AfDB, JICA seal $350m loan agreement to support Africa’s private sector
By Cynthia Ezekwe
As an avenue to boost private sector development in Africa, the African Development Bank (AfDB) and the Japan International Cooperation Agency (JICA) have signed a $350 million loan agreement to finance the Bank’s support for private sector operations in the continent.
According to AfDB, the loan comes under the Enhanced Private Sector Assistance (EPSA) initiative, which is a component of Japan’s official development assistance to Africa.
The signing ceremony for the private sector concessional loan took place at JICA’s headquarters in Tokyo, between Tanaka Akihiko ,JICA president, and Akinwumi Adesina, president of the African Development Bank Group.
Akihiko noted that the loan represented a crucial step in Japan’s efforts to work with the African Development Bank to support Africa as it faces the challenge of navigating multiple compounded crises including issues of debt sustainability and the impact of the war in Ukraine.
“The private sector in Africa is fundamental in creating jobs for the prosperity and progress of Africa. Although the private sector has been confronting unprecedented economic and social pressures, we are confident that the Bank’s Non-sovereign operations supported through this concessional loan will play an essential role in addressing these pressing issues,’’he added.
On his part,Adesina thanked the government of Japan as well as JICA, for their continuous support to the bank and Africa, and urged JICA to collaborate with the AfDB Group in other critical areas, such as refining the food and agriculture delivery compacts developed by African countries during a January food summit held in Senegal to tackle the continent’s food insecurity.
“JICA’s support would be crucial in the implementation of the special Agro-processing Industrial Zones, which will be the biggest game changer in Africa’s agriculture. It will transform rural economies, reduce food losses, process and add value to crops produced in rural areas and create jobs,”Adesina said.
Business A.M gathered that JICA and the African Development Bank signed the first private sector assistance loan in 2007. To date, AfDB and the government of Japan have signed eight non-sovereign loans totaling $1.85 billion. The loans have so far contributed to support 51 projects, mainly credit lines and equity to regional development finance institutions, private equity funds and project finance for infrastructure public-private partnerships.
Japan’s support to Africa channeled via the African Development Bank Group through EPSA, consists of three main components, which includes a robust co-financing facility under the accelerated Co-financing Framework Agreement; the Fund for African Private Sector Assistance, that has been critical in supplying technical assistance and expertise to project sponsors across Africa in various sectors, and the Private Sector Investment Finance.
The government of Japan is recognised as one of the AfDB’s biggest supporters. It contributed to the bank’s largest ever general capital Increase in 2019. In December 2022 Japan provided $534 million to the African Development Fund’s $8.9 billion sixteenth replenishment