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Helping Africa meet its need for a stronger private sector that can raise local incomes and hold its own in the global marketplace, the International Finance Corporation (IFC) is teaming up with donor partners to launch a far-reaching new initiative: the Private Enterprise Partnership for Africa (PEP-Africa).

With this initiative, IFC, the private sector arm of the World Bank Group, is adapting a technical assistance business model it also uses in the former Soviet Union, the Middle East/North Africa, and other regions. IFC is providingUS$37.5mn to fund PEP-Africa’s core management and administration expenses over the next five years, then will leverage this amount by mobilising additional donor funds for specific projects.

In most cases, these will be multiyear efforts to build sustainable local capacity for development in key sectors such as agribusiness, tourism, infrastructure, or financial markets. To maximise impact, special emphasis will be placed on integrating these technical assistance efforts with IFC’s investments in Africa, which currently stand at about US$400mn a year – more than twice their level two years ago.

“PEP-Africa represents a key initiative designed to help us implement our strategic priorities in Africa,” says IFC acting executive vice-president Assaad Jabre. “From helping improve the business environment to supporting the growth of the SME sector and taking a much more proactive approach to project development in the region, PEP-Africa will build on IFC’s investment experience to identify constraints to private investment in Africa and help both governments and the private sector address these constraints. We look forward to working with our partners in the private sector and in the donor community so that PEP-Africa can make a real difference for the region by creating the right conditions for accelerated growth, better job prospects, and improved living standards.”

Based in Johannesburg, PEP-Africa will officially commence operations in July, replacing and expanding on the work of the Africa Project Development Facility, IFC’s existing programme for developing small and medium enterprises (SMEs).

But work has already begun on:

  •  Entrepreneurship: With around US$1.4mn in support from the Netherlands, a new SME Entrepreneurship Development Initiative is underway. This will continue and expand on the key projects of the existing facility, which has strengthened Africa’s small and midsize businesses and their support institutions for more than 15 years.

 

 

  •  Leasing: A grant of more than US$900,000 from Switzerland is helping IFC adapt its successful efforts in other regions to expand Tanzania’s access to leasing, an effective financing option for smaller businesses that can neither afford to purchase needed new equipment outright nor qualify for bank loans to finance them. A similar Swiss-funded IFC project in Uzbekistan has helped the country’s number of leases increase dramatically in the past year, and there are indications that similar results can be achieved in Tanzania and other East African countries.In addition to the focus on smaller businesses, PEP-Africa expects to be active in investment climate reform, infrastructure, gender equality, and other areas. It thus joins a family of regional technical assistance facilities managed by IFC that together have more than 600 full-time staff in the field. PEP-Africa is also a key part of IFC’s new strategy in Africa; other initiatives include the US$225mn, 10-country, IDA-IFC Africa Micro, Small, and Medium Enterprise initiative with the World Bank, as well as the creation of integrated SME solution centres in Madagascar and Kenya.

 

PEP-Africa will be headed by Bernard Chidzero, a Zimbabwean national who joined IFC in 2004 after heading a private management consulting firm in Africa.