More listening and more action: How conversations with private sector partners are helping shape IFC’s COVID response strategy

As we continue to grapple with the effects of the COVID-19 pandemic on our communities and economies, it’s also critical to explore ways we can work together to recover and rebuild stronger.

As part of this process, IFC has been hosting virtual meetings with various clients across Africa. The private sector is integral to the rebuilding process, especially given the fiscal constraints weighing on many governments across Africa, constraints that are being multiplied by the COVID-19 crisis.

Central to IFC’s COVID-19 response is understanding the many and serious challenges our private sector partners are facing so we can design and implement solutions to help them recover, be more resilient, and play important roles fueling inclusive, job-creating growth.

During a recent virtual meeting with a diverse group of private sector leaders from Southern Africa and Nigeria, I learned about the challenges they are facing and some of the steps they are taking to recover. A few themes stood out.

Now more than ever, companies are realizing the value of digital investments, from financial services to digital connectivity.  A wave of digitization was already washing across Africa pre-COVID, with many companies and start-ups on the continent being hailed as global leaders. For those that hadn’t yet embraced digitization, many are eagerly doing so now.

As one partner said, COVID-19 has been a “massive wake-up call” for the need to accelerate digital investments. Most financial institutions and other companies we spoke with have been prioritizing digital channels and payment solutions, a process that COVID-19 has made even more urgent.

However, the renewed focus on the digital opportunity has also exposed the digital divide: we need to do more to increase access to the digital economy in Africa, and to make it more inclusive, from infrastructure to skills building. 

The theme of inclusion emerged in other ways. Partners described how they are seeking the best balance between their social responsibility and their ability to continue operations, with many making vital contributions to uplifting local communities.

As one partner said, “We have a social responsibility.” Many companies are reaching out to the communities where they work in to help them manage the spread of the coronavirus, while others are delivering critical services even when payments are delayed. One company said that payments for its services stood at less than half of normal rates. It is a situation that cannot last long without serious consequences.

This is where IFC and other development finance institutions are stepping up to help companies manage some of the business costs associated with COVID-19.

Liquidity is tight right now and financial institutions—as well as companies—need access to lending. However, help must not burden the private sector with cheap and unmanageable debt. Our partners told us that fiscal support must be affordable and not overlook the importance of equity support.

Even before the COVID-19 crisis hit, many companies, start-ups, and private equity houses in Africa were struggling to raise money or access funding to grow. As one of our partners said: “This is an extraordinary time for IFC to have an impact.”

It is an extraordinary time. The COVID-19 crisis threatens to reverse much of Africa’s recent progress, with the World Bank forecasting that the region will slide into recession in 2020 for the first time in more than 25 years.

Since March, IFC has deployed $517 million in COVID-19 related support to partners in Africa and the Middle East, including a combined $200 million to Nigeria’s Access Bank, FCMB and Zenith Bank for on-lending to SMEs across several sectors facing working-capital or trade-finance challenges. The facility will support hundreds of businesses in Nigeria’s health, pharmaceuticals, food, and trading sectors, allowing them to strengthen operations, maintain employment, and access critical imports of goods, commodities, and raw materials during these challenging economic times.

We will soon be announcing our next wave of engagement, which will focus more closely on specific regional and industry needs. This will include World Bank Group collaboration to help rebuild economies and to create projects that will attract investment back into developing countries. We must keep listening, and we must provide support where it’s needed most. We hear our partners and will continue to respond quickly to their needs.

Author : Kevin Njiraini, Regional Director

Original Source : World Bank Blogs