Africa: Global Lenders Pledge Billions for Continent

Dakar — MULTILATERAL lenders have pledged $15bn to support trade, strengthen the financial sector and increase lending for infrastructure, agribusiness and small enterprises in Africa.

Announced at the annual meeting of the African Development Bank (ADB) board of directors in Dakar yesterday, the increased support is part of a co-ordinated response to help regions affected by the global economic slowdown and help stem the reversal of investment in Africa.

The ADB has pooled resources together with the European Investment Bank (EIB), the Development Bank of Southern Africa (DBSA) and the French Development Agency to lend support to private sector investment projects to spur growth.

Announcing the joint international finance institutions' action plan, ADB president Donald Kaberuka said the severity of the challenge facing the continent was unprecedented: "It took us decades to get where we are but six months to go from (economic growth of) 7% to 3%, and we are not sure that for us this crisis is not at its beginning."

Under the plan, the ADB will use an emergency liquidity facility of $1,5bn to give financial support to countries and projects facing liquidity constraints. The bank will also introduce a new $500m trade finance line of credit and is considering committing another $500m to global trade liquidity programmes to support commercial banks and other trade finance institutions. It will also contribute funds to support agribusiness and microfinance.

The DBSA will inject $4bn of development finance into priority infrastructure projects, which represents a doubling of the funding disbursed over the past three years. The bank has also vouched to step up assistance for development and training through the disbursement of a further $50m.

The EIB has also agreed to step up support for infrastructure development and investment in energy projects. It would also lend support to Africa's financial sector through credit lines, the provision of equity and " more flexible guidelines", the bank's Patrick Walsh said.

The EIB has already pushed up lending to the continent from $55bn last year to $70bn this year, in response to the crisis, and funding for infrastructure development now represents half of the bank' s business on the continent.

Kaberuka came out strongly on the role of the private sector in underpinning economic recovery, saying the continent needed both effective markets and effective states to respond to the crisis. The states' role was to " reduce risk and lower the cost of doing business" for the private sector .

But he also called for support for Africa, saying the crisis was caused entirely by external factors that now affected African lives.






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