The EU, its Member States and European financial institutions (‘Team Europe’) will launch the ‘Investing in Africa’s Start-ups’ initiative, announced European Commission President Ursula von der Leyen on Tuesday 18 May, ahead of the Paris summit on financing African economies for the post-Covid-19 recovery hosted by Emmanuel Macron (see EUROPE 12583/5).
“We want to overcome this pandemic together. Europe can benefit greatly from Africa’s very young and dynamic economy. Our initiatives therefore aim to stimulate youth entrepreneurship and support small businesses, which are the backbone of the African economy. Europe will also invest in more resilient African health systems and in local vaccine production”, said Mrs von der Leyen.
This investment in small businesses will combine substantial financial support with technical expertise.
IMF Managing Director Kristalina Georgieva emphasised the need to reverse a very dangerous divergence between advanced and poor countries - most notably in Africa, which is forecast to grow at 3.2% this year compared to 6% for the rest of the world - and to put growth and social development in Africa on the agenda.
The IMF is proposing an extraordinary post-Covid-19 action of $650 billion in Special Drawing Rights (SDRs).
“We need to stimulate growth with public and private finance by mobilising funding from the international community, donors, and the countries themselves. The ambition is to draw SDRs from countries like France”, she told the press.
Mr Macron spoke of the “summit of emergency and ambition” - a health emergency, “because Africa is poorly vaccinated”, and an economic and social emergency due to the slowdown in growth. The financing needs until 2025 are estimated at $285 billion, he said.
According to him, the priorities are as follows:
- vaccinating 40% of the African population: “this can be done in 2021, if we reallocate doses and allow more doses to be produced in Africa with real technology transfers”;
- turning the $33 billion in SDRs into $100 billion, allocating them to the African Development Bank, and making it possible to fight terrorism;
- building a stable business framework: “We are going to launch an alliance to mobilise more private sector investors, African and non-African, to go along with public financing”.
The current chair of the African Union, Félix Tshisekedi, said that “$100 billion in SDRs would be enough” to revive “exsanguinated” African economies.
He added, “Then we will have to see, at the level of Africa - of regional organisations - how to create a financial safety net that could help us cope. We have great infrastructure needs for reviving Africa”. (Original version in French by Aminata Niang)