UN report focuses on private sector’s resilience to COVID-19

The Economic Commission for Africa (ECA) on Tuesday launched its flagship Economic Report on Africa, titled: “Innovative Finance for Private Sector Development in Africa”, which among others focused on private sector’s resilience to COVID-19.

The report looked at innovate financing as a way providing solutions to the challenges of private sector financing, hence enabling Africa’s private sector to thrive and drive the continent’s economic growth and recovery; and importantly to increase the private sector’s resilience to the effects of the global coronavirus pandemic.

Prepared by the institution’s Private Sector Development and Finance Division and under the leadership of the Executive Secretary, Ms. Vera Songwe, the Report was presented during a virtual launch attended by some of Africa’s most eminent minds in the business and finance sectors, government officials, civil society, academia, representatives of the public and private sectors, as well as development partners.

In remarks made at the launch, Ms. Songwe expressed her hope that the analysis in the ERA would allow stakeholders, particularly during, and in the post-COVID-19 pandemic, to look at how financing and innovative tools for infrastructure, agriculture and technology, are designed as the Continent tries to build forward out of the COVID-19 pandemic.

The Report examines the innovative financial instruments, practices and policies required to enable African countries to make a step-change in growing the gamut of businesses, including start-ups, micro and small enterprises, social enterprises, professional businesses, exchange-listed corporates, and public-private companies, that will drive inclusive economic growth, create jobs and pathways to better livelihoods for African people. It’s key recommendations include regulating the banking and financial services sector; creating financial stability through effective policies; amending and updating financial sector legislation and regulatory policies; and promoting innovative private sector financing.

The report also calls on African nations to embrace the continent’s Digital Transformation Strategy and the African Continental Free Trade Area (AfCFTA) to streamline policies and regulation.

Furthermore, as the end of COVID-19 is uncertain, the Report calls on African governments to explore the full range of policy measures to stabilize the financial system and enable continued funding of the private sector; increase government capacity; strengthen financial sector resilience; and support all financial innovations that could mitigate the impact of the pandemic on African economies.

Adelaide Matlanyane, Governor of Central Bank of Lesotho, emphasized that infrastructure financing should come from capital markets, pension funds, and other sources of funding, adding, against the COVID-19 backdrop, this was the best time to adopt robust policy frameworks for Africa. “We have to look for adaptable solutions to the unique circumstances of Africa. Governments should be moving to the provision of e-services and adopting technology to enhance financial inclusion,” she added.

Louis Rene Peter LaRose, Seychelles former Finance Minister, said: “The way we look at aid for development needs to change. We need to tap into the private capital markets and be innovative, proactive, risk-takers.

Andrew Mwaba, Board of Directors at the Bank of Zambia, said that Africa needs banking and strong institutions for the market to work. He noted that stock markets present key financing opportunities and the listing of public utilities offers more financing opportunities. He emphasized the need for governments and regulators to relax restrictions to allow foreign investors to provide additional financing.

Iraj Abedian, founder and Chief Executive of Pan-African Capital Holdings (Pty) Ltd, said; “The fragmentation of regulation hinders the development of financial technologies (FinTech), which requires scale to be successful. We need to find bankable projects, and to maximize the circular flow of funding on the continent; We have to take consolidation of markets seriously.”

Mohammed Ibrahim from the Ministry of Finance for Public Treasury, Egypt, for his part said; “As we continue grappling with the COVID pandemic, development of the capital markets and digitalization are key ways ahead for the continent. Climate risk and disaster risk finance also play key roles moving forward.”

Mohamed Lemine Dhehby, Mauritania’s Finance Minister, stressed the need to learn from previous financial crises, adopt responsible investing and take advantage of the benefits of Islamic Banking, according to the press release from UNECA.