions. All of the investment groups’ contribution will assist various programs in order to increase economic progress and make a positive impact socially.
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