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Africa Commission Proposes $3 billion Guarantee Fund for Continent’s Small, Medium Businesses
Dakar, May 13, 2009 - The Africa Commission has proposed the establishment of a USD 3billion African Guarantee Fund (AGF) in partnership with the African Development Bank (AfDB), to boost the development of small and medium enterprises (SMEs). SMEs in Africa are providing jobs for people of the continent.
The proposal is part of the five initiatives by the Africa Commission which launched its Report, Wednesday at AfDB’s 2009 Annual Meetings in Dakar, Senegal.
The Africa Commission, which believes focus should be directed towards private sector-led growth as such creates jobs, has also recommended a partnership between the European Union and AfDB to the extent of ensuring access to energy at the local level.
According to the Commission, “more than three-quarters of Africans lack access to electricity – a major constraint to economic development, doing business and standards of living.”
The report also reveals as a recommendation, the improvement of the business climate and Africa’s competitive edge by making sure that the World Economic Forum’s Global Competitiveness Report covers all African countries.
The Commission is therefore promising that it will work with a range of Africa-based entities with a view to ensuring that the findings of this benchmarking process is followed-up by the development of detailed policy responses and concrete reforms.
In addition, unleashing the power of African entrepreneurship, both in start-up and existing enterprises, by providing advisory services and access to finance in order to allow young people to translate their good ideas into practical plans, is also an initiative proposed by the Commission.
This initiative, it says, will be implemented in partnership with the International Labour Organisation (ILO) and Youth Employment Network--a partnership between the United Nations, ILO and World Bank. The expectation is that, this will create 40,000 new jobs and 20,000 new businesses.
The Africa Commission, the Report also discloses, has recommended the support of higher education and research across the continent.
From this initiative, quantity and quality of artisans through apprenticeships, especially in the rural areas, are expected to be increased. In addition, the move is expected to link tertiary research and business practices, to expanding agricultural output.
AfDB President, Donald Kaberuka, Member of the Commission who will head the African Guarantee Fund, notes that “small and medium-sized businesses and entrepreneurs lack access to financing for investments and the economic crisis has just worsened the situation. That is why we want to establish the African Guarantee Facility with the aim of mobilizing loans for USD 3 billion. This can open up for about USD 20 billion in investments, equaling 1.5percent of Africa’s GDP.”
Extolling the move, Kaberuka said: “It will be the most innovative initiative launched in Africa in decades, and we are convinced that it will create millions of productive and decent jobs.”
The President of Tanzania and member of the Africa Commission, Jakaya Kikwete, expresses the belief that “the Africa Commission’s report and recommendations fill out a vacuum. The lack of employment opportunities for the youth is one of the key challenges on the continent and is not reflected in the current international development focus. With the involvement of all the significant African stakeholders in the development of the report, the recommendations represent African solutions to African challenges.
“This”, he said, “is why I am very optimistic as regard to the prospect of living up to the high ambitions of the report; to create a whole new agenda for development policy in Africa.”
In his own remarks, Chairman of the Africa Commission and Danish Prime Minister Lars Løkke Rasmussen, said: ”with the report of the Africa Commission, we have outlined a clear path towards strengthening private sector-led growth, and we have already established strong and promising partnerships with key actors such as the African Development Bank, World Economic Forum, ILO, the World Bank and the African Union Commission- all of whom will support the realization of the five main initiatives.
He added: “It is now that the work begins. All the members of the Commission have today committed themselves 100 percent to the recommendations and initiatives of the report. This demonstrates the genuine engagement we all feel towards creating more and better jobs for Africa’s youth.”
The Africa Commission was launched by Prime Minister of Denmark in 2008 to help Africa benefit more from globalization. The Commission consisted Heads of State and governments, politicians, experts, representatives from international and regional organizations as well as the business community, civil society and the academic world. The majority of the Commissioners were from Africa, which reflected the Commission’s overriding commitment to ensure African ownership of its recommendation and initiatives.