Making policies work

Publications

Saving Africa’s private sector jobs during the coronavirus pandemic

15-04-2020

San Bilal, Stephany Griffith-Jones, Sony Kapoor, Stephen Karingi, Vera Songwe and Dirk Willem te Velde. Paper by ECDPM, ODI, Re-define and UNECA paper for EDFI, April 2020

Share Button

Because of the coronavirus pandemic, Africa’s private sector is facing a very large recession, the likes of which has not been seen for 25 years. This is putting more than 20 million jobs and many livelihoods at risk and pushing millions into poverty.

The authors of this paper argue that development finance institutions are uniquely placed to provide financial support and lead the eventual recovery.

European Development Finance Institutions (DFIs) and their shareholders must step up with additional resources and use their links with the domestic banking sector and their competencies to channel liquidity to Africa’s private sector. Also, European DFIs support millions of jobs in Africa, often highly productive ones that have strong interlinkages with the rest of the economy. These direct and indirect jobs must be protected in the recession as they will be crucial to Africa’s bounce-back.

For that, European DFIs need to immediately boost the liquidity support for investee firms, increase their risk tolerance, relax debt servicing requirements where necessary, provide scarce foreign exchange when needed, come up with innovative support mechanisms including credit guarantees to deliver countercyclical support, and set up a bounce-back better and recapitalisation vehicle to inject equity into otherwise viable firms hit by the crisis.

This will require new capital, increased risk tolerance, temporary suspension of minimum return requirements and new credit lines and guarantees from donors of between € 2-5 billion. This will allow European DFIs not only to protect the jobs they support but also to prevent the loss of jobs in otherwise viable firms.


Read the paper


Please refresh the page in case the file does not load or download the file here.

Download (PDF, 435KB)

This paper is also available via EDFI’s website.


Photo courtesy of World Bank Photo Collection via Flickr.


More on COVID-19 and international cooperation


To see all ECDPM work on COVID-19 and international cooperation, have a look at our dossier.

Leave a Reply

Your email address will not be published. Required fields are marked *

This site uses Akismet to reduce spam. Learn how your comment data is processed.

Comments

Economic Transformation and TradeBriefing papersCOVID-19Africa

Downloads

External authors

Stephany Griffith-Jones

Sony Kapoor

Stephen Karingi

Vera Songwe

Dirk Willem te Velde