Covid-19: €1 Billion More for Small African Businesses
published on 03 December 2020
To support African MSMEs – micro, small and medium sized enterprises – affected by the consequences of the Covid-19 pandemic, AFD Group is scaling up the presidential Choose Africa initiative by mobilizing an additional €1 billion. This will bring the mechanism up to €3.5 billion instead of the €2.5 billion initially planned for 2018-2022.
Entire sectors of Africa’s economy are experiencing a marked slowdown due to the current health measures and reduced business activity. On the front line: microenterprises and small and medium-sized enterprises (MSMEs), which account for 90% of the entrepreneurial fabric and 60% of employment on the continent.
In addition to emergency measures (such as deferred repayments and technical assistance) which provided immediate initial support, AFD Group is now mobilizing €1 billion under the Choose Africa initiative. The objective is to help these MSMEs, which have been weakened by the huge fallout from the Covid-19 pandemic. This additional commitment brings the presidential initiative up to €3.5 billion instead of the €2.5 billion initially planned between 2018 and 2022.
An Additional Boost to African Entrepreneurs
“After providing €1.2 billion of assistance to health stakeholders in Africa to address the Covid-19 pandemic, AFD Group is proud to be supporting, with the lead of the French President, economic players on the continent under the Choose Africa initiative”, says Rémy Rioux, Chief Executive Officer of AFD.
“To provide countercyclical solutions to African entrepreneurs hard hit by a crisis that is exogenous to them while helping them become the architects of a sustainable recovery, France is mobilizing an additional €1 billion,” he said. “This program now stands at €3.5 billion. It is also contributing to the collective effort of public development banks towards African SMEs, announced at the Finance in Common Summit for all those who make Africa the leading continent for entrepreneurship and innovation.”
Support African MSMEs: a priority for France and AFD Group
This new “Resilience” component is implemented by Proparco, AFD Group’s private sector financing arm. It aims to support financing solutions for MSMEs, which are the backbones of the African economy. It is France’s contribution to the commitment to a $4 billion effort towards African MSMEs made by some twenty public development banks, including Proparco, at the first Finance in Common Summit organized from 9 to 12 November 2020 at the initiative of AFD.
This additional commitment is strengthening and scaling up the Choose Africa program, which is dedicated to financing and supporting African start-ups, microenterprises and SMEs from now until 2022. “The exceptional difficulties and needs expressed by African microenterprises, SMEs and mid-cap companies, including those of French entrepreneurs in Africa, called for an increased financial commitment and the implementation of new and targeted tools”, says Grégory Clemente, Chief Executive Officer of Proparco. “The support from the French Government and European Union is today allowing us to deploy a new component of the Choose Africa initiative with a set of tailor-made solutions to address the needs of the crisis. This initiative is being deployed in partnership with local financial systems.”
Further reading: the in-depth interview with Grégory Clemente (in French) about the details of this commitment in Jeune Afrique
AFD Group has already committed over €2 billion under Choose Africa, supporting over 16,000 businesses and tens of thousands of entrepreneurs across the continent. They thereby benefit from improved access to credit or a strengthening of their capital base. This financing will be combined with support activities to strengthen the capacities of some 2,000 companies.
Some 200 partners of AFD Group in Africa (incubators, investment funds, local banks, microfinance institutions) are currently contributing to the success of this initiative.
