African Development Bank and JICA sign $350 million loan to support private sector operations in Africa
The African Development Bank (AfDB) and the Japan International Cooperation Agency (JICA) have signed a JPY 44.1 billion ($350 million) loan to support private sector operations in Africa. The loan falls under Japan's Official Development Assistance to Africa, known as the Enhanced Private Sector Assistance (EPSA) initiative.
The signing ceremony took place at JICA's headquarters in Tokyo between JICA President, Dr. Tanaka Akihiko, and Dr. Akinwumi Adesina, President of the African Development Bank Group.
EPSA's fifth version, worth $4 billion, was signed by the Bank and JICA during the Eighth Tokyo International Conference on African Development (TICAD 8), held in Tunis last August.
The initiative is a critical component of Japan's support to Africa, consisting of three main components: a co-financing facility under the Accelerated Co-financing Framework Agreement, the Fund for African Private Sector Assistance, and the Private Sector Investment Finance.
Japan's support to Africa
The government of Japan is one of the Bank's biggest supporters, having contributed to the Bank's largest-ever General Capital Increase in 2019. Japan has also provided $534 million to the African Development Fund's $8.9 billion sixteenth replenishment in December 2022.
Since 2007, the Bank and the government of Japan have signed eight non-sovereign loans worth $1.85 billion, which have so far supported 51 projects, mainly credit lines and equity to regional development finance institutions, private equity funds and project finance for infrastructure public-private partnerships.
Promoting private sector operations and tackling Africa's challenges
Dr. Tanaka said 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.
He said that although the private sector in Africa has been confronting unprecedented economic and social pressures, he was confident that the Bank's Non-sovereign Operations supported through this concessional loan would play an essential role in addressing these pressing issues.
Dr. Adesina thanked the government of Japan as well as JICA for their continued support to the Bank and Africa. He invited JICA to collaborate with the African Development Bank 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.
Dr. Adesina also highlighted the need to support young people to go into agriculture and establish youth entrepreneurship investment banks to provide young people with financial and technical support throughout the business cycle.
Dr. Tanaka agreed with the areas highlighted by the African Development Bank chief, saying they were important to Japan's agenda of future collaboration with Africa.
JICA's further discussions with the African Development Bank Group
Dr. Tanaka emphasized the importance of promoting interaction between Japan's university students and those of Africa to foster exchange of knowledge and skills.
He agreed that JICA should hold further discussions with the African Development Bank Group to look into other issues raised by Adesina, including digitization of primary healthcare operations and the establishment of the African Pharmaceutical Technology Foundation, to be hosted in Rwanda's capital, Kigali.
Conclusion
The loan agreement signed between the African Development Bank and JICA is a significant step towards supporting private sector operations in Africa. Japan's support to Africa channeled via EPSA aims to promote co-financing, provide technical assistance and expertise to project sponsors, and finance private sector investments.
The loan is expected to play an essential role in addressing Africa's pressing challenges, including issues of