A resolution at the just concluded sixth Tokyo International Conference on African Development (TICAD) in Nairobi, Kenya, as well as first on the continent, has offered African businesses a fresh financing package of $3 billion.
The initiative, brokered between the African Development Bank (AfDB) and Japanese development agency- Japan International Cooperation Agency (JICA), will be rolled in three years.
The funding will also be provided equally, under AfDB’s Enhanced Private Sector Assistance for Africa (EPSA) initiative and JICA.
The AfDB Group President, Akinwumi Adesina, first reiterated the importance of energy in the continent’s quest to industrialise and urged quick action, as it cannot be realised unless the energy crisis is resolved. He said that the new drive with JICA is a significant expansion of AfDB’s support to the private sector, which will play a critical role in Africa’s economic transformation.
“The scaling up of the EPSA initiative will help increase access to electricity, boost the industrialization of the continent and improve the quality of millions of lives in Africa . . . We are proud to partner with Japan, one of our key strategic partners, in this endeavour.”
He pointed out the critical role of research and development in boosting growth, and urged African leaders to invest in the sector as in the case of Asia to realise increased development.
“Research and development is at the core of what Asia has done. Africa spends only 0.1 per cent of its GDP on R&D; this is so small compared to Japan, which spends 3.7 percent of its GDP on R&D. We cannot succeed without R&D,” he said.
But pointing out political will as a key ingredient for ensuring formulation of the right policies for development, Rwanda’s President, Paul Kagame, said: “The basis of development for any society is going to be good politics. This will give way to the right policies that can blend into global instruments to forge one development path.”
The President of Liberia, Ellen Johnson Sirleaf, said some of the policies, especially around economic integration, are necessary to move the continent from one that exports raw materials into one that adds value to its products.
Such policies, she noted, would encourage inter-country trade, which is currently too low in Africa, with sub-Saharan African countries recording the lowest trade among themselves, compared with other regions.
According to AfDB, intra-African trade accounts for 11 per cent ($110 billion) of the value of total African trade.
In addition to its private sector funding, Japan has also pledged to provide an extra $300 million for co-financing with the AfDB to help African countries access the best low emitting clean coal technologies available.
Already, it has provided about $1 billion of concessional loans to Africa under EPSA-1 (2005-2011) and is providing about $2 billion under the current EPSA-2 (2012-2016).
“AfDB and Japan have agreed today to upgrade the joint EPSA initiative, which has been at the core of our long-standing partnership, helping to boost private sector-led growth in Africa.
“We look forward to continued close collaboration with the AfDB so as to further accelerate the development of the African private sector, by delivering resilient and high-quality infrastructure and strengthening the health system,” Japan’s State Minister of Finance, Taku Otsuka, said.