IFC Executive Vice President Lars Thunell joined other key partners at the World Economic Forum in South Africa to unveil the Investment Climate Facility for Africa. IFC's Board of Directors approved a $30 million grant last week with other donors and private companies.
"You have a consensus on the political and business side that the private sector is the engine for growth," said Thunell, "and you need a good business climate to support the private sector. The new facility is a culmination of that consensus."
The investment climate remains a major challenge on Sub-Saharan Africa's path to a better future. African businesses currently face one of the world's highest levels of regulatory obstacles to entrepreneurs. Africa has also been one of the world's slowest regions to reform its investment climate. Private investors need the right environment to operate. Transparent, robust institutions and an efficient and clear business regulatory environment are also needed to establish the conditions necessary for growth.
Sustaining the Momentum for Change
Today there is a growing commitment by Africa's leaders, supported by the international donor community, to put in place the conditions needed for private-sector-led growth and development. It is important that this momentum not be lost. African leaders have again underlined the importance of economic growth in improving conditions in Africa during the World Economic Forum on Africa 2006, on May 31-June 2 in Cape Town.
The event, attended by more than 700 participants drawn from politics, business, and civil society, has sought to identify how Africa's current growth can be sustained over the long run. The role the private sector can play has figured prominently on the agenda, and Thunell was able to offer particular insights from IFC's 50-year history on this issue.
At the World Economic Forum plenary panel, Thunell was joined in the unveiling of the ICF by Baroness Valerie Ann Amos (pictured), leader of the United Kingdom's House of Lords; Harish Manwani, President for Asia and Africa at Unilever; Benjamin William Mkapa, ICF Co-chair; and Niall FitzGerald (pictured), Chairman of Reuters.
Making Africa a Better Place to do Business
Supporting the African private sector and improving the investment climate is one of IFC's three top priorities for the region. IFC is the largest multilateral source of loan and equity financing for private sector projects in Africa and offers key advisory and technical assistance through its regional multidonor facility, PEP-Africa, and the Foreign Investment Advisory Service.
On May 25, IFC went even further in supporting African private sector and investment climate reform by approving its $30 million grant to the Investment Climate Facility for Africa. IFC will also contribute expertise to the facility, based on its experience investing in the private sector in developing countries.
The Investment Climate Facility for Africa is a unique new public-private partnership that focuses exclusively on improving the continent's investment climate. It complements the work IFC already carries out in Africa and provides a mechanism through which the private sector, the G8 countries, donors, and African governments and institutions can support Africa's vision for sustainable growth and development. It draws on political support from throughout the continent.
| The objectives of the Investment Climate Facility for Africa are |
- To build the environment for investment climate reform
Encourage, develop, and work with coalitions for investment climate reform.
- To get the investment climate right
Support governments in creating a legal, regulatory, and administrative environment that encourages businesses at all levels to invest, grow, and create jobs.
- To enhance Africa's business climate image
Improve Africa's image as an investment destination through a coordinated effort to publicize improvements in the investment climate.
|
| The facility's priorities areas will be |
- Property rights
- Taxation and customs
- Infrastructure facilitation
- Competition
- Business registration and red tape
- Financial markets
- Labor markets
- Corruption and crime
|
About the Investment Climate Facility for Africa
The Investment Climate Facility for Africa is a public-private partnership established as an independent trust with a seven-year lifespan, headquartered in Johannesburg, South Africa. The co-chairmen are Benjamin Mkapa, former President of Tanzania, and Niall FitzGerald, Chairman of Reuters. The Board of Trustees includes prominent businessmen and political figures from Africa and beyond.
It has been established in close cooperation with the African Development Bank and has been endorsed by the Report of the Commission for Africa (2005), the G8 at Gleneagles in July 2005, and the New Partnership for Africa's Development (NEPAD). Three multinational firms, Shell, Unilever, and Anglo American, have also contributed financial resources. Discussions are underway with other African and international firms to build on this endeavor.
IFC's Role and Strategy in Africa
IFC is the largest multilateral source of loan and equity financing for private sector projects in Africa. IFC's strategy for Africa is to address the development of the region comprehensively, not only through large projects but also by expanding the investment program to target smaller businesses, which constitute the backbone of the African economy.
For larger projects, IFC is increasingly involved in the formative stages of project development, thus expanding its role significantly beyond provision of finance. To improve the overall investment climate, IFC is also focusing its global knowledge and local expertise on reducing the investment constraints faced by the private sector in Africa. IFC's increased emphasis on technical assistance, deriving from the focus on smaller investments, led to the creation of IFC's multidonor Private Enterprise Partnership for Africa in 2005.
