The Africa Finance Corporation has launched a $2bn fund to support bank-driven economic recovery in Africa following the disruption of Covid-19 and the Russia-Ukraine war.
The Lagos-based AFC has committed to fund up to 50% of the African Economic Resilience facility and will mobilise the rest through its network of international partners and investors.
The facility, announced at the AFC Live Infrastructure Solutions Summit in Abuja, will be disbursed via loans from AFC to select commercial banks, regional development banks and central banks in African countries, providing them with hard currency liquidity to finance trade and other economic activities.
The AFC’s head of treasury and financial institutions, Banji Fehintola, said that the fund was a response to the global economic upheaval shaking the continent. The growth momentum for the region has weakened this year with economic activity expected to expand by 3.8% this year compared to 4.5% last year, according to the IMF’s Regional Economic Outlook in April.
“The Covid-19 pandemic set back Africa’s economic growth trajectory and further widened the trade financing gap. Before the continent could get over that, the Russia-Ukraine conflict has brought with it a new set of challenges, but which have the same effect of negatively impacting growth prospects across the continent. As such, we are determined to play a leading role in shaping the continent’s recovery and resilience, not only though the work we do in bridging Africa’s infrastructure gap, but also through targeted interventions such as this $2bn Covid-19 economic resilience facility.”
Applications for the African Economic Resilience facility will open via the AFC’s website. The institution says that the fund will help to drive the continent to a new phase of growth “focused on maximum resource value capture and domestic job creation.”
AFC typically invests in infrastructure assets that provide essential services in power, natural resources, heavy industry, transport, and telecommunications. It has invested an estimated $10bn in projects across 35 African countries.
AFC recently launched an independent asset management arm, AFC Capital Partners, which has plans to raise $2bn to fund climate adaptation infrastructure projects in Africa.