A member of the World Bank Group, International Finance Corporation (IFC), has invested $5.6 billion in 2020 fiscal to help the private sector in the Middle East and Sub-Saharan Africa, as regional economies are slowing down in the face of lower oil prices and the COVID-19 pandemic.
Between July 1st last year and June 30th, the Washington-based institution has pledged $4.6 billion in funding to private sector companies in Sub-Saharan Africa, exceeding its $4.1 billion commitment for the year 2019. Gross investment in the Middle East and North Africa region crossed over $1 billion.
“In the wake of the economic crisis brought on by the COVID-19 pandemic, we stepped up the momentum to help our clients stay in business and maintain jobs which are critical to economic growth and livelihoods,” Sérgio Pimenta, IFC vice president for the Middle East and Africa, said in a statement.
The global economy is poised to plunge into the worst recession since the Great Depression, with this year’s International Monetary Fund expecting a 4.9% contraction and an only slow recovery in 2021.
According to the fund, the economies of the Middle East and Central Asian countries are estimated to decline by 4.7% on average.
IFC’s investments centered on sectors such as healthcare, agribusiness, renewable energy, housing finance, infrastructure and small and medium-sized enterprise financing, particularly in the vulnerable and conflict-affected situations (FCS) where the institution invested more than $1.2 billion.
IFC has also invested a further $2 billion in short-term trade financing to fund SMEs across the region.
“We applaud the perseverance and resilience of the small, medium and large businesses that are the foundation of economies in Africa and the Middle East and we will continue to support them in the next phase of the crisis and through the recovery,” Mr. Pimenta said.
IFC has offered advisory services worth more than $590 million to approximately 376 projects aimed at improving the business climate, supporting investment policies and building markets in priority sectors.
IFC announced $8 billion in global fast-track funding in March to support companies that are impacted by the outbreak. The foundation has since contributed more than $3.5 billion to businesses worldwide, it added.
Along with other multilateral financial organizations, the IMF and the World Bank are also offering credit facilities and grants to help the poorest nations improve their health infrastructure and tackle the pandemic’s economic effects.
The group of the world’s twenty largest economies agreed on the time-bound Debt Service Suspension Initiative (DSSI) for poor countries in April, allowing for debt suspension until the end of this year.
42 countries have so far sought assistance under the program, leading to a deferral of around $5.3bn in debt repayments. Last week, the G20 said it would consider expanding the program when its financial policymakers meet later this year.