The African Development Bank Group (AfDB) and the European Bank for Reconstruction and Development (EBRD) have signed a memorandum of understanding to promote sustainable private sector development in Africa.
The memorandum of understanding will help catalyse new sources of financing to help bridge the $2.5 trillion annual financing gap for development in Africa. The gap requires that development finance institutions work in partnership.
In Nigeria alone, borrowing to close the financing gap has ballooned the country’s total public debt to about N32.9 trillion as of December 2020, according to the Debt Management Office (DMO).
Under the new partnership initiative, the AfDB and EBRD will capitalise on their respective expertise and experience, with a particular focus on climate change, green and resilient infrastructure and capital markets development. They will also work on improving business environments, bolstering the real economy and mobilising private sector investment.
Covid-19 is threatening progress made towards the United Nations (UN) Sustainable Development Goals (SDGs) and is exacerbating the debt vulnerability of many African countries.
“The new partnership agreement between our two institutions will pave the way for us to do more together, especially in supporting the growth of Africa’s private sector. The impact of Covid-19 on government resources is huge and we need to mobilise more private resources to help African countries build back stronger,” said Dr. Akinwumi Adesina, signing the memorandum with his counterpart, EBRD President, Odile Renaud-Basso.
President Renaud-Basso, said: “The COVID-19 crisis has made the need for better and ever-closer collective action even more urgent. Collaboration between the EBRD and AfDB has grown from strength to strength over the years in the region. This partnership will allow our institutions to do even more to promote sustainable private sector development in North Africa.”
The African Development Bank and the EBRD have a long history of cooperation. Last month, the two institutions signed a $114 million financing package for the construction of the largest private solar plant in Egypt.
This new partnership will enable the two institutions to strengthen the potential for joint projects and activities, unlocking investment opportunities in their common countries of operations.