Fragility is on the rise in Africa, conflicts are becoming more regionalized, and COVID-19 and climate change are amplifying existing vulnerabilities. By 2030, up to two-thirds of the world's extreme poor could live in fragile and conflict affected situations (FCS).
Africa is home to 20 of the 39 countries globally that are either facing conflict or are classified as fragile. Meanwhile, the number of people suffering acute food insecurity is estimated at 270 million globally [IMYA2] , more than 100 million of whom reside in Africa, while the number of “conflict countries” has more than doubled over the last decade, triggering large flows of refugees.
For these reasons, engaging in FCS is a priority for IFC, which established its Fragile and Conflict Situations (FCS) Africa unit in 2014 to support and grow IFC’s investment and advisory engagements in African FCS.
Investing for development in these markets is especially difficult because of small deal sizes, high operating costs, inadequate or unreliable market data, a weak/unenforceable regulatory framework, integrity risks, and political instability or unpredictability.
However, fragile does not mean futile—and though doing business and supporting development in FCS is more complex, the ultimate impact is often that much greater.
Between July 2008 and June 2021 IFC invested $8 billion in both long- and short-term finance in FCS in Africa. Looking ahead, IFC has committed to increasing its investments in them and in International Development Association (IDA) countries to 40 percent of its overall portfolio by 2030.
Africa Fragility Initiative
To better support development in FCS, in 2022 IFC launched the Africa Fragility Initiative (AFI), a $74 million, five-year program established with the support of Ireland and Norway.
AFI will help IFC deliver on its FCS commitments under the WBG FCV Strategy and the 2018 capital increase package. The initiative will complement and add value to other IFC activities focused in FCS, including Upstream and blended finance work, the IDA Private Sector Window [IDA PSW], and the FCS risk envelope).
Both AFI and IFC FCS Africa program build upon IFC’s Conflict Affected States in Africa (CASA) Initiative, which ran from 2008 – 2021, covered 13 countries, and was IFC’s flagship platform dedicated to FCS.
Supported by Ireland, The Netherlands and Norway, CASA pioneered private sector development in fragile countries, including through conflict sensitivity tools, and by supporting refugees and host communities.
AFI will be active in 32 countries through five sub-regional platforms: Sahel & West Africa, Horn of Africa & Yemen, Central Africa & The Great Lakes, Southern Africa & the Indian Ocean, and North Africa. The shift from a country-focused model to a sub-regional model is designed to address the sub-regional dimension of fragility.
Specifically, AFI will focus on building partnerships, knowledge management, and delivering innovative, tailored, conflict-sensitive approaches to promote responsible investing in fragile countries. AFI will be grounded in—and build upon—lessons learned from CASA.
The East Africa Refugee & Host Community Program
IFC’s East Africa Refugee and Host Community Program is a first-of-its-kind advisory program dedicated to developing and supporting private sector solutions for refugees and host communities in Ethiopia, Kenya, Uganda, and Sudan. The East Africa Refugee Program is comprised of two parts: the Kakuma Kalobeyei Challenge Fund (KKCF) and the PROSPECTS Partnership.
- KKCF is a five-year program with a competitive financing mechanism designed to support and incentivize private sector investment in the Kakuma-Kalobeyei refugee-hosting area in northern Kenya. After a groundbreaking FCS Africa study, “Kakuma as a Marketplace”, found an annual economy worth $56 million and a market of 250,000 people in the camp and surrounding town, IFC designed KKCF to unlock the large but latent economic potential of the area.
KKCF is supported by five partners: The Ministry of Foreign Affairs of the Netherlands, the Swiss Agency for Development and Cooperation (SDC), the German Federal Ministry of Economic Cooperation and Development through KfW, the UK's Foreign, Commonwealth and Development Office (FCDO), and the European Union.
- IFC is also part of the strategic, multi-year PROSPECTS partnership spearheaded by the Netherlands which brings together IFC, the International Labour Organization (ILO), the UN Refugee Agency (UNHCR), the United Nations Children's Fund (UNICEF), and the World Bank. PROSPECTS creates strong partnerships between humanitarian and development actors to improve coordination and efficiency and boost development overall impact for refugees and host communities. IFC’s FCS Africa program supports PROSPECTS’ engagements in Kenya, Uganda, Ethiopia, and Sudan.